From Barns to Big Boxes Redux 2012 New Laws, New Economy Raw Land Acquisition, Development Planning & Financing ACQUISITION OF RAW LAND
RAW LAND = 8 TRACTS Parcels A-G & Kathryne s Corner Visual Resources On Line GIS in county tax offices Google Earth NC One Map Geospatial portal http://data.nconemap.com/geoportal/catalog/main/home.page Imagery from multiple years 1993 2010
Commercial Real Estate Broker Lien Act (GS Chapter 44A, Art 2, Part 4) DEFINITION: Commercial real estate. Any real property or interest therein, whether freehold or non freehold, which at the time the property or interest is made the subject of an agreement for broker services: a. Primarily sales, office, research, institutional, warehouse, manufacturing, industrial, or mining purposes or for multifamily residential purposes involving five or more dwelling units; b. Zoning ordinance (or petition to amend) allows above use; or c. Contract, lease, option Commercial Real Estate Broker Lien (cont d) Contract for broker services must be written signed by parties Filed with Clerk of Superior Court Time limits Filing prior to closing OR within 60 days for post closing installment OR with 90 days for lease Civil action with 18 months after filing the lien EXC within 1 year for option to purchase 125% Bonding off or payment to Clerk provision pending litigation Includes attorneys fees for prevailing party automatically No relation back Not affect lender s deed of trust lien
Commercial Real Estate Broker Lien Concerns Mechanics liens: Claim of lien on real property or on funds have priority For gap closing, need affidavit/indemnity that no other brokers involved other than those paid at closing May be filed last minute, critical concern in your update at time of recording Check temporary indexes May be buyer s or seller s broker CAUTION: Leaseholds installment payments FORMS www.northcarolina.ctt.com
Commercial Real Estate Broker Lien Sample Commitment Requirement Unless this transaction involves only real estate containing one to four residential units as shown on a current plat of survey, the Company must be furnished with a) Satisfactory proof that the land in this transaction is not commercial real estate as defined in G.S. 44A 24.2(3); or b) Satisfactory affidavit(s) from both the Seller and from the Buyer (or Lessor & Lessee for lease) a) that no Broker Services have been engaged with regard to the contract, lease or option of any interest in the Land and b) that no notice of lien for any broker services has been received. c) In the event that said affidavit(s) contain any qualification with respect to any broker services, satisfactory proof of payment in full for all broker services, together with a lien waiver or estoppel letter from such identified broker(s). NOTE: Where the possibility of a right to file a Broker s Lien(s) is determined and no lien waiver(s) nor Estoppel Letter(s) is furnished to the Company, an exception as follows will be taken in the final policy pending verification that none of have been filed prior to recording of documents of the transaction to be insured: Any Commercial Broker s Lien, or right to a Commercial Broker s Lien, imposed by law. Water & Sewer Assessments Parcels A & B Become liens on the adjacent real property (See G.S. 160A 237 or G.S. 153A 201) Become liens when confirmed (G.S. 16 A 216 et seq. and G.S. 153A 185 et seq.) Super priority just below ad valorem taxes Excepted from coverage unless paid Pending assessments are not covered matters under ALTA policies 10 year enforcement period from: date due and payable or date of first installment
SUPER PRIORITY ASSESSMENTS Not just your standard Water/Sewer/Sidewalk/Streets Anymore! Maintenance, Sanitation & Demolition Liens (GS 160A 193, 228, 233, and 443) Mowing, trash pickup Public Nuisance Removal of building or dwelling prejudicial to public health & safety Property vacant for a while Often not yet filed Have superpriority (1) lien on the Property with the same priority as unpaid ad valorem taxes -- SUPERPRIORITY. (2) lien on any other real property of the owner located within the city limits or within one mile thereof except for the owner's primary residence, collected as a MONEY JUDGMENT.
