Perc Test Every Lot Before You Subdivide Land

Here is a mistake I see every few months. An investor buys 30 acres, gets one good perc test near the road, draws six lots, and starts marketing. Then lot 4 fails. It is low and wet, and the only septic option is an engineered system the buyer does not want to pay for.

Now the plan is five lots, not six, and the numbers look a lot worse. That is why my rule is simple: perc test every lot, before you close.

What is a perc test?

A soil test that shows whether the ground can absorb septic water well enough for a septic system.

A perc test, short for percolation test, measures how fast water drains into the soil. The results, often with a soil evaluation, tell the county health department what kind of septic system the lot can use. Good soil means a conventional system. Poor soil can mean an engineered system or no septic permit at all.

This matters because a lot of rural land has no sewer. The EPA says more than one in five U.S. households use a septic system or a small cluster system. On raw land, the septic question is usually the whole question.

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Why do you need a perc test on every lot?

Because soil changes across a parcel, and one good test near the road says nothing about the back 20 acres.

Soil can change a lot across one parcel. High ground drains, low ground stays wet, and rock or clay can show up anywhere. A single passing test proves one spot. Every lot you plan to sell needs its own passing test in its own building area, or you are guessing at your lot count.

Rule of thumb: no perc, no lot. Count a lot only after it passes.

How does a failed perc test hurt a subdivide?

You lose a lot, sell it for less, or spend more to make it work.

A lot that cannot take a conventional septic system has fewer buyers. Some will pay for an engineered system, but most will not, and they want a lower price. Sometimes the county will not issue a permit at all. Either way, your lot count or your price drops, and your profit goes with it.

Fewer buyers, since many want a normal septic system
Lower price for the lots that need an engineered system
Some lots may not be buildable at all
Harder to sell with seller financing, and harder to sell the note

Does Damen Capital require a perc test on subdivided lots?

Yes. Every lot needs a perc test showing a conventional system to get the 80% subdivide loan.

Our top subdivide tier, up to 80% of the purchase price, needs the plat recorded at closing and a perc test on every lot showing a conventional septic system will work. We also need a passing perc on lots under 10 acres when we buy the seller financed notes you create from those lot sales.

That second part is easy to miss. If you plan to sell your lots with seller financing and then sell the notes, the perc test is what makes those notes easy to sell. On lots under 10 acres, we buy notes only with a perc test showing a conventional system, or with at least 40% down from the buyer on an alternative system.

When should I order perc tests on a subdivide?

During your due diligence period, before you close on the land.

Order perc tests as soon as the contract is signed. Put a due diligence period in the contract long enough to get results back, and make the deal depend on them. Some counties only allow testing in the wet season, so ask the health department early. The worst time to learn a lot fails is after you own it.

Anne Arundel County in Maryland, for example, says some of its testing is limited to the wet season. Your county may be different, so call first.

Sign the contract with a perc contingency
Have the surveyor mark each planned lot and building area
Call the county health department or a licensed soil tester
Test each lot in the spot where the house and septic would go
Redraw the lot plan around the results before you close

Do big lots need a perc test too?

For our 80% subdivide tier, yes. For note purchases, only lots under 10 acres.

Our top subdivide tier wants a passing perc on every lot, big or small. When we buy the notes you create, we need a perc only on lots under 10 acres, since a bigger lot has more room to find good soil. Either way, a passing perc is a good sales tool that helps you sell faster at a better price.

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Frequently Asked Questions

Do I need a perc test on every lot when I subdivide?

Yes, for every lot you plan to sell as buildable. Soil changes across a parcel, so one passing test does not prove the other lots.

What happens if a lot fails the perc test?

The lot may need an engineered septic system, which cuts the price and the number of buyers, or it may not be buildable at all.

Does Damen Capital require perc tests for subdivide loans?

Yes. The 80% subdivide tier needs a perc test on every lot showing a conventional septic system.

When should I get perc tests done?

During the due diligence period, before you close. Some counties only allow testing in the wet season, so call the health department early.

Will you buy a note on a lot without a perc test?

On lots under 10 acres, only if a perc test shows a conventional system, or with at least 40% down from the buyer on an alternative system.

Why You Perc Test Every Lot Before You Subdivide Land