TABLE OF CONTENTS. Chapter 1 CHAPTER 1 LAND USE CONTROLS AND ZONING

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1 TABLE OF CONTENTS Chapter 1 CHAPTER 1 LAND USE CONTROLS AND ZONING 1.1 I. THE PLANNING PROCESS A. The Concept of Planning B. The Planning Commission C. The Regional Planning Commission D. The Professional Planner II. THE COMPREHENSIVE PLAN A. Overview B. Elements of the Comprehensive Plan C. Manner of Adoption of a Comprehensive Plan D. Effect of Adoption of the Comprehensive Plan E. The Comprehensive Plan and Public Facilities F. The Comprehensive Plan and Building or Setback Requirements for Proposed Streets and Highways G. Practice Suggestions III. THE SUBSTANCE OF LAND USE CONTROLS A. Methods of Controlling Land Use B. Zoning Regulations (a) 1. Relationship of Zoning Regulations to the Comprehensive Plan (b) 2. Constitutionality of Zoning Regulations: Rubric of General Welfare (c) 3. Kansas Statutory Scheme (c)(1) a. Districting (c)(2) b. Cumulative Zoning Districts (c)(3) c. Noncumulative Zoning Districts (d) 4. Specialized Zones (d)(1) a. Flood Plain Zoning (d)(2) b. Agricultural Zoning (d)(3) c. Airport Zoning (d)(4) d. Historic Preservation Zoning C. Flexible Zoning Techniques (a) 1. Planned Unit Developments (a)(1) a. Overview (a)(2) b. Enforcement and Modification of the PUD Plan (a)(3) c. Opportunities Under Planned Unit Development Legislation (a)(4) d. Planned Unit Development Problem Areas (a)(4)(i) i. Size of Planned Unit Development (a)(4)(ii) ii. Lack of Mutuality Between Municipality and Developer (a)(4)(iii) iii. Premature Commitment by Developer (a)(4)(iv) iv. Phasing of PUD and Non-Uniform Allocation of Open Space (a)(4)(v) v. Dedication of Open Space (b) 2. Special Use Permits (b)(1) a. Definition (b)(2) b. Permissible Use in Kansas (c) 3. Floating Zones (c)(1) a. Definition (c)(2) b. Permissible Use in Kansas xi

2 xii Table of Contents 1.3.3(d) 4. Clustering (d)(1) a. Definition (d)(2) b. Permissible Use in Kansas (e) 5. Density Zoning (e)(1) a. Definition (e)(2) b. Permissible Use in Kansas (f) 6. Contract and Conditional Zoning (f)(1) a. Definition (f)(2) b. Permissible Use in Kansas (g) 7. Transferable Development Rights (g)(1) a. Definition (g)(2) b. Permissible Use in Kansas (h) 8. Overlay Zones (h)(1) a. Definition (h)(2) b. Permissible Use in Kansas (i) 9. Design Control and Aesthetics (i)(1) a. Definition (i)(2) b. Permissible Use in Kansas (j) 10. Growth Management (j)(1) a. Definition (j)(2) b. Permissible Use in Kansas D. Regulation of Mobile and Manufactured Homes (a) 1. Mobile Homes (b) 2. Manufactured Homes IV. SUBDIVISION CONTROLS A. Enabling Legislation B. Contents of Subdivision Regulations (a) 1. Platting (b) 2. Lot Splitting (c) 3. Design Standards (d) 4. Public Improvements (e) 5. Public Improvement Construction Standards (f) 6. Mandatory Dedication of Open Space V. SITE PLAN CONTROLS VI. THE REZONING PROCESS A. Amending the Zoning Regulation B. The Lawyer s Role in the Rezoning Process (a) 1. Representing the Client in Rezoning (a)(1) a. Determining the Client s Needs (a)(2) b. Application for Rezoning (a)(3) c. Conferences with Planning Staff and City Officials (a)(4) d. Determining Burden of Proof (a)(5) e. Review of Zoning Regulation and Comprehensive Plan (a)(6) f. Reducing Neighborhood Opposition (a)(7) g. Exhibits (a)(8) h. Checklist of Additional Steps for Preparing Planning Commission Presentation (b) 2. The Commission Meetings (b)(1) a. Unique Character of the Planning Commission Meeting (b)(2) b. The Lawyer s Role in the Planning Commission Meeting (b)(3) c. The City or County Commission Meeting

3 Table of Contents xiii 1.6.2(c) 3. Representing Opponents of Rezoning (c)(1) a. Determining the Facts (c)(2) b. Developing Neighborhood Opposition (c)(3) c. Publicizing the Opposition (c)(4) d. The Commission Meeting (c)(5) e. Kinds of Opposition (c)(5)(i) i. Opposition Based on Procedural Defects (c)(5)(ii) ii. Opposition Based on Merits of the Application (c)(6) f. The Protest Petition (c)(6)(i) i. The Persuasive Petition (c)(6)(ii) ii. Legal Petition VII. ADMINISTRATIVE RELIEF FROM LAND USE CONTROLS A. Staff Relief B. Statutory Relief (a) 1. Board of Zoning Appeals (b) 2. Powers and Duties of Board of Zoning Appeals (b)(1) a. Variances Definition (b)(2) b. Criteria for Issuance of a Variance (b)(3) c. Exceptions Definition (b)(4) d. Use of the Exception VIII. JUDICIAL CONTROL OF ZONING AND LAND USE DECISIONS A. Timeliness of a Challenge to a Zoning Regulation or a Board of Zoning Appeals Decision (a) 1. Zoning Regulation (b) 2. Board of Zoning Appeals Order or Determination B. Standing to Challenge a Zoning Regulation C. Remedies in Zoning Cases D. Scope of Judicial Review (a) 1. Zoning (b) 2. Platting (c) 3. Special Use Permits (d) 4. Nonconforming Uses (e) 5. Burden of Proof (f) 6. Evidence (g) 7. Presumptions (h) 8. Construction of Zoning Regulations IX. LIMITATIONS ON LAND USE CONTROLS A. Police Power or Eminent Domain B. Unlawful Delegation of Power and Discretion C. Procedural Due Process D. Substantive Due Process E. Equal Protection of the Law F. Federal Antitrust Laws G. Exclusionary Zoning H. Aesthetic Zoning I. Federal Acts (a) 1. The Fair Housing Act (b) 2. The Religious Land Use and Institutionalized Persons Act of (c) 3. Telecommunications Act of J. Zoning to Limit or Retard Community Growth

