What Should Your Offer on Alabama Land Be Contingent On, and What Happens to Your Earnest Money?

Make the offer contingent on each check that could kill your plan: a septic site evaluation, a survey, clear title, legal access, water and power, and the flood zone. Write each with a deadline and a way out. If a check fails and you give notice in time, the contract can send your earnest money back. Leave a check out, or miss its deadline, and that money is at risk.

A Land Offer Has to Ask Questions a House Offer Never Does

A house offer is built around a building. The inspector checks the roof, the wiring, and the foundation, and the inspection clause covers whatever the inspector finds.

Bare land has no building to inspect. Will the ground take a septic system? Where are the corners? Does a recorded road or easement reach the tract? Can you get water and power to it, and at what cost? Is part of it in a mapped flood zone?

None of that is on a house checklist. If those checks aren't written into the land offer, you can sign a contract on a tract you can't build on.

The Perc Test Comes First on a Tract With No Sewer

A family we know of was walked out to a tract and shown where the house would go. They could see the porch. Then the soil evaluation came back, and the ground wouldn't perk. With no septic system, there was no house.

We don't know what their contract said. Any buyer in that spot asks the next question, though. Does the deposit come back? That's the case a perc contingency is written for.

The Alabama Department of Public Health tells buyers to ask first on its page Can I Live On This Lot?. "Before you purchase land to build a home," check with the city sewer authority or the local health department. If there's no sewer, the soil has to be tested. The page sends you to a professional engineer, land surveyor, geologist, or soil classifier, and in some counties the health department's environmentalist can do it.

The county health department then decides on a permit. The page is blunt: "Many sites are simply not suitable for a septic tank system."

In Shelby County, the state's Shelby County Environmental Services page lists the Shelby County Environmental Department at (205) 685-4178. Call before you sign and ask what's on file for the parcel.

Our screen can't stand in for that test. In our Shelby County export of October 1, 2026, 93.7 percent of scored undeveloped parcels with a mapped drainage class sit on soils that pass our septic screen. That leaves about 6 percent on wetter soil, and a screen only reads the county soil map.

The permit comes from a hole dug on your tract. What "the ground won't perk" means explains the difference. You can see the Shelby County numbers beside the flood and road figures.

Write the perc contingency so the evaluation happens where you want the house and drain field. The best corner of the tract may be nowhere near that spot. Spell out what result counts as a pass. A conventional system and an engineered one are very different checks to write.

Five More Checks Each Need a Line of Their Own

• Survey. A licensed surveyor finds or sets the corners and shows what crosses the lines. The contingency lets you walk if the acreage, the frontage, or an encroachment isn't what you were sold. Do you need a survey covers what the map must show.
• Title. A closing attorney or title company searches the probate records and issues a title commitment. Read its exceptions. The contingency lets you object to a lien, a gap in the chain of deeds, or a mineral reservation you can't live with. How to look up the deed gets you started on your own.
• Access. A recorded easement or frontage on a public road, shown on paper. If the seller says the neighbor lets everyone use the dirt road, make the recorded easement a condition of closing. See is this tract landlocked and who maintains the road.
• Water and power. Written answers from the water utility and the power company on where service ends and who pays to extend it. With no main on the road, the question becomes a well. Our notes on the water line, power, and drilling a well list what to ask.
• Flood zone. The current FEMA map for the tract, and an insurance quote if any part sits in a zone starting with A or V. Reading a flood zone walks through it.

Two more show up often. If you're borrowing, a financing condition protects you when the loan falls through, and paying for vacant land covers why land loans differ. If you have a specific build in mind, zoning and recorded covenants are worth a line too. Can I build what I want explains where to look.

A Contingency Needs a Deadline, a Pass Line, and a Way to Give Notice

A clause that says "subject to a perc test" leaves too much open. Who orders the test? Who pays? By when? What result lets you out? How do you tell the seller?

A workable contingency answers all of that. It names the check and who orders it. It sets a date. It says what result counts as a failure. It says how notice must be given, usually in writing. And it says what happens to the earnest money if you give that notice in time.

The deadline is the part people lose. A soil evaluator or surveyor may be booked weeks out, and the health department has its own queue. Call before you sign and build the deadline from their answers. Once a deadline passes and you've given no notice, that contingency may no longer protect you. Read how your contract handles it.

Where Your Earnest Money Sits While You Check

Earnest money is the deposit you put up with a signed offer. If a licensed broker holds it, Alabama law sets the rules for how.

Section 34-27-36 of the license law was amended by Act 2025-380 in 2025. The Commission can still discipline a licensee who fails to keep other people's money "in a separate federally insured account or accounts in a financial institution located in Alabama." Section 34-27-84 adds a second duty. Every licensee must "account for all property coming into the possession of the licensee that belongs to any party."

The Alabama Real Estate Commission's Rule 790-X-3-.03 adds the timing. Cash is deposited immediately. A check is deposited when the contract says. If the contract doesn't say, it's deposited "when the offer becomes a contract."

Plenty of rural land sells owner to owner, with no licensee at all. Then the contract usually names a closing attorney or a title company to hold the deposit. Ask that office in writing how it holds the money and what it needs before releasing it. Handing a check straight to the seller leaves nobody in the middle.

What Happens to the Money When a Tract Fails a Check

If the tract fails a check the contract names, and you give notice before the deadline, the contract can provide for the deposit to come back to you.

When the deal closes, the rule says a broker disburses trust funds "within 7 business days." When it doesn't close, the rule is stricter. Suppose the deal "terminates without consummation," or the two sides disagree about the money. Then the broker may not release it, "except pursuant to a written agreement signed by all parties after or upon termination, or pursuant to a court order." The rule also lets a broker deposit disputed money with a court.

In plain terms, a broker can't hand the deposit back on your word alone. Both sides sign a release, or a court decides. A clear contingency, a failed perc test, and a timely notice give the seller little to argue about when the release comes around. A vague clause, or none, leaves the release open to question.

Have a Licensee or Real Estate Attorney Draft the Terms

Everything above is negotiated. The seller can push back on any contingency, any deadline, and the size of the deposit. Nothing here is legal advice, and no single form fits every tract.

The Alabama Real Estate Commission's consumer information page says the law doesn't require an owner to use a licensed broker to sell. It also recommends using a licensed broker or salesperson, or "an attorney for legal advice if you have questions or are uncertain about the process."

Know who the licensee across the table works for. Unless you've signed a written agency agreement, a licensee is a transaction facilitator. The law describes that role as helping the parties without being an agent or advocate for either one. Broker or agent explains the difference. And closing costs on Alabama land covers the money that comes after the contract.

A LandScout parcel file puts the soil drainage class, the flood zone, and the mapped road frontage in one place. That tells you which contingencies matter before you write the offer. The pricing page lists what each plan includes.

Do the homework before you sign, and put every check into the offer with a date beside it.