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Written by Hanover Mortgage Company · Updated September 23, 2026 · 7 min read

For educational purposes only. This is general information, not legal, engineering, tax or insurance advice. Do not rely on it for any property decision. Confirm everything with the local agency and licensed professionals.

This guide is for investors, builders and landowners with a specific California parcel. Already own land and want to pull equity out of it? See Land Cash-Out Refinance in California.

Hanover Mortgage Company is a private money mortgage company. Hanover MC underwrites in-house, orders custom California loan documents, and arranges business purpose 1st, 2nd, and 3rds. On land, Hanover MC arranges 1st trust deeds only. Land loans require only lite documentation, but every loan needs a solid, realistic exit strategy. Capital comes from private trust deed investors.

1. Is It a Legal Lot?

Check this first. A parcel split off by deed without an approved map may not get a building permit, even with utilities at the curb. An APN is for taxes and doesn't prove the lot is legal. If you have doubts, ask the county for a Certificate of Compliance (Gov. Code §66499.35). A conditional certificate can require road or utility work before permits.

2. Utilities: Where Does Service End?

"Utilities available" means little until you know where service stops.

Water: Get a will-serve letter for the APN from the water district.

Wells: Look up nearby DWR Well Completion Reports. In medium- and high-priority basins under the state groundwater law (SGMA), new wells may face extra review or pumping limits. Check DWR Basin Prioritization and call the county well office.

Sewer or septic: Get a sewer will-serve letter, or confirm the site can pass a perc test under the State Water Board septic (OWTS) policy and county rules.

Power: PG&E, SCE and SDG&E line extensions follow CPUC Rules 15 and 16. Get a written estimate. "Power nearby" is rarely cheap.

Drainage: Check which way the lot drains, look for drainage easements, and confirm there's a storm drain you can connect to. Grading an acre or more usually needs a construction stormwater permit. Work in a creek or dry wash may need a CDFW streambed agreement.

3. Impact and Connection Fees

School, park, traffic, and water and sewer capacity fees can cost more than the utility work. Cities and counties must post their fee schedules online (AB 602). Get a written estimate from the city, the school district and the water and sewer agencies before you buy. ADUs often pay less.

4. Fire Rules and Insurance

In fire hazard zones, expect road width and turnaround standards under the Board of Forestry fire safe regulations, required hydrants or water tanks, and defensible space. Get insurance quotes before buying. If standard insurers won't write a policy, the California FAIR Plan may be the fallback, which affects cost and resale.

5. Protected Species and Habitat

Protected plants or animals can mean surveys, work limits, set-asides or mitigation fees, and they can knock out CEQA exemptions. Watch for:

• Coastal sage scrub in Southern California, habitat for the California gnatcatcher
• Vernal pools and seasonal wetlands, especially in the Central Valley
• Open grassland and vacant lots with burrowing owls, which the state gave endangered-species protection in 2024
• Desert parcels with western Joshua trees, which need a permit and fee to remove under the
  Western Joshua Tree Conservation Act
• Creeks and riparian corridors

Screen the parcel first with USFWS IPaC (federal) and CDFW's California Natural Diversity Database (state). If either shows a hit, hire a biologist for a site survey before you buy.

6. CEQA and By-Right Options

CEQA (the state's environmental review law) applies to the approval you request, not the land itself.

Common exemptions: Class 3 covers small projects, such as one home or up to three in urban areas. Class 32 covers infill sites of 5 acres or less that can be served by utilities. The 2025 AB 130 exemption covers urban infill housing up to 20 acres.

Worth a look for investors: Since July 2025, SB 1123 allows up to 10 small homes (averaging 1,750 sq ft or less) on a vacant single-family lot of up to 1.5 acres. Approval comes from staff within 60 days, with no CEQA review.

Most likely to need full review: raw acreage needing a map or rezoning, and sites with habitat, hazards, contamination, coastal or historic issues. See what nearby projects faced on CEQAnet. The state's Site Check map also shows parcels where housing may qualify for CEQA streamlining.

7. Title Surprises

• Legal access: A dirt road isn't an easement. Ask the title officer whether access is insured.
• Mineral rights: On older rural parcels, someone else may own them.
• Special taxes: Mello-Roos and other assessments add to holding costs.
• Easements: Utility, drainage and access easements can shrink where you can build.

The Developable-Lot Link Kit

These links are research starting points for education only. The city or county makes the final call on your project.

How This Affects Financing

Hanover Mortgage Company underwrites land on the asset and equity, not income or DTI, with lite documentation. What Hanover MC does require is a solid exit strategy, such as a sale, a refinance after entitlement, or build-and-sell. A legal, utility-ready lot makes that exit more believable. Land without utilities can still qualify, underwritten more conservatively, case by case.

Common uses of proceeds include buying a lot quickly with a bridge loan, pulling equity out to pay for utility extensions or permits (see land cash-out), and holding a lot through entitlement with a term loan.

Some Land Loans Hanover MC Has Arranged

Past closed transactions only, not a quote or commitment to lend. See the Transactions page.

FAQ

Hanover Mortgage Company arranges private, business-purpose mortgage financing for property owners and investors throughout California, evaluated on the asset and available equity rather than income or DTI. Hanover MC does not fund loans directly — capital comes from private trust deed investors, with financing arranged under Hanover MC's California DRE broker license. Real Estate Broker, California Department of Real Estate, License #01410448 ? NMLS #337458.