Country Property and Acreage Homesites
searches seek to trace the land ownership to be sure the current owner actually
owns it. Titles can be flawed by
questions of who died first, as when title passed by inheritance. Were there children from a previous marriage 80
years ago has come up several times in my personal experience. Old Spanish Land Grants can get involved in
older areas like the St. Louis area.
cannot really explain it, but I think the story below explains it pretty well. I
first heard it over 40 years ago, and it does explain what they are trying to accomplish
in those arcane title searches.
I hope you enjoy it.
have to love this lawyer...
A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the lawyer three months to track down. After sending the information to the FHA, he received the following reply:
(Actual reply from FHA):
"Upon review of your letter adjoining your client's loan application, we
note the request is supported by an Abstract of Title. While we
compliment the able manner in which you have prepared and presented the application,
we must point out you have only cleared title to the proposed collateral
property back to 1803. Before final approval can be accorded, it will be
necessary to clear the title back to its origin."
Annoyed, the lawyer responded as follows:
"Your letter regarding title in Case No.189156 has been received. I note you wish to have title extended further than the 206 years covered by the present application. I was unaware any educated person in this country, particularly those working in the property area, would not know Louisiana was purchased by the United States from France in 1803, the year of origin identified in our application. For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France, which had acquired it by Right of Conquest from Spain. The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Queen Isabella. The good Queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus's expedition. Now the Pope, as I'm sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume God also made the part of the world called Louisiana. God; therefore, would be the owner of origin and His origins date back to before the beginning of time, the world as we know it, and the FHA. I hope you find God's original claim to be satisfactory. Now, may we have our loan?"
The loan was immediately approved.
(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 email@example.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.
What's New? Lots Is New!
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. firstname.lastname@example.org 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.
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.
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
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
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
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
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
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
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
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.
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.
Thanks for reading.