Now, in case you haven't noticed by now, I'm a bit fond of where I'm from.
As a result, I knew exactly where I was going with my hypothetical purchase of property. Since you should be somewhat familiar with the dynamic of Lufkin already, I'll incorporate the reasonings for my purchase as we go. The type of property I'm gunning for back home is large-scale industrial property.
Now, here me out before you write this off. I am aware that plants and manufacturing centers have become either obsolete or relocated to metropolitan areas. I've seen the ghost structures in towns all throughout the state that directly reflect the direction their hometowns have gone in. I know that little fish cannot survive for long on their own in the modern corporate climate.
And those are the exact reasons I'm hypothetically purchasing these properties.
If you'll recall, we previously discussed the economic misfortunes of my hometown over the years (2009 median household income ~$12,000 below Texas avg.). One of the direct causes of these turns is the closing/buying out of, now, all of our major manufacturing giants in town. With the Monday sale of Lufkin Industries to GE, all four of the industrial titans that built the town have either closed or sold. And, although no decisions have been made on the future of Lufkin Industries in GE's business plan, most Lufkinites can tell you that it won't take long for LI to disappear from its namesake town.
Casualties of these turnovers are the MASSIVE plants they leave behind after discontinuing operations. Among the empty steel towers are two huge paper mills (Southland Paper and Champion, Inc.), a fully functional compound that can produce anything possibly produced from timber (Temple Inland), and (potentially) two massive plants that serve as the world leader in pumping units & their replacement parts (Lufkin Industries).
Although all of these businesses have fallen prey to corporate giants, none of their potential products are even close to obsolete. Combine the potential to produce useful products with the certainly severely discounted "ghostplants" that can produce them...you might be on to something.
Oh, but there's more.
Lufkin is currently at its highest unemployment rate this millennium, sports a staggering 80% of 25+ year olds without college educations, and has risen in low-income housing demands every year seemingly ever. What can unemployed, uneducated, and unfortunate individuals do? They can work in manufacturing (currently 22% of jobs in Lufkin). I'd even incorporate a co-op plan at Lufkin High School that trains seniors in said jobs, automatically places them upon graduation, and fast tracks them for advancement. It's a seemingly great way to pump money and jobs back into the town I love so much.
The lone issue? What company is going to actually enact my plan? If these plants aren't good/convenient enough for the corporations that acquired them, why would they be good enough for someone who has the means to acquire them themselves?
The answer isn't quite clear to me yet, as my reasonings tend to turn subjective. However, I've been working on figuring it out for three years now, and I would love nothing more than to enact these plans one day.
Until then, those empty metal graveyards serve as a personal reminder of what was and what I believe still can be.
Figures in this entry are courtesy of city-data.com.
Wednesday, April 10, 2013
Foreclosures
One night recently, as I was mindlessly browsing the wide world of the sports inter webs, I stumbled across the story of Robert Swift, a former high school phenom turned top NBA draft pick. Swift's career was less than memorable which, coincidentally enough, ended up foreshadowing his fortunes in real estate.
As you can see here, Swift, as many newly wealthy, young athletes do, spent a significant amount of his rookie contract money on a lavish new home in his new city. Swift's new, 1.3 million dollar home outside Seattle, purchased in 2006, was representative of Swift himself: shiny and new, rare and valuable, and...short-lived and financially burdening.
You see, poor Robert flamed out in 2008, just four years after being drafted and, more importantly, at the conclusion of his one and only NBA contract. After hanging on for several years, Swift finally lost his home to foreclosure. The combination of his loss of income and the irresponsibility of the original purchase serving as dual knock-out punches.
Here's where the story gets interesting:
After the home was foreclosed on, Swift refused to leave it. Even after the bank resold the property (for about half the price Swift paid), Big Rob would not leave. The new owners reportedly sent him letters, visited the home, and even went to the door on multiple occasions, all to be completely ignored by the owner-turned-squatter.
After a threat of judicial foreclosure, Robert Swift finally left the home he no longer owned. Unfortunately for the new owners, Robert didn't take everything with him. Reports from the initial entry into the home cited "pizza boxes and beer bottles in the kitchen, walls punched in around the house, piles of animal feces and rounds of live ammunition" strewn throughout the house.
As for Robert Swift, his career never amounted to much more than his belongings in his former home.
Wednesday, February 20, 2013
"You'll Love Lufkin!"
Yep, that's our motto.
Whether it applies to you or not, there is no denying that Lufkin is certainly a..."unique" place.