4 xiv Table of Contents K. Nonconforming Uses (a) 1. Definition (b) 2. Kansas Nonconforming Use Statutes (c) 3. Extension, Enlargement, or Alteration of Nonconforming Uses (d) 4. Abandonment of Nonconforming Uses L. Municipal Land Use Controls Over State Property (a) 1. Zoning Controls (b) 2. Building Codes CHAPTER 2 TITLE EXAMINATIONS 2.1 I. INTRODUCTION AND SCOPE OF CHAPTER II. TITLE EXAMINATION OPTIONS A. Title Insurance B. Abstracts and Title Opinions (a) 1. Abstracts: Purpose, Form and Content (a)(1) a. Caption Sheet; Property Description (a)(2) b. Body (a)(3) c. The Certificate (a)(4) d. Period of Time Covered (b) 2. Title Matters That May Not Be Disclosed in the Abstract (b)(1) a. Unrecorded Rights (b)(2) b. Zoning and Other Ordinances (b)(3) c. Mechanic s, Materialmen s, and Similar Liens (b)(4) d. Survey Matters (b)(5) e. Certain Fixtures (b)(6) f. Certain Conveying Party Information (b)(6)(i) i. Competency (b)(6)(ii) ii. Fraud; Duress (b)(6)(iii) iii. Other Conveying Party Issues (c) 3. Liability of the Abstracter (d) 4. The Title Opinion C. Stand-Up Title Reviews and Opinions D. Comparing Title Examination Options (a) 1. Selection Factors (b) 2. Type of Transaction Financing (c) 3. Title Information Provided (d) 4. Cost (e) 5. Availability of Abstracts and Stand-up Reviews; Turnaround Time (f) 6. Liability III. IDENTIFYING, ANALYZING AND CURING TITLE DEFECTS AND TITLE REQUIREMENTS A. Standards for Title Examination B. Title Matters Not Requiring Objection or Requirement Because of Curative Law (a) 1. Curative Statutes (b) 2. The Marketable Record Title Act (c) 3. Exceptions to the Marketable Record Title Act Property Interests and Conditions Not Affected

5 Table of Contents xv 2.3.2(c)(1) a. The Right to Possession of a Lessor or any Lessor s Successor as a Reversioner on the Expiration of Any Lease (c)(2) b. The Rights In and To Any Lease of Any Lessee or Any Lessee s Successor (c)(3) c. Term Mortgages (c)(4) d. Any Mineral Interest That Has Been Severed from the Fee Simple Title of the Land (c)(5) e. Easements (c)(6) f. Use Restrictions or Area Agreements (c)(7) g. Rights of Any Reversioner or Remainderman Upon the Expiration of Any Life Estate or Trust (c)(8) h. Rights of Reverter or Rights of Entry for Condition Broken (c)(9) i. Rights or Interest of the United States or State of Kansas C. Preparation of Title Opinions and Title Objection Letters D. Common Title Defects, Objections and Requirements (a) 1. Divorces (b) 2. Joint Tenancy (c) 3. Bankruptcies (d) 4. Trust Deeds (e) 5. Transfer on Death (TOD) Deeds (f) 6. Pending Actions Lis Pendens Statute (g) 7. Pending Actions The Relation Back Doctrine of K.S.A (h) 8. Title Issues Common to Commercial Real Property Transactions APPENDIX 2A: Sample Title Opinion Based Upon Abstract Review CHAPTER 3 FORMS OF REAL ESTATE OWNERSHIP IN KANSAS 3.1 I. SCOPE OF CHAPTER II. RELEVANT FACTORS A. Type and Use of Real Estate (a) 1. Personal Use (b) 2. Business Use (c) 3. Rental Use (d) 4. Investment (e) 5. Property held for Sale to Customers B. Limited Liability C. Number and Type of Owners D. Type of Management E. Avoidance of Double Taxation F. Contributions and Distributions of Property G. Deductions of Losses H. Inclusion of Debt in Basis I. Allocation of Income J. Ability to Grant Service Providers a Profits Interest K. Phantom Income and Accumulation of Earnings L. Classification of Entities for Tax Purposes M. Effect of Governmental Grants or Other Public Contributions III. COMPARISON OF OWNERSHIP TYPES A. Individual Ownership

6 xvi Table of Contents 3.3.1(a) 1. Advantages (b) 2. Disadvantages B. Tenancy in Common (a) 1. In General (b) 2. Advantages (c) 3. Disadvantages C. Joint Tenancy (a) 1. In General (b) 2. Advantages (c) 3. Disadvantages D. Corporations (a) 1. Advantages (b) 2. Disadvantages E. S Corporations (a) 1. In General (b) 2. Advantages (c) 3. Disadvantages F. General Partnership (a) 1. In General (b) 2. Advantages (c) 3. Disadvantages G. Joint Venture H. Limited Partnerships (a) 1. In General (b) 2. Advantages (c) 3. Disadvantages I. Limited Liability Companies (a) 1. In General (b) 2. Advantages (c) 3. Disadvantages J. Limited Liability Partnerships K. Trusts (a) 1. In General (b) 2. Business Trust (c) 3. Land Trust (d) 4. Practicality of Trust Ownership of Real Estate (e) 5. Real Estate Investment Trusts IV. OTHER ISSUES A. Applicability of Securities Law B. Effect of Governmental Assistance CHAPTER 4 THE CONDOMINIUM AND THE TOWNHOUSE 4.1 I. SCOPE OF CHAPTER II. DISTINCTION BETWEEN A CONDOMINIUM AND A TOWNHOUSE PROJECT III. PROBLEMS OF STRUCTURING A PHASED CONDOMINIUM PROJECT IV. REVISIONS TO THE APARTMENT OWNERSHIP ACT V. THE HUD REGS

