Buildable or unbuildable: the question that sets the price
Land is priced by what a buyer is allowed to build. Four things decide it: zoning (lot size and frontage), the ability to handle wastewater (sewer or a septic system that passes), wetlands and flood limits, and access from a public or approved way. An “unbuildable” lot is one where at least one of those fails, and it usually sells for far less, mostly to abutters or conservation buyers.
If you know what you have, say so with paper: a survey, a soil evaluation, a letter from the zoning officer. A buyer who sees a documented buildable lot can pay for a house site. A buyer who sees guesses will pay for the risk.
Perc test and Title 5 on a lot
Where there is no sewer, a house needs a septic system under Title 5 of the state environmental code (310 CMR 15.000). Site evaluation uses deep observation hole tests, a soil profile, percolation testing, landscape position and hydrogeologic properties. The regulation says at least two deep observation holes are done in the presence of the approving authority (usually the board of health), and percolation tests are done in the primary and reserve areas, also witnessed (310 CMR 15.000).
If you can, have a licensed soil evaluator do the testing before you list and ask the board of health what it needs. A failed test can end the buildable status. A passing test is one of the best things you can show a buyer. Buyers often put a perc test in as a condition of the purchase. See Buying or selling property with a septic system for the transfer inspection rules, which apply to a property that has an existing system, and our Title 5 guide.
Wetlands and the conservation commission
The Wetlands Protection Act, MGL c.131 s.40, bars anyone from removing, filling, dredging or altering a bank, riverfront area, fresh water wetland, coastal wetland, marsh, meadow or swamp, or land subject to flooding, without first filing a notice of intention with the local conservation commission. A person who files must also notify abutters within 100 feet. The “riverfront area” runs 200 feet from a river’s mean annual high-water line, with some exceptions.
You, or a buyer, can ask the commission whether the law applies to the land. The statute says the commission must give a written determination within twenty-one days of a certified-mail request. The state’s form for this is a Request for Determination of Applicability (WPA Form 1), which can confirm resource area boundaries or whether a project is covered. A commission can ask for plans by an engineer or wetland scientist. Plan for the time this takes.
Zoning, frontage and ANR plans
Zoning sets the minimum lot size, frontage and setbacks. A lot that is too small or narrow may not be buildable by right, or may need a variance. Ask the town’s building or zoning office for a zoning letter and read the by-law yourself.
If you are dividing land and every new lot has the frontage the town requires on a street the town accepts, the lots can often be created with an “Approval Not Required” (ANR) plan. MGL c.41 s.81P says that if the planning board finds the plan does not require approval under the subdivision control law, it endorses it “forthwith, without a public hearing”, and the endorsement “shall not be withheld unless such plan shows a subdivision.” If the board thinks the plan needs approval, it must tell you in writing within 21 days, and if it fails to act in 21 days the plan is deemed endorsed. Under section 81L, “subdivision” means dividing a tract into two or more lots, with exceptions that your surveyor and lawyer will check. Hire a registered land surveyor and a lawyer for this step.
Chapter 61, 61A and 61B land: the town’s right of first refusal
Forest land (Chapter 61), farmland (61A) and recreational land (61B) get a lower tax rate. If the land is taxed this way, it “shall not be sold for, or converted to, residential, industrial or commercial use” while so taxed or within a year after, unless the city or town has been notified of the intent to sell or convert. (c.61 s.8, c.61A s.14, c.61B s.9.)
- For a sale for another use, the notice must include a certified copy of the signed purchase and sale agreement and a statement of the proposed use.
- It goes by certified mail or hand delivery to the mayor and city council or select board, assessors, planning board, conservation commission and, for Chapter 61, the state forester.
- For 120 days after a proper notice is mailed, the city or town has a first refusal option to meet the bona fide offer. It can assign that option to a nonprofit conservation group or the state, as the 61A and 61B text shows.
- A residence for the owner or certain close relatives is not a conversion for these rules.
In practice, this means a purchase and sale agreement for this kind of land should say it is subject to the town’s option, and your attorney should do the notice. If you are not sure whether the land is classified, the assessors’ office can tell you. Also ask about rollback taxes: we did not verify them here, so we are not quoting any figure.
Who buys land, and taxes on the sale
Typical buyers are builders and developers, neighbors who want more yard or protection, farmers, conservation groups and individuals who want to build a home. Many land sales are cash, since lenders are often cautious about raw land. A cash offer can be faster, and a listing may bring more if the lot is clearly buildable. Compare them here.
You will pay a deed excise tax and may owe capital gains tax. The home sale exclusion does not usually apply to land that is not your home, so ask a CPA and try our capital gains calculator. The seller pays annual property tax on the land until closing, prorated.