The Importance Of The Study Period

The Importance Of The Study Period

We’re looking for our next spec lot, and it has been a challenge. The market for good build-able lots in Northern Virginia is tight, and we’re finding we have to act fast because there are often multiple offers on the same property. Moving swiftly when submitting an offer doesn’t leave much time to research the lot. This means we’re not always 100% sure we can build what we want until after the contract is ratified. One way we protect ourselves is we write in a study period clause in every contract we write. This allows us time after ratification (usually 5-10 days) to research the property and verify we can build what we want to build.

Over the last two weeks, we’ve put offers on two properties. We lost one after bidding $15K over the asking price (another guy came in a few dollars higher). The other contract we submitted was ratified but one day into the study period, we realized it wasn’t build-able (for us). Thank goodness we had a study period written into the sales contract.

I’m disappointed because the lot seemed really great. Awesome location inside the beltway, big lot (.5 acre) and on a very nice street. There was a competing offer on the lot, but we included an escalation clause, and we ended up with a ratified contract within two days. Score!

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Wrong. The next day, it was discovered that almost the entire lot was covered by RPA (Resource Protection Area).

Boo.

Fairfax County provides the following definition of RPA on their website.

RPA Resource Protection Areas (RPAs) are the corridors of environmentally sensitive land that lie alongside or near the shorelines of streams, rivers and other waterways which drain into the Potomac River and eventually into the Chesapeake Bay. In their natural condition, RPAs protect water quality, filter pollutants out of stormwater runoff, reduce the volume of stormwater runoff, prevent erosion and perform other important biological and ecological functions.

So what does this mean if you find a lot (or own a lot) with designated RPAs? Well, it doesn’t necessarily mean you can’t built on it, but it is worth taking a look at the implications of building. If you disturb the RPA, you must replace it. For example, if your new home project disturbs 2,000 square fee of RPA, you will have to replace the same amount in the form of plantings. It can be costly and building in an RPA can also extend the time it takes to get county approvals since there are more requirements.

I’ve written about the importance of The Study Period before, and it is something I feel strongly about. I would rather lose a lot because we included a short study period in the contract than to get a ratified contract only to find out we can’t build what we want (or at all). Given that choice, the study period wins every time.

Dream Big. Build Smart.

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