Plan document says "puchase primary residence" for Hardship distribution, participant wants to buy the land first with this money. Plan is audited each year, so I'm inclined to deny it. Anyone have experience either way?

I would use the same logic here as I would when determining whether a loan is for the purchase of a primary residence (to be conservative). See 72(p)(2)(B)(ii) which defines a principal residence as a dwelling, which, within a reasonable time will be used as the participant's primary residence. Land would not qualify as a dwelling in my opinion. I am actually hesitant to even allow a hardship for the construction of a principal residence, so I definitely would not allow a hardship for the purchase of land!

purchase of primary residence should be evidenced by contract to purchase residence. land alone would not qualify.