Country Property and Acreage Homesites
All About Title Insurance
by John Price on 09/25/11(Really, just a little about Title Insurance)
When you buy a house or piece of land, everybody tells you to be sure you have clear title and to get title insurance. If you are getting a loan, your bank will require it. What is this all about?
There is an entire industry built around proving land ownership, and in a nutshell, that is what title insurance is all about. You actually get an insurance policy from a private company that tells you that you own the land. To issue the policy, the first thing they have to do is confirm that the person selling it to you owns it.
It sounds pretty simple. Either the people selling it to me own it or they don’t. It’s not that simple. Nearly no one totally owns their land or home. In fact I would almost say NO ONE fully owns their land or home. That may seem like a strange statement, but it is true. The ownership is not absolute.
Let’s suppose you buy a house in a subdivision in July from an honest person who has already paid off his bank. It sounds like he owns it. I can guarantee you there are exceptions to his ownership. He owes 6 months taxes, but cannot pay the bill because the bill is not out yet. I can almost guarantee you there is some kind of utility easement over his lot. If he has electric to his home, there is an easement. And I can almost guarantee you that he cannot do what he wants with his home. There are likely to be subdivision covenants and restrictions. The first thing that happens to issue you title insurance is a search of land records. A good search should discover those easements, subdivision restrictions, etc. And they are important in the sense they in some way limit what you can do with your own property. What I have described is an everyday simple title search and what is likely to be found on a house or piece of land considered to be “in the clear.”
Unfortunately, an honest person with the best intentions can have bad title. You are about to buy a house and what sold you is that new deck. The owner paid the contractor, but did not know the ins and outs of the law. What he does not know is that his contractor did not pay for the lumber in that new deck. The lumber yard owns part of that house and the seller may be totally innocent. But there is a title flaw. That is the kind of thing title insurance typically protects you from as a practical matter.
But title insurance can also protect you from total disaster. I have seen only a handful of extreme cases in my 40 plus year career, and they would have been disasters without title insurance. In one case, we bought 300 acres and subdivided it. I got a call from a lady asking why my "for sale" sign was on her land. I had a new survey and title insurance and thought “it cannot be true”, but I called the title insurance company and reported a possible claim on my policy. Sure enough there was a mistake in the description of the land and she owned it, not me. What caused the mistake is not important. What is important is that there was a mistake. The title insurance company bought the land from the lady that owned it and gave it to me. I was made whole because I had a good title insurance policy.
Another case was even worse and also involved about 300 acres. We purchased and started subdividing. The adjoining land and the land we bought both had very long term owners and both were big parcels. By pure luck, both were changing hands at about the same time and being surveyed at the same time. My surveying was actually subdividing at that point. My boundary had already been surveyed and insured. Two different survey companies found themselves on the wrong side of each other. It was a 30 or 40 acre mistake. My title company bought 5 or 6 lots from me at near retail because I did not own the land and they had insured me that I did. That is not many cases in 40 years, but I hope I made my point.
I have seen all kinds of things that have to be proven before closing in order to have good title insurance. Most of the strange ones have to do with land that has been in the same family for a long time. Produce proof that Bill’s first wife died before she had children. She died in 1930. What? The title company is worried about missing heirs that might have a claim. Normally these kinds of issues get resolved with an affidavit of some kind.
The list can go on and on. There are two things you really need to remember on most transactions. 1. Get title insurance. 2. Read the title insurance commitment. READ IT! It might say Joe has hunting rights for 50 years. If you have questions about a document referenced in the insurance commitment, read and question that document. Don’t be paranoid, but check it out with your agent, your title company, or an attorney. If it is land, make sure there is a fairly recent survey. I have seen absentee land owners lose as much as 50 or 60 acres because a neighbor was farming it. All may have been innocent, but in the case I remember that farmer owned the land even though the deed said the absentee owner owned it. Our survey discovered the problem.