7 Table of Contents xvii 4.6 VI. RESTATEMENT (THIRD) OF PROPERTY: SERVITUDES VII. BENEFITS AND BURDENS OF CONDOMINIUMS A. Legal Status as Real Property B. Exclusive Ownership and Possession C. Separate Taxation D. Appurtenant Rights (a) 1. Undivided Interest in Common Areas and Facilities (b) 2. Permanent Character of Undivided Interest E. Partition Actions Prohibited F. Insurance Protection G. Interdependent Community (a) 1. Owners Association (b) 2. Compliance with Bylaws and Rules and Regulations (c) 3. Safety and Soundness Duties (d) 4. Personal Obligation to Comply with the Act, the Declaration and Bylaws H. Economic Viability (a) 1. Division of Common Profits and Expenses (b) 2. Personal Liability for Common Expenses (c) 3. Right of Assessments (d) 4. Waiver and Abandonment are no Excuse from Contribution to Common Expenses (e) 5. No Blanket Mortgages (f) 6. Limitations on Mechanic s Liens (g) 7. The Tipping Point VIII. CONDOMINIUM DECLARATION A. Description of the Land B. Description of Units C. Specific Description of Units as Constructed D. Description of Common Areas and Facilities and Common Expenses E. Description of Limited Common Areas and Facilities F. Undivided Interests in Common Areas and Facilities for All Purposes G. Use Restrictions H. Service of Process I. Procedure for Rebuilding or Restoration in the Event of Damage J. Convertible Condominium K. Expandable Condominium L. Additional Declaration Provisions Not Required by Statute (a) 1. Right of First Refusal to Homeowners Association to Purchase (b) 2. Management (c) 3. Condominium Fees (d) 4. Insurance (e) 5. Developer Control (f) 6. Recreational Condominium Special Provisions (g) 7. Easements (h) 8. Contractual Rate of Interest IX. CERTIFIED FLOOR PLANS OF CONDOMINIUM UNITS X. LAND SURVEY XI. THE CONDOMINIUM DEED XII. ASSOCIATION OF APARTMENT OWNERS

8 xviii Table of Contents A. Structure B. Bylaws of the Owners Association C. Income Tax Exemption: I.R.C. 501(c)(4), 501(c)7, and XIII. CONDOMINIUM MORTGAGE PROVISIONS XIV. THE TOWNHOUSE OWNERSHIP ACT XV. THE TOWNHOUSE DECLARATION A. Description of the Real Estate B. Description of the Townhouse Units C. Common Areas and Facilities D. Common Expenses and Method of Apportionment E. Rights of the Association for Unpaid Expenses F. Insurance G. Easements Created for the Benefit of the Association and Owner H. Amendment of Declaration I. Additional Provisions Not Required by Statute (a) 1. Management (b) 2. Developer Control XVI. ASSOCIATION OF TOWNHOUSE OWNERS APPENDIX 4A: Form for Expandable Declaration of Condominium Under Kansas Apartment Ownership Act APPENDIX 4B: Form of Engineer Certificate to be Attached to Floor Plans of Each Building APPENDIX 4C: Index of Floor Plans and Survey for each Building APPENDIX 4D: Reasearch and General Drafting Aids CHAPTER 5 RESIDENTIAL LANDLORD AND TENANT LAW IN KANSAS 5.1 I. INTRODUCTION II. PRIOR TO RENTING III. REQUIREMENTS AND LIMITATIONS OF THE RENTAL AGREEMENT A. Limitations on Leases Prescribed by the Act B. Providing for Terms Omitted From the Lease C. Rules of Law Which Have Not Been Altered or Superseded by the Act D. The Fair Housing Act IV. PERIOD IMMEDIATELY AFTER THE TENANCY BEGINS V. PROBLEMS ARISING DURING THE TERM OF THE TENANCY A. Duties Imposed on the Landlord and Remedies Available to the Tenant Under the Act B. Other Limitations Imposed on the Landlord by the Act C. Rules of Law Concerning Obligations of the Landlord Not Affected by the Act D. Tenants Obligations Under the Act E. Destruction of the Premises F. Transfer of Interest by the Landlord or Tenant

9 Table of Contents xix 5.6 VI. EVICTION A. Notice Requirements (a) 1. Notice Terminating the Tenancy (b) 2. Notice to Quit the Premises (c) 3. Combined Notices B. Other Considerations with Regard to Eviction VII. PROBLEMS AS THE TENANCY ENDS A. Notice Requirements for the Termination of Periodic Tenancies B. Holding Over C. Abandonment D. Return of the Security Deposit VIII. COMMENTS AND CONCLUSIONS IX. FORMS APPENDIX 5A: Rental Agreement APPENDIX 5B: Rules and Regulations APPENDIX 5C: Premises Inventory APPENDIX 5D: Furniture Inventory APPENDIX 5E: Notice to Quite Premises APPENDIX 5F: Notice to Quit for Nonpayment of Rent APPENDIX 5G: Notice to Quit for Violation of the Rental Agreement and of the Residential Landlord and Tenant Act APPENDIX 5H: Writ of Restitution and Execution APPENDIX 5I: Notice of Appeal CHAPTER 6 MORTGAGES AND CONVENTIONAL REAL ESTATE LENDING 6.1 I. SCOPE AND INTRODUCTION A. History of Mortgages B. Statutory Definition C. Deeds of Trust D. Installment Sale Contract II. TYPES OF MORTGAGES A. Standard Mortgages (a) 1. Single Family (b) 2. Commercial B. Construction Mortgages (a) 1. Characteristics (b) 2. Loan Commitment Letter (c) 3. Permanent Financing Commitment (d) 4. Other Security (e) 5. Construction Loan Agreement (f) 6. Basic Construction Loan Documents C. Wraparound Mortgages