Founded in 1882 as a depot along a misrouted railroad, Lufkin has grown into the county seat of Angelina County and the largest "city" in Deep East Texas. I use city as a relative term, because our population sits at just a shade above 35,000. To find us, you have to venture deep into the thick pine forests of east Texas. Once you arrive at the intersection of Interstate 59 and US Highway 59, about two hours north of Houston and 45 minutes west of the Louisiana border, you'll find enough of a break in the trees to notice civilization that seems to be void of much of the surrounding landscape. That's us.
Lufkin houses several noteworthy locations, such as: the Texas State Forestry Museum, The Medford Museum of Western Art, and Ellen Trout Zoo. The Zoo is likely the most remarkable of the attractions that seem out of place in town, as it houses over 800 animals and has been hailed as the "best small town zoo" in America. I only elaborate on this so I can include two events in the Zoo's history that embody some of the strange happenings that seem to be synonymous with my hometown. In 2002, Ellen Trout Zoo opened their crown jewel: the hippo exhibit. We proudly boasted that our town had only the second ever hippo exhibit west of the Mississippi River, a truly remarkable feat. Unfortunately, several years later, a visitor lobbed an inflatable ball into the hippo habitat. The hippo ate the ball and suffered fatal internal injuries as a result. Secondly, in the 70's, the zoo housed two beautiful whitetail deer in one of their earliest exhibits. Said exhibit was promptly closed, however, due to a crazed hunter shooting the buck in the exhibit, cutting through the fence, and stealing the poached deer as a prize. That actually happened.
Back to the town. Lufkin was once a traditional east Texas small town, driven by agriculture and resource based industry. We boasted two major paper mills, Temple-Inland, a fortune 500 building and packing materials production company, and Lufkin Industries, the largest producer of long-haul trailers and one of the largest oilfield equipment producers in the world. However, as the changes of the new millennium have implemented themselves, Lufkinites have seen the closure of both paper mills, the downsizing, merger, and relocation of most of Temple's services, and the product base of Lufkin Industries reduced to only replacement gears and maintenance parts for trailers and derricks.
Whether it applies to you or not, there is no denying that Lufkin is certainly a..."unique" place.
Founded in 1882 as a depot along a misrouted railroad, Lufkin has grown into the county seat of Angelina County and the largest "city" in Deep East Texas. I use city as a relative term, because our population sits at just a shade above 35,000. To find us, you have to venture deep into the thick pine forests of east Texas. Once you arrive at the intersection of Interstate 59 and US Highway 59, about two hours north of Houston and 45 minutes west of the Louisiana border, you'll find enough of a break in the trees to notice civilization that seems to be void of much of the surrounding landscape. That's us.
Lufkin houses several noteworthy locations, such as: the Texas State Forestry Museum, The Medford Museum of Western Art, and Ellen Trout Zoo. The Zoo is likely the most remarkable of the attractions that seem out of place in town, as it houses over 800 animals and has been hailed as the "best small town zoo" in America. I only elaborate on this so I can include two events in the Zoo's history that embody some of the strange happenings that seem to be synonymous with my hometown. In 2002, Ellen Trout Zoo opened their crown jewel: the hippo exhibit. We proudly boasted that our town had only the second ever hippo exhibit west of the Mississippi River, a truly remarkable feat. Unfortunately, several years later, a visitor lobbed an inflatable ball into the hippo habitat. The hippo ate the ball and suffered fatal internal injuries as a result. Secondly, in the 70's, the zoo housed two beautiful whitetail deer in one of their earliest exhibits. Said exhibit was promptly closed, however, due to a crazed hunter shooting the buck in the exhibit, cutting through the fence, and stealing the poached deer as a prize. That actually happened.
Back to the town. Lufkin was once a traditional east Texas small town, driven by agriculture and resource based industry. We boasted two major paper mills, Temple-Inland, a fortune 500 building and packing materials production company, and Lufkin Industries, the largest producer of long-haul trailers and one of the largest oilfield equipment producers in the world. However, as the changes of the new millennium have implemented themselves, Lufkinites have seen the closure of both paper mills, the downsizing, merger, and relocation of most of Temple's services, and the product base of Lufkin Industries reduced to only replacement gears and maintenance parts for trailers and derricks.
Lufkin Industries' "Rudolph the Red-Nosed Pumping Unit, seen in action here
The town has seen major demographic changes as a result of this. We now feature a <50% married couples rate and a near 15% rate of households with a single mother. The median income of Lufkin sits at a meager $30,922, the per capita income has fallen to $17,613, and almost 20% of the population lives under the poverty line. Despite these staggering stats, the people of our town love and take care of one another. As a result of this ever-changing economic environment, Lufkin's younger demographics are starkly different from the older folks in town.