In looking at older properties on private easements, check out the easements. I know of one case where the buyer checked it out and the proof was not there. A neighbor, who had the right, gave that buyer and his wife a 30 foot easement for road purposes. Yet the traveled drive was only about 12 feet wide. Years passed, that neighbor died and his ground was split in half. The road was still only 12 feet wide and a new buyer bought an acre 30 years later, with the hopes of building 4 new homes. The original buyer warned him that it was only a 12 foot wide prescriptive (Prescriptive means basically it has been used for years and is there whether there is an official record or not.) That 30 foot wide easement is for me, and not for the public. I’ll work with you and grant you additional rights, but you don’t have them now. But you have to work with me on how many houses and house sizes. The inexperienced developer did not listen. The original buyer, and by now you probably know it was me, came home from a business trip to find his yard totally destroyed with new road construction and mature trees cut down. The trees were both within that strip and outside it. I was not very happy. Ultimately a judge agreed with me and it was a 12 foot wide easement for anyone but me and did not meet code for redevelopment. Did his title insurance company do its job? I suspect they did, and I suspect he did not get advice on what the documents meant. What is the purpose of this story? You have a use in mind for your purchase. Be sure title conditions fit that use. His title was perfectly good for one house, but it was fatally flawed for 4 houses.
One other thing about title insurance; and this will shock you. When buying, you might have something against you personally, that means you cannot get good title insurance. Joe Smith is buying a house. Joe Smith has a lien from the IRS. He cannot get good title to the house he is trying to buy. Joe Smith is horrified as he has always paid his taxes. The title company steps in and tells him of the problem. It turns out that the Joe Smith who owes the IRS has a different middle name and lives in a different town. Not the same person. The title company helps get those kinds of things cleared up.
Check out our properties at www.priceacreage.com. We keep our titles clean, but they are never totally without some encumbrance. There will normally be subdivision covenants, telephone easements, electric easements, etc., that in some way limit your rights to the property.
Land and home ownership is the American dream. Just a little prudence and common sense on title issues can insure you it does not become a nightmare.
Email me with any questions at johnvprice@gmail.com and I will try to answer them. But I am not an attorney and cannot give legal advice. I’m just a guy with lots and lots of experience. If I cannot answer your question, I can hopefully point you in the right direction.
Thanks for reading.
John Price
News Flash! Great new financing and not my normal article.
by John Price on 11/06/10
What's New? Lots Is New!
New Financing
Hot off the press! One of my banks has just lowered interest
rates on both lot loans and construction loans.
Our published financing charts are
out of date. This interest rate reduction drops your
payments about $21 per month on a $50,000 loan.
I have discovered new financing from a great local institution that will make your lot loan based on a 30 year amortization. This reduces payments nearly $40 per month on a $50,000 loan. Plus they have a great construction loan program with low closing costs.
I have other great programs also. Call or email me for details. johnvprice@gmail.com or 314-827-5263. There are loans available that are likely to fit your needs.
New Homes Started and Finished
A new home just started on lot 14 at The Hollows at Frisco
Hill. It is really looking 
good. Lots 12 and 20 are still under construction.
A new home was recently finished on lot 76 at Stonebridge Place. The Family has moved in. A new home is nearly finished on lot 52 at Stonebridge Place. They should be in before Thanksgiving. And a new home has started on lot 69 of Stonebridge Place.
And finally a new home is about to start at The Falls at Little Creek. They should be digging the foundation this week.
New Properties
Red Oaks was recently paved and the restrictions are about to be recorded. It is two acre tracts just north of Antonia on Old Lemay Ferry Road. A 4 lot subdivision with a country lane feel. Very Private.
Spring Forest Valley. It has
for sale signs but 
has never been advertised. It is a "Coming Soon", even
though a few lots are already sold on Prairie Hollow Road. Water and
sewers. Not many lots available. New road should start soon. Call me for
details.
