A Slippery Slope...Estimating Fill Dirt Costs

One of the first things you have to do if you want to build a new house is pick out a lot.  One of the most important things about selecting a lot, other than its neighborhood and location, is how much it will cost to prepare it for building.  You will need to clear it and fill it with dirt so that it is high enough to meet the code requirements.  Clearing costs are not a big problem for your builder to estimate with reasonable accuracy.  Spreading and grading the fill dirt is not a big problem to estimate with reasonable accuracy, either.

But estimating how much fill dirt you will  need before you make your offer to purchase is a big problem.  Many builders offer a fill dirt allowance as part of their “site preparation costs”.  They generally provide “10 loads of fill dirt”.  And often that is not near enough.

Florida is low.  “Buying Swamp Land in Florida” use to be a well-recognized joke.  But Palm Coast is now “developed”.  Buyers are not buying swamp land for their home sites.  But it use to be.  They dug all those nice canals and made all those nice lakes here.  And they piled muck from those canals and lakes right alongside them.  This land became our building lots.  Palmettos and Pine trees grew up, but the muck is still there.  So on some lots you find out, after you clear them, that you have to get rid of some muck and replace it with fill dirt.  Sometimes lots of muck.  Or sometimes it’s just a low lot.

You really can’t tell how much fill dirt you will need until you pay for a survey and clear the lot.  And you generally won’t spend money to do that until after you have purchased the lot and are ready to build. 

At about $100 per load, your ten load allowance can get used up in a hurry and you can wind up with a large and unexpected bill for extra fill dirt.

There is a “Feasibility Study” contingency clause in most Purchase and Sale Contracts for Vacant Land.  It is comprehensive and looks great, but won’t protect you from needing extra fill dirt.  You have to have the survey and clear the lot to see what you’ve got. 

I recommend you select your lot and your builder at the same time.  (Talk To Ted !)  Ask (insist) your builder visit the lot you have selected quickly, before someone else grabs it…and someone will if it is in a great location and offered at a bargain price.  

Your builder will have to cover himself six ways from Sunday because he also cannot know much about the lot until after survey and clearing.  But he has much more experience than you evaluating and purchasing lots, so his opinion is very important.  Ask him to put his guestimate, with his disclaimer that it is only his best guess, in writing.  And ask him if his contract says that you will be charged for extra fill dirt at cost or will it be charged at “cost plus”.

Darrell Cone (Darrell Cone Dozer Service) in Bunnell (386-437-5788) has been clearing and grading our Palm Coast lots since the ‘90s.  Maybe longer.  I plan to interview him for some up-to-date pricing estimates and some war stories about fill dirt and include them in a blog post.  Meanwhile, here is the Feasibility Clause I talked about (edited by me). 

And please POST YOUR COMMENTS if you have advice, information or experience you can add about evaluating a lot before you sign a contract to purchase it.

Feasibility Study: Buyer will, at Buyer's expense and within __ days from Effective Date ("Feasibility Study Period"), determine whether the Property is suitable, in Buyer's sole and absolute discretion, for use. During the Feasibility Study Period, Buyer may conduct a Phase I environmental assessment and any other tests, analyses, surveys and investigations that Buyer deems necessary to determine to Buyer's satisfaction the Property's engineering, architectural and environmental properties; zoning and zoning restrictions; subdivision statutes; soil and grade; availability of access to public roads.' water, and other utilities; consistency with local, state and regional growth management plans; availability of permits, government approvals, and licenses; and other Inspections that Buyer deems appropriate to determine the Property's suitability for the Buyer's intended use.

If the Property must be rezoned, Buyer will obtain the rezoning from the appropriate government agencies.  Seller will sign all documents Buyer is required to file in connection with development or rezoning approvals.

Seller gives Buyer, its agents, contractors and assigns, the right to enter the Property at any time during the Feasibility Study Period for the purpose of conducting Inspections; provided, however, that Buyer, its agents, contractors and assigns enter the Property and conduct Inspections at their own risk.

Buyer will indemnify and hold Seller harmless from losses, damages, costs, claims and expenses of any nature, including attorneys' fees, expenses and liability incurred in application for rezoning or related proceedings, and from liability to any person, arising from the conduct of any and all Inspections or any work authorized by Buyer.

Buyer will not engage in any activity that could result in a construction lien being filed against the Property without Seller’s prior written consent.

If this transaction does not close, Buyer will. at Buyer's expense, (1) repair all damages to the Property resulting from the Inspections and return the Property to the condition it was in prior to conduct of the Inspections, and (2) release to Seller all reports and other work generated as a result of the Inspections.

Buyer will deliver written notice to Seller prior to the expiration of the Feasibility Study Period of Buyer's determination of whether or not the Property is acceptable. Buyer's failure to comply with this notice requirement will constitute acceptance of the Property as. suitable for Buyer's intended use in its "as is" condition.

If the Property is unacceptable to Buyer and written notice of this fact is timely delivered to Seller, this Contract will be deemed terminated as of the day after the Feasibility Study period ends and Buyer's deposit(s) will be returned after Escrow Agent receives proper authorization from all interested parties.