The best example of this new age is seen at Lufkin High School, the lone high school serving the city. Upon dissecting the student body, you would find that the caucasian, hispanic, and African-American populations each account for almost exactly one-third of the students, each. We boast the only 5A classification for any high school within two hours of us, regardless of direction. The Lufkin Panthers boast a proud athletic tradition, producing state championships in all three major boys sports and producing such football stars as Dez Bryant, Reggie McNeal, and Jorvorskie Lane. Although I concentrated my athletic career in baseball, Abe Martin Stadium (Lufkin's football stadium) is my favorite of our athletic landmarks due to its iconic status and my memories of never missing a home game for 18 years.
One of many packed playoff games at Lufkin's Abe Martin Stadium
Many of my other fond memories of home come from the landscape and all that comes with it. For an outdoorsman, Lufkin serves as an ideal location to do a little bit of everything. The abundance of water, foliage and plant life, and high levels of undeveloped land surrounding the town harbors a vast array of game. Whether you fancy deer, duck, hog, varmint or even gator hunting, you can find a place to do it within 30 minutes of your home. If you're searching for gators, you'll find yourself at either Toledo Bend, the reservoir that straddles the Louisiana-Texas Border, or Lake Sam Rayburn, the largest lake located wholly in Texas. Either of these places provide world-class freshwater fishing and have served as hosts of some of the most prestigious fishing tournaments in existence. I prefer Rayburn, as it is much easier to engage in watersports there without damaging your boat.
Lake Sam Rayburn from above (the Lufkin side)
Although all these other places are great, I've saved my absolute favorite location in Lufkin for last. If you venture into the old parts of town that have become a bit run-down as Lufkin grew outward, you'll find Taylor Bros. Paint and Floor Covering, my family business. Entering its 85th year of operation, Taylor Bros. has served as the life-blood of my family since soon after our arrival in Texas. In the 1910's, my great-great-grandfather moved his family from Tennessee, deciding to settle at the community around the railroad junction in Lufkin. Fast forward about 15 years: the eldest of the six Taylor children, my great-grandfather, proposes an idea to his three brothers that the four of them open a paint store in town. The four brothers, all of whom worked into their eighties, forged what would come to be known as the most respected paint and floor covering business in east Texas. Over the 85 years, 17 different Taylor men, including myself, have worked at the "shop" in some different capacity, which is now owned by my father, uncle, and great-uncle. We are responsible for some venues that Aggies are very familiar with, having done the paint and floor covering work in the Zone Club in 1999 and doing the same work on the upcoming RC Slocum Nutrition Center, next to the Bright Complex. I grew up in the shop, learned just about everything I know about life there, was assumed to have and expected to maintain an image of hard-working, respectful, and fiercely loyal that had become synonymous with our last name there, and spent invaluable time with our sprawling, now 40+ member family tree there. The shop is the nearest and dearest place to my heart and it's really not even close. The pride I feel that it is still around and still stands for everything my great-grandfather wanted it to means more to me than I could ever imagine. Though it isn't something that will immediately come up in others' discussions of Lufkin, it warrants inclusion in this one. If you ever stop through town, feel free to drop in and say hello. The door is always open, there is always great conversation and visitors to chat with, and there's always a complimentary cold beer (or two, maybe three..)
Google Earth screenshot of Taylor Bros. Paint and Floor Covering
Wednesday, February 6, 2013
Thoughts on a Guest Lecturer
Last Monday, my finance class had the privilege of hosting two guests speakers during our lecture. These two speakers, Dr. Samuel Harrison and Mike Gentry, spoke of their experience with real estate development and contractual issues that pertain to topics we were covering at the time. After listening to the business partners tell of their current real estate deal, I was able to further confirm my growing suspicion that I might be interested in a career in real estate.
Harrison and Gentry came to speak with us about a commercial development project they are in the process of brokering. The site of the development is a plot of land, owned by Harrison's family (his great-grandfather won it in a poker match!), at Highway 6 and Briarcrest. After receiving an offer worth consideration, Harrison's family decided to move forward with the development of their property. As of now, the plan for commercial development includes a hotel and "super" gas station.
At this juncture, Harrison enlisted Gentry, a real estate attorney, as counsel moving forward in the deal. As seems to always be the case in development deals, several hurdles presented themselves along the path to the current point. The notable setback that was discussed involved the removal of oil pipeline infrastructure that was no longer in service. During the removal process, a small amount of oil was spilled onto the property. Though not catastrophic in its quantity, the spilt oil proved to be potentially hazardous enough to warrant concerns about foundation issues on the land. The end result? Complete soil replacement, costing $250,000. As tends to happen, this issue managed to trigger another one. This second roadblock required a search of the property for historical artifacts, due to its proximity to a historical site, the town of Boonville, TX. Upon solving this problem with no issues, the project was able to continue smoothly.