10 xx Table of Contents 6.2.3(a) 1. Description (b) 2. Consent of First Lender (c) 3. Mortgage Registration Fee (d) 4. Key Provisions D. Second Mortgages E. Leasehold Mortgages F. Loan Commitment Letters, Loan Agreements and Credit Agreements (a) 1. Form III. CONTRACTUAL ISSUES A. Interest and Repayment (a) 1. Usury (b) 2. Points and Prepaid Finance Charges (c) 3. Default Interest (d) 4. Prepayment Penalties B. Insurance and Taxes C. Future Advances (a) 1. In General (b) 2. In Practice (c) 3. Statutory Authority (d) 4. Court Rulings D. Assignment of Rents E. Appointment of Receiver F. Waiver of Redemption (a) 1. Right of Redemption and Waiver (b) 2. Example of Waiver of Redemption Clause G. Mortgage as Security Agreement and Financing Statement H. Subordination (a) 1. Subordination of the Owner s Fee (b) 2. Subordination of the Tenant s Leasehold Interest (c) 3. Other Mortgagees I. Attorney Fees J. Environmental Liability K. Clogging the Equity L. Guaranty (a) 1. Definition (b) 2. Construction (c) 3. Defenses (d) 4. Some Defenses That Did Not Work (e) 5. Endorsers and Accommodation Parties Under the Uniform Commercial Code M. Nonrecourse Loans N. Loan Assumption (a) 1. Generally (b) 2. Due on Sale Clause (c) 3. Assuming vs. Subject To IV. DEFAULT PROBLEMS A. Foreclosure (a) 1. Default (b) 2. Right to Cure Reinstatement (c) 3. Title Search (d) 4. Parties

11 Table of Contents xxi 6.4.1(e) 5. Petition (f) 6. Pretrial Relief (g) 7. United States as a Party (h) 8. Service Personal, Mail, or Publication (i) 9. Defendants in Military Service (j) 10. Guardian Ad Litem (k) 11. Title Search Update (l) 12. Judgment (m) 13. Sheriff s Sale (n) 14. Bidding (o) 15. Confirmation of Sale (p) 16. Redemption (q) 17. Waiver (r) 18. Owner Redemption (s) 19. Creditor Redemption (t) 20. Federal Government Liens (u) 21. Bankruptcy Effect on Validity of Sheriff s Sale (Fraudulent Transfer) B. Deed in Lieu of Foreclosure C. Defenses to Foreclosures (a) 1. Borrower s Breach of Loan Documents (b) 2. Lender s Breach of Loan Documents (c) 3. Servicer s Breach of Notice Requirements (d) 4. Notice Requirements for Lender s Attorney (e) 5. Lender s Breach of Industry Regulations (f) 6. Real Estate Settlement Procedures Act (g) 7. Truth in Lending Act (h) 8. Uniform Consumer Credit Code (i) 9. Usury (j) 10. Kansas Consumer Protection Act (k) 11. Credit Agreements (l) 12. Equity (m) 13. Breach of Fiduciary Duty or Negligence (n) 14. Scrutiny of Judgment/Redemption Amounts (o) 15. Extension of Redemption Period V. MISCELLANEOUS A. Assignment of Mortgage B. Removal of Buildings C. Purchase Money Mortgage Priority D. Satisfaction or Release E. Mortgage Registration Fee F. Foreign Lenders Doing Business In Kansas (a) 1. Foreign Corporations, Limited Liability Companies and Limited Liability Partnerships (b) 2. Business Trusts G. Mortgage Businesses H. Loan Brokers I. Basic Recording Rules

12 xxii Table of Contents CHAPTER 7 CONTRACTS FOR SALE OF REAL ESTATE AND CLOSING PART A: CONTRACTS FOR SALE OF REAL ESTATE 7.1 I. FUNDAMENTAL REQUIREMENTS II. THE PARTIES III. DESCRIPTION OF THE PROPERTY IV. CONVEYANCE V. PURCHASE PRICE VI. METHOD OF PAYMENT VII. PROOF OF TITLE VIII. TAXES IX. POSSESSION X. CLOSING XI. INSURANCE XII. FEES XIII. REMEDIES XIV. DISCLOSURES A. Agency Disclosure B. Lead Paint Disclosure C. Property Condition Disclosure D. Notice Concerning Sex Offenders E. Radon Disclosure F. Foreclosure Addendum G. Waiver H. Required Additional Language XV. MISCELLANEOUS XVI. INSTALLMENT CONTRACTS FOR DEED XVII. OPTION TO PURCHASE REAL ESTATE PART B: CLOSING THE TRANSACTION 7.18 XVIII. GENERAL XIX. THE CLOSING STATEMENT XX. DELIVERY OF DOCUMENTS XXI. REAL ESTATE SETTLEMENT PROCEDURES ACT PART C: FORMS 7.22 XXII. REAL ESTATE CONTRACT GENERAL FORM XXIII. CONVENTIONAL FINANCING CONTINGENCY XXIV. USE OF A CLOSING ESCROW XXV. CONTINGENCY OF ASSUMPTION OF EXISTING MORTGAGE XXVI. CONTINGENCY OF FHA FINANCING