10 acres at Antonia. Wow! 10 acres. On Old Lemay Ferry Road North of Antonia. Call for details or visit www.cannonhouseproperties.com. This is a rare find. At least 2 great home sites and maybe more. I cannot sell less than 10 acres because of subdivision regulations, but you can subdivide into a couple of parcels. I can help walk you through the process.
Check out www.priceacreage.com for other properties.
And thanks for reading.
John Price
314-827-5263
All About Protective Covenants and Restrictions
by John Price on 11/04/10
The main purpose of subdivision restrictions is to protect the
appearance, property values, and peace and quiet in a subdivision. In order to do this, the developer limits, or
restricts, what a property owner can do with his property. Most people don't like to be restricted, but
they want their neighbors restricted.
From a developer's standpoint it is a balancing act.
By way of example, I am going to explain the highlights of restrictions on one of our subdivisions, The Hollows at Frisco Hill. And I will explain our thinking behind some of those provisions. If you want to follow along with the original document, you can download it from Google Docs. The direct link is https://docs.google.com/fileview?id=0B_Jjps9T4pqdNTIwNWJlMWMtNmE2My00YTdlLWI2OWMtMzYyNDMyZGRjZjhh&hl=en
We have used the same basic set for years, with modifications to fit specific circumstances. We are always walking a tight rope between protection and freedom.
Even though we wrote them, we are often asked, what they mean.
The only person who can really say what they mean is a judge. Restrictions are a private contract and the
enforcement takes place in Civil Court. Either
you or the property committee will have to sue in order to enforce them, but I
don't remember ever seeing it go nearly that far. A subdivision generally attracts like minded
people who want to follow the rules they agreed to. And small acreages, in particular attract
like minded people who want a little freedom and privacy. As you read these, please keep this in mind.
Paragraph 1. An architectural
control committee has to approve the building plans. We are
not trying to limit architectural creativity or tell anyone what style of home
to build, but trying to avoid box-like homes which take away from the beauty of
the subdivision.
Paragraph 2. This
paragraph details the minimum house size and prohibits certain styles and
certain materials. Nowhere does it say
what kind of material you have to use, rather it spells out some specific
materials that cannot be used.
Paragraph 3. Each lot
must have enough off street parking so that parking on roads is limited. We like that country lane feel, and it is
lost if people park on the street.
Paragraph 4. No
mobile homes.
Paragraph 5. Limits
on the types of animals kept on the property.
Paragraph 6. The use
of the land is limited to single family homes, except we do allow certain types
of in home business that do not disturb the neighbors. For example, the architect that designed my
home had his office in his home in a ritzy part of west St. Louis County. My wife and I visited him there once during a
yearlong project. I don't think his
neighbors cared and he would be welcome at The Hollows at Frisco Hill. More and more real estate agents work out of
their home and occasionally have to meet a client at their home. They would be welcome.
Paragraph 7. There is
a time limit on when you have to complete your home once you get your building
permit. I have seen very expensive homes
go up in 5 or 6 months, but everything has to fall into place. My home took a year. Our restrictions allow 20 months and
generally follow Jefferson County rules.
A building permit is good for a year and an extension for another 6
months is automatic. If not done in 18
months, the homeowner may find himself before a judge. We allowed 20 months with the intent that
seasonal issues might require more time for landscaping.
Paragraph 8. We
severely limit re-subdivision
Paragraph 9. It
prohibits front yard mechanics, storage of garbage and that sort of thing. The purpose is to keep the subdivision
looking neat.
Paragraph 10. It is a
little more on general appearance.
Paragraph 11. Stop
noisy 4 wheelers.
Paragraph 12. It is 1
and ½ pages designed to insure all sewer systems are properly maintained and
working properly.
Paragraphs 13 through 17.
Those go into subdivision governance and assessments. We try to set the assessments at a reasonable
amount to do the job, but give power to the owners to change them if we
estimated wrong. There are two items in
paragraph 14 that might need some explanation.