In conjunction with their field experiences, the two men spoke of the contractual elements of their deal. They explained escrow to us, a topic I had always been unclear on, and the inner-workings of negotiating development deals. I learned that escrow is a bit of a cousin of layaway in principle, requiring a buyer to provide a seller with payment in return for exclusive rights to the property during negotiation. In said negotiation, things like feasibility tests and zoning rights are handled, culminating in the buyer's decision on whether or not to move forward with the deal. The two men provided us with a few seller's tricks in the negotiation that serve to skirt as much of the costs as possible towards the buyer (that I'll hopefully get to carry these out someday), as well as other issues, like dealings with TxDOT (my grandfather's employer for 40 years.)
Everything about this lecture managed to pique some part of my interest. My personal experiences with land transactions were comparable to our lecturers circumstances, but differed enough to provide with with some full circle perspective. The legal issues also fascinated me. I've always been one to thoroughly examine anything I'm given, searching for loopholes, caveats, or any inaccuracies to use as ammo in an argument. The "seller's tricks," as I've been calling them, were a perfect example of something I would do in the situation.
As this class progresses, I'm realizing that I would love, as well as be suited for, a career in real estate. Stay tuned to see if anything changes!
Harrison and Gentry came to speak with us about a commercial development project they are in the process of brokering. The site of the development is a plot of land, owned by Harrison's family (his great-grandfather won it in a poker match!), at Highway 6 and Briarcrest. After receiving an offer worth consideration, Harrison's family decided to move forward with the development of their property. As of now, the plan for commercial development includes a hotel and "super" gas station.
At this juncture, Harrison enlisted Gentry, a real estate attorney, as counsel moving forward in the deal. As seems to always be the case in development deals, several hurdles presented themselves along the path to the current point. The notable setback that was discussed involved the removal of oil pipeline infrastructure that was no longer in service. During the removal process, a small amount of oil was spilled onto the property. Though not catastrophic in its quantity, the spilt oil proved to be potentially hazardous enough to warrant concerns about foundation issues on the land. The end result? Complete soil replacement, costing $250,000. As tends to happen, this issue managed to trigger another one. This second roadblock required a search of the property for historical artifacts, due to its proximity to a historical site, the town of Boonville, TX. Upon solving this problem with no issues, the project was able to continue smoothly.
In conjunction with their field experiences, the two men spoke of the contractual elements of their deal. They explained escrow to us, a topic I had always been unclear on, and the inner-workings of negotiating development deals. I learned that escrow is a bit of a cousin of layaway in principle, requiring a buyer to provide a seller with payment in return for exclusive rights to the property during negotiation. In said negotiation, things like feasibility tests and zoning rights are handled, culminating in the buyer's decision on whether or not to move forward with the deal. The two men provided us with a few seller's tricks in the negotiation that serve to skirt as much of the costs as possible towards the buyer (that I'll hopefully get to carry these out someday), as well as other issues, like dealings with TxDOT (my grandfather's employer for 40 years.)
Everything about this lecture managed to pique some part of my interest. My personal experiences with land transactions were comparable to our lecturers circumstances, but differed enough to provide with with some full circle perspective. The legal issues also fascinated me. I've always been one to thoroughly examine anything I'm given, searching for loopholes, caveats, or any inaccuracies to use as ammo in an argument. The "seller's tricks," as I've been calling them, were a perfect example of something I would do in the situation.
As this class progresses, I'm realizing that I would love, as well as be suited for, a career in real estate. Stay tuned to see if anything changes!
Wednesday, January 30, 2013
Public Restrictions on Real Estate
Expounding on my previous blog post, this entry will examine four common public restrictions on real estate and attempt to explain each one. These public restrictions, property tax, power of eminent domain, police power, and escheat, differ from private restrictions due to the lack of a second individual/company as a property owner. These restrictions deal solely with restraints and rules enforced between a property owner and the government.
1. Property Tax
As you likely knew, the government maintains the right to levee taxes on the owner of any piece of property. These taxes, known as property taxes, serve as one of the governments largest sources of revenue. In order to enforce these taxes, the government must assess the value of a piece of property through an estimation of the market value of the property in question. From this estimate, the government develops and budget and tax rate, calculates the tax as a percentage of the property value, and bills property owners for the tax.