Super priority assessments: Judgment lien on ALL property WEEDWACKER DEMOLITION Department of Transportation Easements Parcels A & B
DOT Temporary Construction Easement Parcels A & B In February of 2004, NCDOT recorded temporary construction easement with term of 2 years Seller claims project is complete Insurable? Marketable Title? Verify: 1. Terms of easement just for initial construction or for future maintenance? 2. Construction completed Transportation Corridor Official Maps (G.S. 136 44.51) TCOM filed with the register of deeds no building permit or subdivision submittal approval Transportation authority notified within 10 days. No application delayed more than 3 years from original submittal. If TCOM impact still being reviewed after the 3 year period eligible project must be approved. If no acquisition proceedings initiated within 3 year period treat the real property as unencumbered and free of any restriction on sale, transfer, or use.
Residential Lease/Option Parcel B Residential Lease/Option Parcel B
Lease/Option GS Ch. 47G (Effective 10/1/10) 1 4 family residential dwelling Will be occupied by purchaser as principal dwelling Recorded instrument with all terms, incl 3 day right to rescind Provisions of NCGS Ch. 42 apply Terminable only by mutual agreement or court order/judgment If mortgage default, purchaser can demand refund of payments above fair rental value. Remedies: Unfair trade practice (GS 75 1.1), damages, rescission, equitable or declaratory relief
Contract for Deed GS Ch. 47H Purchase: down payment + 5 or more payments 1 4 family structure to be occupied by purchaser as principal dwelling (incl manufactured home) Recorded instrument, incl. significant disclosures RE title, maintenance, taxes, insurance, outstanding mortgages, 3 day right for purchaser to cancel Seller must own (n/a if seller s primary residence) Any mortgage must be of seller only Terminable only by mutual agreement or court order / judgment. Remedies: Unfair trade practice (GS 75 1.1), damages, rescission, equitable or declaratory relief Option to Purchase
Option Coverage Endorsement to owner s policy Title to fee estate vested in current owner (optionor) Policy coverages: NOT covered: option is valid & enforceable optionee rights vested of record expenses for judicial determination or defense of validity & enforceability of option Specific performance action If optionor s encumbrances at time of exercise exceed option price, requiring enforcement action Option Coverage Requirements: Recorded Option Agreement or Memorandum GS 47 18 & GS 47 119 Option term < 30 years Not mortgage or sale/leaseback Subject to: Terms of option agreement Title matters from attorney s opinion as of policy date
Non residential option notice of intent to exercise Where the lease clearly stated that the tenant was required to give 30 days notice to landlord of his intent to exercise the option, such notice had to be given at least 30 days prior to the termination of the lease. Catawba Athletics v. Newton Car Wash Railroad Car/Spur Track Parcel B
Railroad Car/Spur Track Parcel B Railroads Railroad title rights are created by: Conveyance document (deed, right of way, condemnation) Statutory presumption / implied grant (fee owner acquiescence) Charter of the particular company Statutory presumption (GS 40A 3), depending on location Prescription Interest may be: Right of way (easement) Fee (for limited purpose) Fee Determine railroad company that originally obtained the right ofway and its current status Best research tools: Look for old cases for the particular railway NCDOT maps / info Historical maps, aerial photographs, title documents To determine exact authority: Width Condemnation rights Purposes allowed Seminal case: McCotter v. Barnes (1958) NC Secretary of State (corporations) NC DOT www.bytrain.org US Surface Transportation Board Contacts for railroad companies, such as NCRR (www.ncrr.com) Railroad Museum, Spencer, NC State Library (statelibrary.ncdcr.gov)
City Streets have priority, but cannot seriously impede railroad s ability to use tracks State Roads are governed by NC Secretary of Transportation Private owners: No right to access despite long use Application can be made to the railway company for an encroachment agreement GS 160A 298 GS 136 20 Schwarz & Schwarz, LLC v. Caldwell County Railroad Co. http://www.bytrain.org/safet y/corridorpreservation/encro achfrm.pdf http://www.ncrr.com/ncrr corridor map.html