Each lot gets two votes. This
provision was the result of a customer suggestion about 20 years ago. "I want to vote differently than my husband
and you do not provide for that." Now
there are two votes per lot. If you
live there you get two move votes per residence. People who actually live in the subdivision
have much more invested than someone thinking of building in a year or
two.
Paragraphs 18 and 19.
They discuss easements necessary for utilities, etc.
Paragraph 20. It
explains who has standing to enforce the restrictions.
Paragraph 21. This
paragraph explains how the owners can change the restrictions should
circumstances change which the developer could not envision.
Paragraphs 22 through 25.
These are esoteric legalistic items to help make the entire document
enforceable.
Paragraph 26. This
one was very important to me. Remember
my comments on control versus freedom?
This paragraph explains the purpose of the architectural control
committee and hopefully forces them to allow reasonable freedom in design.
Paragraphs 27 through 30.
These paragraphs are more legal requirements and initial governance.
Appendix A is specifications for equipment required by the
Rock Creek Sewer District and is informational in nature.
I'm going to repeat myself, because I feel this is an
important point. My partners and I wrote these restrictions, but what do they
really mean? The only person who can
really say what they mean is a judge.
Please check out www.priceacreage.com
and www.cannonhouseproperties.com
for information on various properties.
Most have restrictions, but there is the occasional nearly unrestricted
property. You can check out this and
other articles at http://www.priceacreage.com/info-blog.html.
Thanks for reading.
John Price
314-827-5263
What to expect on a loan application and don't get mad at the bank
by John Price on 10/11/10
I have recently had some customer concerns on what they felt were intrusive requests for information from their banks.
Loans on my product are readily available, and the banks I recommend want to deal with you; but a few things have changed over the last several years.
In the old times, banks were not concerned about income if the collateral was good enough. I recently had a customer wanting to borrow $60,000 on a house in the clear worth about $300,000. He wondered why the bank even cared about his income. He felt insulted that they even asked. The answer is government regulations. The banks have to prove up to government regulators that he can pay for his loan. It is just a change in the times that has been in the making for 20 or 30 years. They don't want a loan that the borrower might not be able to pay back, no matter how good the collateral. And the change in attitude accelerated dramatically with fraudulent appraisals, fake income, and other issues that have now been uncovered as total scams. It is a government crackdown on fraud.
I had another customer upset that the bank wanted to see his social security card. It is part of the Patriot Act and an effect of 9/11. I mean, this guy is as Missourian as they come. But the banks have to have their paperwork because of the government regulations. I understand why the government needs this, but I also understand my customer's viewpoint.
So what should you expect when you apply for a loan? You should expect to have to fill out a loan application that looks a lot harder than it is. It is a standard form that all banks use and can be done in 20 minutes if you do not freeze up on details. A good banker will make it take 20 minutes versus 2 or 3 hours. And you should expect to have to provide 2 years tax returns.
That is about it. Good credit, a loan application, and 2 years tax returns should do it. Maybe some pay stubs.
If the bank wants much more, go to another bank, and go to a local bank. The local banks still have some common sense.
But don't get mad at your bank. The government makes them ask you for this information because of all of the abuses in the past.
If you have any questions on bank financing or general real estate, feel free to contact me.
Check out my properties at www.priceacreage.com and www.cannonhouseproperties.com.
Thanks for reading.
John Price
Do You Need an Architect to Design Your Home? Part I
by John Price on 09/14/10
If you are like many of my customers you are doing two things. You are looking through books and books of house plans and you are trying to find that perfect small acreage to build that dream home.
Depending on where you want to live, I suggest finding the land first. You can modify house plans, but cannot do that much to change the land.
Many of my customers have an idea on the type of setting they want and buy the land. Then they get a builder to work with them and go from there. A few get an architect.
