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Buying Land & Building a Home

Before you spend much time looking for land to buy, first do a little research to find out what costs and steps have to be take before the actual construction. You may decide it is worth more to buy an existing home and make personal modifications. Many first time home builders think you just buy a lot and get some building permits and start building. Not so, there are a number of steps and issues one has to consider before applying for building permits.

When buying land, you need to check the zoning to see if a home can be built on it. If it is zoned for residential, one must consider if it can be hooked up to sewer and water or is capable of supporting a septic system and well.

Septic systems generally cost $5,000-$10,000. Wells can cost $15,000-$40,000, depending on the depth, location and the need for a secondary pressure tank.

Building in an unincorporated area usually requires a secondary pressure tank for the required interior fire sprinklers. Then there is the cost of bringing in other utilities such as electricity, propane tanks and phone lines.

Certain areas in the county require a "Perq Test" to determine if the site is suitable for the required septic system. This involves digging a hole about 10 feet deep and waiting a few days to determine if the ground water rises to the point where a septic system would contaminate it.

This test can only be done during the rainy season which generally ends in April. Grading a lot can be a major cost of building a home. Many lots are priced seemingly low because the high cost of grading and site preparation in order to build.


Obtaining a loan on land is not as easy as getting a loan for buying a house. Buying raw land, lenders typically require 50% down usually with a shorter term and a higher rate of interest.

Once these steps are taken the next stop is the local planning department. The following information was derived from materials provided by the cities of Morgan Hill and Gilroy and should be considered as only a guideline. Contact the City for the most up to date information. Follows are some of the steps necessary to complete the process of building a home.

Advanced Review Group
This group, consisting of a Planner, an Engineer, a Plan Review Technician and the Fire Marshal, meets with the project owner and his/her staff at their request, prior to the submission of any application, to discuss the process for that particular project. This optional meeting is designed to result in both the owner and the City having an understanding about the nature and scope of the project, the steps required in the process, an approximate time frame in which the project can be completed and an approximation of the fees which will be charged.

Land Use Applications
Land use applications are processes such as General Plan Amendments, Zoning Changes, inclusion in the Urban Service Area, Residential Development Ordinance applications, Tentative Map applications, Conditional Use permits, and Architectural and Site Reviews. One or more of these applications may be necessary on some developments.

Environmental Review
Certain projects, because of their size or potential impact, may require an environmental review. This determination is based on rules of the California Environmental Quality act.

Development Review Group
The Development Review Group meets every week to discuss all applications received in the past week. This group consists of members of each Division within the City organization which has responsibility for any part of the development process. The group reviews Architectural and Site Review applications. It will also review preliminary plans in order to help the applicant identify any problem areas prior to a full submission of an application. In many cases, this results in a significant time savings for both the applicant and the City, allowing us to reduce your costs as well as the fees we must charge to recover our costs.

Sewer Allocations
Additional or new allocations for sewer capacity are granted by the Engineering Division in accordance with policies set by the City Council.

Utility Connections
Connections to water, sewer and storm drainage systems are handled by the Engineering Division. Engineering also reviews all infrastructure plans associated with new development and inspects the work.

Parcel Maps
Parcel maps are required in order to split lots and for subdivisions of less than five lots.

Building Permits and Inspection
Building permits are generally required for any building or construction involving any plumbing, electrical, mechanical, or structural alterations. The Uniform Building Code states that a permit is required for all new construction, demolition, remodeling, improving, removing, repairs, or moving of all buildings or structures. Regardless of the type of occupancy, a permit is required for additions, swimming pools, hot tubs, spas, decks over 30" above grade, carports, sheds over 120 sq. ft. of roof area, skylights, covered patios and walkways, retaining walls, bathroom and kitchen remodeling, termite repairs, reroofing, solar panels and most interior and exterior remodeling work. Permits are also required for plumbing, electrical, and heating and cooling work. When work is done without a permit, the permit fees will be doubled, the completed work may have to be dismantled or uncovered to provide access for inspection.

Who May Apply for a Permit?
Property owners or licensed contractors may apply for a building permit. The person signing for the permit must declare they have no employees, or they must show proof of a valid Workers' Compensation Insurance policy before a permit can be issued.

General Permit Requirements
For new construction, additions and most remodeling, complete plans are required. All plans must include the name and address of the architect, engineer, or other person preparing the plan. Energy calculations are required and must be incorporated into the plans. Generally 3 or 4 sets of plans are required to be submitted.

Information Required on Drawings
A plot plan must be included in plans for any work which alters the use, exterior footprint, exterior of an existing structure, or for any new buildings. Plot plans must show lot dimensions, front, rear and side setback distances to all property lines and existing buildings.

Indicate all easements and underground utility lines.
Show locations and sizes of proposed and existing water, sewer, gas and electric meter. Floor plans must show dimensions and the location of all walls, plumbing fixtures, doors, windows, appliances, kitchen counter, furnace and water heater.

All electrical fixtures and locations must be indicated.
Framing plans must indicate the sizes of floor joists and girders, ceiling joists and roof rafters. If you are using main beams, trusses or any unconventional framing, calculations must be submitted. Four exterior elevations are required which show windows, doors, skylights and architectural finish features. Heights of buildings must be indicated to show compliance with zoning regulations.

Engineered Plans
If you are constructing a new building or addition on a hillside, engineered footings are required, with soils and geology reports to substantiate all design assumptions. Calculations shall be submitted in two copies with the designers wet signature and stamp. Structures in the residential hillside zone must have noncombustible roofing and be fire sprinklered.

How Much Will it Cost ?
Building permit fees are based on a proportion of the total construction cost, including all labor and material involved in the proposed work. A plan check fee is assessed at a percentage of the building permit fee. Plumbing, electrical and mechanical permit fees are based on the actual work done, such as how many receptacles, sinks, etc. Where applicable, all site development fees, parks development fees, public safety fees and school impact fees, mitigation fees and water meter hook-up fees must be paid prior to permit issuance.

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