13 Table of Contents xxiii 7.27 XXVII. CONTINGENCY OF VA FINANCING XXVIII. CONTINGENCY OF CONVENTIONAL INSURED LOANS XXIX. ADDITIONAL PROOF OF TITLE XXX. CONTINGENCY OF TERMITE INSPECTION XXXI. INSTALLMENT CONTRACT FOR DEED XXXII. AGENCY DISCLOSURE LANGUAGE REQUIRED WHERE REAL ESTATE LICENSEES ARE INVOLVED K.S.A , XXXIII. LEAD WARNING STATEMENT LANGUAGE REQUIRED FOR ALL RESIDENTIAL HOUSING BUILT PRIOR TO C.F.R. SUBTITLE A XXXIV. SPECIAL ASSESSMENT DISCLOSURES (REQUIRED WHERE SPECIAL ASSESSMENTS ARE PRESENT. K.S.A. 12-6,123 AND 12-6A20) XXXV. SHORT SALE ADDENDUM (REQUIRED WHERE APPLICABLE IF REAL ESTATE LICENSEE INVOLVED) XXXVI. HOME EQUITY PROTECTION FORM - REQUIRED ANYTIME PROPERTY IS IN FORECLOSURE, POST FILING OF PETITION CHAPTER 8 TAX CONSIDERATIONS 8.1 I. INTRODUCTION II. TAX CLASSIFICATION OF REAL ESTATE III. CAPITAL GAINS AND LOSSES A. Definition of Capital Asset B. Dealer or Investor C. Mechanics of Capital Gains and Losses (a) 1. Capital Gains of Individuals (b) 2. Capital Losses of Individuals (c) 3. Capital Gains of Corporations (d) 4. Capital Losses of Corporations D. Tax Treatment of 1231 Assets IV. COMPUTATION OF AMOUNT OF GAIN OR LOSS A. The Amount Realized B. Basis (a) 1. Cost (b) 2. Substituted Basis (c) 3. Property Acquired by Inheritance (d) 4. Property Acquired by Gift (e) 5. Adjustments to Basis C. Holding Period V. SALES TO RELATED PERSONS VI. SUBDIVIDING REAL ESTATE VII. CAPITAL COST RECOVERY

14 xxiv Table of Contents A. Depreciation B. The Taxpayer Entitled to Depreciation Deductions C. Improvements to Real Estate D. Methods of Depreciation E. Accelerated Cost Recovery System F. Modified Accelerated Cost Recovery System G. Depreciation Recapture VIII. BUSINESS PROPERTY DEDUCTIONS A. Interest and Taxes B. Expenses for Maintenance and Repairs C. Demolition Loss D. Losses to Business Property E. Operating Expenses IX. LIMITATIONS ON LOSSES FROM REAL ESTATE A. Passive Activity Limitations B. At-Risk Limitation X. INSTALLMENT SALES A. General Rules B. Disposition of Installment Obligations C. Advantages of Installment Reporting XI. PERSONAL RESIDENCES OWNERSHIP AND SALE A. Deductions by Homeowners B. Cooperative Homeowners C. Condominium Homeowners D. Improvements by Homeowners E. Sale of Personal Residence (a) 1. Sale of Principal Residence Prior to May 7, (b) 2. Exemption on Sale by Taxpayer Age 55 or Older for Sales of Principal Residence Prior to May 7, (c) 3. Sale of Principal Residence On or After May 7, F. Vacation Home Deductions XII. TAX PROBLEMS OF MORTGAGES A. The Effect of Placing a Mortgage on Property or Acquiring Property Subject to a Mortgage (a) 1. Basis (b) 2. Costs of Obtaining the Mortgage (c) 3. Mortgage in Excess of Basis B. Exchanges of Mortgaged Property C. Foreclosure and Repossession of Mortgaged Property D. Loss on Foreclosures E. The Bankruptcy Tax Act Provisions Applicable to Mortgagors XIII. TAX PROBLEMS IN LEASING A. Tax Consequences to Lessor B. Tax Consequences to Lessee C. Treatment of Increasing, Decreasing, or Deferred Rents D. Existence of a Lease XIV. REAL ESTATE PROPERTY TAXATION

15 Table of Contents xxv A. Property Taxation in General B. Property Subject to Taxation C. Taxing Officials and Agencies D. Reappraisal and Classification E. The Property Tax System Generally F. The Taxing Process and Timetable G. The Valuation of Real and Personal Property for Purposes of Taxation H. Grounds for Property Tax Disputes CHAPTER 9 MECHANIC'S LIEN LAWS 9.1 I. INTRODUCTION II. A FUNCTIONAL APPROACH TO MECHANIC S LIENS A. What is a Mechanic s Lien and Why Allow It? B. When is a Mechanic s Lien Available? (a) 1. The Owner Must Have Asked For the Increased Value (a)(1) a. Equitable Ownership (a)(2) b. Contracts with Lessees and Holders of Partial Interest in Real Estate (b) 2. To Whom is a Mechanic s Lien Available? C. Lien for What? (a) 1. What are Lienable Items? (b) 2. Used or Consumed III. HOW A LIEN IS CREATED A. Content of a Lien Statement (a) 1. Name of Owner (b) 2. Name of Claimant (c) 3. Description of Real Property (c)(1) a. Lien on Entire Tract (c)(2) b. Multiple Contracts and Tracts (d) 4. Reasonably Itemized Statement (d)(1) a. General Rule (d)(2) b. Suggested Practice Exhibits IV. FORMALITY OF A LIEN STATEMENT A. Verified Statement/Agency B. Agency of Person Signing Lien V. FILING AND SERVING NOTICE OF LIEN VI. TIMING OF A LIEN STATEMENT A. Time to File Lien B. Extensions of Time to File C. Date of Last Work/Work Done to Extend Lien Time D. Counting Months VII. SPECIAL CONSIDERATIONS FOR SUBCONTRACTORS LIENS A. Subcontractors Lien Statements B. Liens of Subcontractors on Residential Property (a) 1. Improvement of Residential Property (b) 2. New Residential Property (c) 3. Special Considerations in Owner Contractor Circumstances