The question is; do you need an architect? My answer is maybe. Without an architect you will need to buy a set of floor plans from someone. At the minimum you will need a highly qualified draftsman to produce a set of plans for both the builder and for government regulators.
What does an architect actually do for you?
I have personally worked with two different architects on 3 different projects. The first two projects were an addition and a remodel on a home built in about 1880. It was money well spent. Putting a pool, porch and patio on a farmhouse well over 100 years old and having it look good is no easy task. Building a master bedroom suite in the same house wasn’t easy either. Those were my first experiences. I had a very young architect, just out of college, with an upcoming reputation for working with century old homes in Lafayette Square in St. Louis. I got him before he got famous so could afford him. This was 25 years ago. You can check out his work by visiting www.priceacreage.com. Look for the 1880's farmhouse for sale and you will see pictures of his work.
When I built my new home a couple of years ago, I hired an architect. He took our concepts, pictures, desires, etc. and turned them into a set of house plans.
I still have not answered the question of what does an architect do? It’s a little like answering the question of what does a doctor do. It is anywhere from saying "It’s ok. Take two aspirin" to saying "You need serious tests immediately."
It can be looking over your shoulder to make sure you make no serious mistakes. It can be conceptualizing the entire project. It can be not much more than the job of an expert draftsman which is to produce a set of legal and useable house plans.
They charge depending on the services contracted for. The charge might be an hourly rate, in which case you should be careful in how attentive you are and how much homework you do, so as to not run up the charges. Sometimes they charge as a percent of estimated construction, in which case they will not let you be inattentive as it costs them more. And I learned that some charge based on the size of the home. They might or might not supervise construction. It is important that you clearly define the relationship up front.
I have had many happy customers who never ever even talked to an architect and they built beautiful homes. But I often hear, "I wish we had known to do this differently."
As I said before, I had an architect on my new home. Lots of meetings and lots of frustration, but I personally feel he kept us from making some mistakes and I personally feel he added some really nice touches my wife and I would have never thought of. We had only a vague idea of what we wanted the house to look like, but we knew what kind of general feel and what kind of living space we wanted. He helped us take those somewhat vague ideas and turn them into a plan.
I cannot think of all the nice touches, but we have a window that gives natural light on the landing going to our finished basement. I would have never thought of that. My home office which is in the finished basement area has four features I love. It has a wood burning stove. It has a very large and open entry door so I can see outside and watch wildlife while I work. (I'm in a basement.) It has an exhaust fan so I can indulge in my nasty smoking habit without smelling up the house. And it has really cheap and durable flooring so a contractor can walk into my office with muddy boots and I can relax knowing all I need is a mop. And I forgot one. The office can be locked totally separately from the house so I could give a contractor or book keeper a key to my office and know our home was still private.
My wife can tell you about touches she loves. But there is one more issue. The house is a series of rectangles and was easy to build. That drove the cost per square foot of construction down.
Even though I paid the architect plenty, I think he cost me little to nothing and may have actually saved me money.
So do you need an architect? I'm back to my firm MAYBE. It depends on how much you are spending, how well you have previously defined the house you want and how much help you need.
I felt this issue was enough out of my technical range of expertise that I ran the first draft by three architects I trusted. They came back with various responses; one actually writing his own article. I respect all three gentlemen and want to include their comments in a Part II to come later.
A good one will only try to sell you a range of services that he thinks you need. It could be anywhere from total design and construction supervision to just looking over your shoulder for a cost of a few thousand or maybe even a few hundred dollars for a couple of consultations.
You will pay for the time you use. The architect has to make a living. But a good one will add enough value that your total extra cost may be next to nothing.
Be sure to check out my properties for custom homes at www.priceacreage.com and www.cannonhouseproperties.com. You can find this article and others relating to creating your dream home at http://www.priceacreage.com/info-blog.html.
Thanks for taking the time to read this. Email me with any follow up questions at johnvprice@priceacreage.com.
Regards,
John
