What Documents Are Needed To Sell Land? | askBAMLand

If you're not professionally flipped land for a living, you might be mildly annoyed by all the paperwork required to sell land.

Not knowing the exact documents you need can make you reach for a lawyer or an agent way too early in the transaction, resulting in additional fees. It is better to figure out which papers you should have, collect them, then get the professionals involved.

You need the title deed, purchase agreement, bill of sale, and transfer deed to finalize a sale. The documents should be notarized, and the binding ones should be signed by the relevant party. Adding disclosure or release from disclosure obligation is optional.

In this article, we will go over what each document includes, why it is important, and whether it is mandatory or at the discretion of the buyer and the seller. We also briefly cover the potential risks of mismanaging or omitting some of these documents in the transaction.

When you are collecting key documents for the sale of your land, you should remember that the purpose of each paper is to prevent complications after the sale. So, a good question to ask is, "will not including this in the transaction cause issues in the future?" If the answer is "yes," you should include the document or the information in question. Here are some such documents that can prevent future problems.

Table of Contents

Proof of Ownership - Title Deed

Before you even put up land for sale, you need to have documented proof of ownership. Anything from a notarized copy of the last transaction to a deed generated in inheritance verification can work for this.

This is more so a requirement from the buyer than the state. If the buyer is willing to overlook this, references to ownership are made in the purchase agreement, which is the document of primary importance in a land sale.

Document to Verify the Transfer - Purchase Agreement

The purchase agreement is a document without which a land sale cannot happen in any state. While you might make a private agreement and even trade money for land, as long as it is not documented and verified, the seller can always back out and claim the land. It is essential to have a purchase agreement that lays the groundwork for the sale deed.

While lawyers and real estate brokers usually offer templates for the purchase agreement, you can have one drawn upfront from scratch. The purchase agreement should feature the following details:

Official ID Details of Both Parties

Your legal name alongside your buyer's legal name is the bare minimum identification requirement for the agreement. A copy of personal identification documents like a driver's license may be attached to this. Usually, that is left for the bill of sale stage.

The Purchase Price

Where identification details are important to establish the parties entering the agreement, the purchase price sums up 50% of the agreement. To avoid last-minute renegotiation tactics, the purchase agreement clearly covers the exact dollar amount for the land.

Closing Date

If you buy real estate for personal use, you might not realize the importance of making transfers on specific dates. But in the world of fast-paced land trading, the buying entity must receive ownership within a specified timeframe. The purchase agreement includes the date of payment and the date of land transfer, both of which usually happen on the same day.

Land Location and Area

surprisingly, this is a largely optional requirement. Depending on how much the other party trusts you, you'll be required to include the exact location of the land you plan to sell. If you have multiple pieces of land, it can be a good idea to include this yourself in order to shield yourself legally. You don't want disingenuous buyers claiming the agreement was for land in a different region.

Disclosure Document or a Big Boy Letter

Whether you include a disclosure document in the transaction or the buyer signs a big boy letter, the choice is up to the buying and the selling party. In other words, neither of these documents are legal requirements in any state. That said, let's go over what these two documents are and why they are significant.

Disclosure Document

When you're the motivated party in the transaction and really want to get rid of the land, your buyer might request a disclosure document, and you might have to comply. This document includes any debt for which the land is serving as collateral, potential value landmines (factors you know can sink the land's value), and problems that the buyer might face after acquiring the land.

As you can see, this is not exactly a document you would agree to provide if you had any leverage in the transaction. In neutral transactions, you only need to prove that the land is not mortgaged, which the deed sufficiently proves.

Big Boy Letter

The big boy letter is a term very rarely used in real estate and is mostly confined to the world of finance and business acquisitions. It is derived from the phrase, "I am a big boy, I can handle it," and refers to business buyers who say they don't need business liabilities declared before buying an entity.

A similar letter signed by the buyer waiving you of any responsibility to disclose potential value landmines or future problems protects you from getting sued by the buyer. But buyers don't usually sign this document unless they are highly motivated to buy a specific piece of land.

The result of this stalemate is usually that the buyer hires his own due diligence team while the seller makes sure that all relevant information is offered in good faith and that no lie or deceptive promise or claim is used to sell the land.

Bill of Sale

Finally, you need the document that establishes the sale and confirms that the money meant to be paid as mentioned in the purchase agreement has been paid. The bill of sale needs to be signed by both parties, preferably in the presence of witnesses, and must be notarized to avoid disputes. Here are the items to include in the bill of sale

  • Identification of the buyer and the seller - This document has to properly pinpoint the buyer and the seller more than the purchase agreement.
  • A reference to the purchase agreement - A reference to the document that paves the way for the sale is a reasonable item to include but isn't mandatory.
  • The exact price - The price of the land must be included in the bill of sale to avoid disputes.
  • The date of the payment - This is the date of the payment, which is simultaneously the date on which the bill of sale is signed.

Transfer Deed

This is the final document that takes you from the sale period to the post-sale period. As long as every document before this is airtight, you can walk away after signing the deed. The transfer deed makes it clear to the government that you have forfeited the ownership of your land by handing it over to the buying party. Here are the items included in the deed:

  • Details of the grantor - When the land is sold, the seller is the grantor. For transfers that don't involve a sale, the donor or distributors assumes this role.
  • Details of the grantee - In a sales transaction, the grantee is the buyer. The details of the receiver of land are included to make the ownership change official.
  • Power of Attorney (if applicable) - If the seller isn't physically present, power of attorney is added to confirm the grantor as the representative of the owner.
  • Details of the real estate - The land being transferred is identified in the transfer deed.

Final Thoughts

If you plan to sell land, you should get two copies of your government ID, the title deed of the land, and a purchase agreement template. After that, you should go over the papers with the buying party, and upon agreement, get a real estate agent or your personal attorney involved.

About THE AUTHOR

Brittany Melling

Brittany Melling

We loved family’s outdoor adventures so much we started a land business just to help others buy their own land. We’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans five western states. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.

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