16 xxvi Table of Contents 9.8 VIII. OPERATION OF MECHANIC S LIENS AND RIGHTS CREATED BY MECHANIC S LIENS A. Lien Priority (a) 1. Date of First Work (b) 2. Multiple Mechanics Liens (c) 3. Rights and Liability of Owner (d) 4. Competing IRS Lien B. Assignment of Mechanic s Liens C. Foreclosure of Lien (a) 1. Limitation of Actions (b) 2. Election of Remedies (c) 3. Foreclosure by First Mortgagee (d) 4. Collection of Interest (e) 5. Distribution of Proceeds (f) 6. Suggestion In Event of Foreclosure D. Action by Landowner E. Bond to Secure Payment of Claim F. Amending Lien Statement G. Bankruptcy (a) 1. The Automatic Stay (b) 2. Trustee Avoidance Powers (c) 3. Effect of Discharge IX. COMMERCIAL REAL ESTATE BROKER LIENS A. Necessity of a Written Agreement B. Liens are Available Only for Commercial Real Estate C. The Amount of the Lien D. Filing a Broker Lien E. Providing the Owner with a Copy of the Notice of Lien F. Time Limits for Filing a Broker Lien G. Priority of a Broker Lien H. Foreclosure of a Broker Lien I. Filing of a Lien Release or Satisfaction J. Attorney Fees and Costs X. FORMS APPENDIX 9A: Lien Statement Contractor's Claim APPENDIX 9B: Lien Statement Subcontractor's Cliam APPENDIX 9C: Notice of Intent to Perform APPENDIX 9D: Warning Statement APPENDIX 9E: Notice of Extension to File Contractor Lien APPENDIX 9F: Notice of Extension to File Subcontractor's Lien CHAPTER 10 DEEDS 10.1 I. GENERAL INTRODUCTION AND SCOPE OF CHAPTER II. REQUIREMENTS FOR CREATING A VALID DEED DOCUMENT A. A Deed Must be in Writing

17 Table of Contents xxvii B. A Deed Must Designate and Describe the Parties (a) 1. Individuals (b) 2. Corporations, Limited Liability Companies, Other Business Entities (c) 3. Trusts and Other Fiduciary Relationships (d) 4. Political Subdivisions, Agencies, Utilities, and the Like (e) 5. Multiple Grantors and Multiple Grantees C. A Deed Must Describe the Property (a) 1. In General (b) 2. Metes and Bounds Legal Descriptions (c) 3. Reference to Plats (d) 4. Other Identifying Characteristics (e) 5. Exceptions from the Legal Description D. A Deed Must Contain Operative Words of Conveyance or Granting Language E. A Deed Must Be Signed By the Grantors (a) 1. In General (b) 2. Corporations and Limited Liability Companies (c) 3. Partnerships (d) 4. Witnesses, Attestations, Proof of Authority (e) 5. Signature by Grantees III. OTHER CUSTOMARY (AND OFTENTIMES NECESSARY) ELEMENTS OF THE DEED DOCUMENT A. Date B. Recitals C. Consideration D. Description of the Interest Conveyed (a) 1. Full and Lesser Interests Generally (b) 2. Mineral Rights and other Surface and Subsurface Interests E. Reservations; Liens and Other Encumbrances (a) 1. Reservations (b) 2. Liens and Other Encumbrances F. Covenants and Warranties; Types of Deeds (a) 1. General Warranty Deeds (b) 2. Special or Limited Warranty Deeds (c) 3. Quitclaim Deeds G. Conditions and Restrictions H. Release of a Spouse s Interest I. Acknowledgments/Notarizations IV. SPECIAL SITUATIONS AND TYPES OF DEEDS A. Deeds of Fiduciaries, Including Trustees B. Sheriff s Deeds, Marshal s Deeds, and Deeds of Other Public Officials C. Transfer On Death Deeds and Beneficiary Deeds D. Correcting Errors in Deeds and Correction Deeds E. Railroad Right of Way Deeds F. Deeds in Lieu of Foreclosure V. THE NEED FOR DELIVERY AND ACCEPTANCE OF DEEDS A. A Deed Must Be Delivered By the Grantor B. A Deed Must Be Accepted By the Grantee VI. ENFORCEABILITY OF AGREEMENTS AFTER DELIVERY OF THE DEED THE MERGER DOCTRINE