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Railroads In the News Railway Abandonment
Railway Abandonment Abandonment of right of way (easement) presumptive after 7 years and track removal, but subject to ownership of underlying fee Other Authority G.S. 1 44.1 (abandonment) NC DOT GS 136 44.36A et seq. (Rail Corridor Preservation Act) US Surface Transportation Board, 49 U.S.C. 10903 (permit) G.S. 1 44.2 (ownership of fee) McLaurin v. Winston Salem Southbound Rwy McDonald s v. Dwyer Burial Grounds Parcel B
Burial Ground Parcel B Burial Grounds (GS Ch. 65, Art. 12) Maintenance: Trust Fund with the Clerk (GS 65 91) or HOA mandate Access to descendant, their designee or person with special personal interest in the grave/cemetery. GS 65 101 Removal / disinterment (GS 65 106): governing body (city/county) approval & supervision Notice to next of kin Publication Reinterment in suitable cemetery Certificates in both counties, names of all decedents, party removing and brief description of statutory basis Pay all expenses, including one of next of kin attending ($200) Replace all tombstones
Ground Penetrating Radar Developer s concerns Delays if family objects Using valuable land & concerns about maintenance if retain the graveyard here If remains are discovered after construction begins as a result of construction or agricultural activities, disturbance of the remains shall cease immediately and not resume without authorization of either the county medical examiner or the Chief Archaeologist [emphasis added]. G.S. 70 29
Burial Grounds Title Policy Exception from Coverage Title to that portion of the land within the bounds of burial grounds, together with right of ingress, egress and regress thereto. Watermelon Patch Parcel B
Watermelon Patch Parcel B Seller has grown a patch of rare winter watermelons which he wishes to harvest after closing. Fructus Industriales personalty,must be excepted in deed. Flynt v. Conrad. Fructus naturales trees, grasses and shrubs real property so long as unsevered. Thus, they pass with title to the premises unless expressly reserved Rare winter watermelons in captivity Deferred Agricultural Use Taxes GS 105 277.2 et seq. 10+ acres, agricultural use for past 3 years, average income $1,000+ Owned by individual/entity 4 years New owner must timely re apply! Due & payable on the day the property loses eligibility Pay 3 prior years, plus current year, plus interest calculated based on the due date of each separate years taxes
Agricultural Use Restriction Parcel E Deed in chain contains covenant restricting use of land to agricultural use, hunting and fishing. Grantor in deed was Commissioner under judicial sale. Commissioner has no authority to place restrictions on property at sale unless directed to do so by the court order. White v. Moore (1971) IF COVENANT IS VALID:
Gap Between Parcels Parcels D, F & G Gap Between Parcels Parcels D, F & G 1. Adjoiners referenced in legal descriptions current or in back chain? 2. Visible possession (cleared, fenced)? 3. Paying property taxes? 4. Activity timbering, hunting, fishine, easements, roads, paths, trails? 5. Adjoiner claims? 6. Use buyer anticipates risk of loss on development, delays (main building vs just a buffer area)? 7. Indemnities available from viable indemnitors?
Easement License Parcel G Bass N Dogs R Us Survey reveals locked wooden structure adjacent to lake. Seller identifies it as belonging to Bass N Dogs R Us, a local fishing and hunting group that he has given verbal permission to fish and hunt on the property. Easement? License? To fish or to build a shack? Who owns Shack and its contents? What is they object & refuse to vacate? What rights do hunting dogs have to reside on the property? Moore Oil Co. v. Cleary (1978) The huntin dogs
Timber Deed Parcel G Title reveals timber deed to We Cut Em Timber Company granting the right to harvest standing timber for a period of 10 years commencing January 1, 2004. Seller claims no standing timber remains on the subject tract. Timber is fructus naturales =real estate Timber not cut, reverts to grantor CONTRAST: Contracts for Sale of Timber GS 25 2 107 & GS 25 2 309 Case Law Chandler v. Cameron Williams v. Parsons Wilson v. Scarboro Lumber Co. v. Corey Hawkins. Lumber Co Timber Co. V. Wells Midyette v. Grubbs Fordham v. Eason Thank you