18 xxviii Table of Contents 10.7 VII. CAPACITY AND ASSENT OF THE PARTIES A. Mental Capacity in General (a) 1. Mental Impairment and Insane Delusions (b) 2. Age (c) 3. Intoxication B. Mistake of Fact C. Fraud and Misrepresentation (a) 1. Reliance on Representations and Age and Mental Weakness (b) 2. Equal Means of Knowledge and Suppression of the Truth D. Duress E. Undue Influence VIII. RECORDING OF A DEED A. Requirements B. Effect of Recording C. Other Documentary Requirements D. Sales Validation Questionnaire IX. APPENDIX OF FORMS APPENDIX 10A: Kansas Warranty Deed APPENDIX 10B: Kansas Limited Warranty Deed APPENDIX 10C: Kansas Quitclaim Deed APPENDIX 10D: Kansas Joint Tenancy Warranty Deed APPENDIX 10E: Kansas Joint Tenancy Quitclaim Deed APPENDIX 10F: Kansas Business Organization Warranty Deed APPENDIX 10G: Kansas Business Organization Limited Warranty Deed APPENDIX 10H: Kansas Business Organzation Quitclaim Deed APPENDIX 10I: Kansas Business Organization Joint Tenancy Warrant Deed APPENDIX 10J: Kansas Business Organization Joint Tenancy Quitclaim Deed APPENDIX 10K: Trustee's Deed APPENDIX 10L: Administrato's Deed APPENDIX 10M: Executor's Deed APPENDIX 10N: Conservator's Deed (Under Court Order) APPENDIX 10O: Executor's Deed (Power of Will in Sale) APPENDIX 10P: Kansas Real Estate Sales Validation Questionairre CHAPTER 11 COMMERCIAL REAL ESTATE LEASES IN KANSAS 11.1 I. INTRODUCTION II. DESCRIPTION OF PROPERTY LEASED III. TERM OF THE LEASE IV. CONDITION, INSPECTION, AND ACCEPTANCE OF PROPERTY

19 Table of Contents xxix 11.5 V. DELIVERY OF POSSESSION VI. RENTAL AGREEMENTS A. Fixed Rent and Net Provisions B. Percentage Rent C. Rent Adjustment D. Abatement of Rent VII. TAX PAYMENTS UNDER COMMERCIAL LEASES VIII. TAXES PAID BY THE TENANT IX. PAYMENT OF EXPENSES X. SECURITY DEPOSITS AND ADVANCE RENTALS XI. REPAIR AND MAINTENANCE XII. TENANT S RIGHTS XIII. TENANT S OPTION TO PURCHASE OWNER S INTEREST XIV. TENANT S RIGHT TO ALTER AND IMPROVE XV. TENANT S DAMAGES IF OWNER FAILS TO DELIVER POSSESSION XVI. DEFAULT A. Owner s Rights Upon Tenant s Default B. Duty to Mitigate C. Owner s Right to Perform Tenant s Obligations XVII. ASSIGNMENT AND SUBLETTING A. Owner s Consent Required B. Restrictions on Right to Assign or Sublease C. Protective Provisions in Subleasing XVIII. AGREEMENTS ON USE OF COMMERCIAL PROPERTY A. Noncompetition Clauses B. Exclusive Use and Radius Restrictions XIX. OPTIONS A. Options to Extend or Renew B. Option to Terminate C. Option to Purchase D. Options Based on Events XX. SURRENDER OF THE PREMISES XXI. WAIVER OF SUBROGATION XXII. EXCULPATORY CLAUSES XXIII. INDEMNIFICATION OF THE LANDLORD XXIV. INSURANCE XXV. FIRE AND OTHER CASUALTY INSURANCE XXVI. CONDEMNATION XXVII. MORTGAGING THE LEASEHOLD INTEREST

20 xxx Table of Contents XXVIII. ESTOPPEL CERTIFICATE XXIX. SUBORDINATION AND NONDISTURBANCE XXX. NEW CONSTRUCTION XXXI. REAL ESTATE BROKER COMMISSIONS XXXII. ATTORNEY FEES XXXIII. PROVISIONS FOR INTERPRETATION AND ENFORCEMENT OF THE LEASE XXXIV. ENVIRONMENTAL CONCERNS XXXV. TENANT REPRESENTATIONS XXXVI. LANDLORD REPRESENTATIONS XXXVII. INDEMNIFICATION XXXVIII. AMERICANS WITH DISABILITIES ACT (ADA) APPENDIX 11A: Lease Forms CHAPTER 12 TITLE INSURANCE 12.1 I. SCOPE AND INTRODUCTION A. Title Insurance v. Abstract and Attorney s Opinion B. General Definition of Title Insurance C. ALTA Form A Insures Against Loss Only D. ALTA Form B Insures Title as Merchantable II. TITLE COMMITMENT AS TO ALL INTERESTS A. General Definition of Title Commitment or Binder (a) 1. Useful Purposes of Commitment or Binder (b) 2. Report as to Outstanding Interest in Land (c) 3. Checklist for Prospective Purchasers (d) 4. Necessary Parties to Foreclosure (e) 5. List of Requirements to Obtain Title B. Conditions Unique to the Title Commitment (a) 1. Mortgage Defined (b) 2. Unresolved Claims Known to Insured Not Covered (c) 3. Company s Liability Limited to Insured (d) 4. Title Company May Not Make Unreasonable Requirements (e) 5. Insured Action Against Company Must Be Based on Terms of Commitment (f) 6. Conditions Nonnegotiable C. Requirements of Companies to Be Met Prior to Issuance of Policy (a) 1. Procure and Record Deed (b) 2. Procure and Record Satisfactory Release of Mortgage or Lien (c) 3. Procure and Record Release or Waiver of Lien or Judgment (d) 4. Complete Satisfactory Court Action to Cure Title Defect (e) 5. Procure and Record Affidavit (f) 6. Obtain Access to Property Insured (g) 7. Miscellaneous Requirements Unique to the Property Insured (h) 8. Requirements Not Satisfied Shown as Policy Exception D. Duration of Company Liability on Commitment

21 Table of Contents xxxi 12.3 III. LEASEHOLD TITLE POLICY A. Form and Requirements B. Amount of Insurance IV. LENDER TITLE POLICY A. Form and Requirements of Loan Commitment B. Form and Requirements of Lender of Leasehold Commitment C. Amount of Insurance for a Lender Policy V. ENDORSEMENT FOR SPECIAL COVERAGES A. Endorsement for Special Coverages (a) 1. Survey (b) 2. Mortgages (c) 3. Comprehensive Minerals (d) 4. Variable Rate, Negative Amortization (e) 5. Street or Special Assessments (f) 6. Condominiums (g) 7. Variable Rate (h) 8. Truth in Lending Regulation Z (i) 9. Multiple Tracts Partial Release Mortgage (j) 10. Construction Draws Total Mortgage Known Draw Downs (k) 11. Construction Draw Specifically to Mechanics Lien Coverage (l) 12. Exceptions to Insure Special Taxes and Assessments Prior to Policy Date (m) 13. Recognizing Assignee as Party Insured (n) 14. Assignment of Mortgage Extension of Assignment Date (o) 15. Leasehold (p) 16. Variable Changes (q) 17. Special Restrictions (r) 18. Zoning Ordinance (s) 19. Zoning Completed Structure (t) 20. Planned Unit Development (Community Unit Plans) (u) 21. Manufactured Housing Unit VI. POLICY OF TITLE INSURANCE A. Conditions and Stipulations that Survive the Issuance of the Policy (a) 1. Definition of Terms (b) 2. Continuation of Insurance After Acquisition of Title (c) 3. Defense and Prosecution of Actions (d) 4. Insured s Obligation to Notify Company of Claim (e) 5. Company s Right to Settle Claims (f) 6. Determination and Extent of Liability (g) 7. Limitation of Company s Liability (h) 8. Reduction of Company s Liability on Partial Payment (i) 9. Liability of Company Is Noncumulative (j) 10. Rights of Recovery Upon Payment or Settlement (k) 11. Liability Limited to Policy (l) 12. Required Notice to Company B. Exceptions Contained in the Policy to Be Issued C. Standard Exceptions (a) 1. Defects First Appearing After the Date of the Policy (b) 2. The Rights or Claims of Parties in Possession Not Shown by the Public Record (c) 3. Easements or Claims of Easements Not Shown by Public Record

22 xxxii Table of Contents (d) 4. Encroachments, Overlaps, and Boundary Line Disputes (e) 5. Mechanics Lien Not Shown by Public Record (f) 6. Taxes and Special Assessments Not Yet Due (g) 7. Special Exceptions (g)(1) a. General Ad Valorem Taxes or Special Assessments Which May Be Due for This Year or Subsequent Years (g)(2) b. Mortgages (g)(3) c. Easements, Leases, and Miscellaneous Other Items That Are Shown on the Public Record (g)(4) d. Restrictive Covenants (g)(5) e. Homeowners Declarations and Rights of Assessments by Homeowners Association (g)(6) f. Planned Unit Development Plans (h) 8. Requirements in the Commitment That Have Not Yet Been Satisfied D. Exclusions From Coverage (a) 1. Laws, Ordinances, Government Regulations, and Government Police Powers (b) 2. Right of Eminent Domain (c) 3. Defects Created by the Insured E. Exclusions from a Loan Policy (a) 1. Failure to Comply With Applicable Doing Business Laws (b) 2. Usury and Other Transgressions (c) 3. Mechanics Liens Arising From Work Performed Subsequent to the Date of the Policy and Not Financed from the Mortgage Proceeds VII. CLAIMS A. What Is a Claim? B. Insured s Claim Notice to Company C. Insurer s Response to Claims (a) 1. Duty to Defend (b) 2. Duty to Defend Seller Mortgage Under a Mortgage Policy (c) 3. Selection of Counsel (d) 4. Conflict of Interest (e) 5. Reservation of Rights (f) 6. Litigation (g) 7. Settlement VIII. REGULATION OF TITLE INSURANCE A. Controlled Business (K.S.A ) B. Rebate Prohibition (K.S.A (14)) C. Federal Rebate Prohibition (Real Estate Settlement Procedure Act) CHAPTER 13 ENVIRONMENTAL CONSIDERATIONS 13.1 I. SCOPE II. INTRODUCTION III. SOURCES OF ENVIRONMENTAL REGULATION AND LIABILITY A. Federal Law (a) 1. CERCLA or Superfund (b) 2. Resource Conservation and Recovery Act (RCRA)

23 Table of Contents xxxiii (c) 3. Clean Air Act (d) 4. EPCRA (e) 5. Federal Water Pollution Control Act (f) 6. Toxic Substances Control Act B. Kansas Laws and Regulations (a) 1. Kansas Superfund Law (b) 2. Kansas Storage Tank Act (c) 3. Kansas Hazardous Waste Management Act (d) 4. Kansas Wastewater Discharge Control Law (e) 5. Kansas Air Quality Control Act C. The Regulatory Agencies (a) 1. U.S. Environmental Protection Agency (EPA) (b) 2. Kansas Department of Health and Environment (KDHE) IV. ENVIRONMENTAL LIABILITIES A. Seller s Considerations (a) 1. General (b) 2. Liability From Prior Activity (c) 3. Liability From Future Activity B. Buyer s Considerations (a) 1. General (b) 2. Preserve the Innocent Landowner Defense (c) 3. Know What You Are Buying; Bona Fide Prospective Purchaser C. Lender s Considerations (a) 1. General (b) 2. The Secured Creditor Exemption (c) 3. Lender Strategy D. Trustee s Considerations V. MEASURING THE RISK A. All Appropriate Inquiry (a) 1. The Problem (b) 2. The Standard (c) 3. The Elements B. Environmental Audits and Assessments (a) 1. General Considerations (b) 2. Environmental Audit (c) 3. Record Review or Phase I Environmental Site Assessment (d) 4. Additional Investigation (e) 5. What the Assessment Should Do (f) 6. What the Assessment Should Not Do VI. LIMITING ENVIRONMENTAL LIABILITY A. Advising the Client (a) 1. Sensitization to Environmental Issues (b) 2. Strategy (c) 3. Limits of Traditional Protections B. Drafting Documents (a) 1. General Drafting Recommendations VII. REAL ESTATE DEVELOPMENT ISSUES A. Wetlands B. The Endangered Species Act