2. Power of Eminent Domain
The power of eminent domain refers to, quite simply, the government's right to possess property for public use, regardless of the owner's desires. In practice, the government notifies the property owner of its intentions for the property through condemnation, determines the value of the land based on just compensation, and possess the property in exchange for the amount determined. This practice is a slippery slope, however, as the government can bend the definition of public use in condemnation, as well as potentially low-balling a property owner in their determination of just compensation. Citizens in my home town are up in arms over the practice of eminent domain to possess their land for construction of the TTC/Interstate 69...you can view an article from our paper, The Lufkin Daily News, here.
3. Police Power
Police power is somewhat of a self explanatory restriction through its name. Although not referring to the actual police force, the government does maintain the right to police any piece of property. This right serves as a means for the government to protect the public health, safety, morals, and general welfare of the public. Through this power, the government regulates the practices of a piece of property, relative to the adjacent properties, community, and jurisdiction of the enforcing government entity. These restrictions, usually maintained and enforced by a city, generally are influenced by factors such as: projected economic development, population gain, transportation and infrastructure feasibility and convenience, public facilities and land use plans, and a city map. These factors all play in to a city's determination of how certain pieces of property can and cannot be used. This practice, known as zoning, specify how any given piece of property may be used in the city's plan for itself. Once usage for a piece of property is determined, it is sorted into its corresponding zone. Zones typically include property zoned for usage as: residential, commercial, or industrial. Violations of zoning restrictions are typically enforced by mandatory dedication (allocating certain portions of property for public use to obtain approval), impact fees (promises to pay for a portion of/all costs of providing public services to a property), and takings (power of eminent domain without actual transfer of ownership of the property).
4. Escheat
Escheat is the rare practice of the government possessing property to prevent it from becoming unowned. Escheat takes place when a property owner passes away without leaving a valid will and a lack of living family. In this instance, the government will assume ownership of the property to ensure its use.
That about wraps up this rundown of private and public restrictions on real estate. Hopefully, these two blog entries have helped you gain a bit of knowledge about your rights and restrictions as a landowner. As someone who hopes to own land in the near future, I know I've picked up on a ton of stuff I didn't, but needed, to know about the intricacies of real estate while putting this together!
1. Property Tax
As you likely knew, the government maintains the right to levee taxes on the owner of any piece of property. These taxes, known as property taxes, serve as one of the governments largest sources of revenue. In order to enforce these taxes, the government must assess the value of a piece of property through an estimation of the market value of the property in question. From this estimate, the government develops and budget and tax rate, calculates the tax as a percentage of the property value, and bills property owners for the tax.
2. Power of Eminent Domain
The power of eminent domain refers to, quite simply, the government's right to possess property for public use, regardless of the owner's desires. In practice, the government notifies the property owner of its intentions for the property through condemnation, determines the value of the land based on just compensation, and possess the property in exchange for the amount determined. This practice is a slippery slope, however, as the government can bend the definition of public use in condemnation, as well as potentially low-balling a property owner in their determination of just compensation. Citizens in my home town are up in arms over the practice of eminent domain to possess their land for construction of the TTC/Interstate 69...you can view an article from our paper, The Lufkin Daily News, here.
3. Police Power
Police power is somewhat of a self explanatory restriction through its name. Although not referring to the actual police force, the government does maintain the right to police any piece of property. This right serves as a means for the government to protect the public health, safety, morals, and general welfare of the public. Through this power, the government regulates the practices of a piece of property, relative to the adjacent properties, community, and jurisdiction of the enforcing government entity. These restrictions, usually maintained and enforced by a city, generally are influenced by factors such as: projected economic development, population gain, transportation and infrastructure feasibility and convenience, public facilities and land use plans, and a city map. These factors all play in to a city's determination of how certain pieces of property can and cannot be used. This practice, known as zoning, specify how any given piece of property may be used in the city's plan for itself. Once usage for a piece of property is determined, it is sorted into its corresponding zone. Zones typically include property zoned for usage as: residential, commercial, or industrial. Violations of zoning restrictions are typically enforced by mandatory dedication (allocating certain portions of property for public use to obtain approval), impact fees (promises to pay for a portion of/all costs of providing public services to a property), and takings (power of eminent domain without actual transfer of ownership of the property).
4. Escheat
Escheat is the rare practice of the government possessing property to prevent it from becoming unowned. Escheat takes place when a property owner passes away without leaving a valid will and a lack of living family. In this instance, the government will assume ownership of the property to ensure its use.
That about wraps up this rundown of private and public restrictions on real estate. Hopefully, these two blog entries have helped you gain a bit of knowledge about your rights and restrictions as a landowner. As someone who hopes to own land in the near future, I know I've picked up on a ton of stuff I didn't, but needed, to know about the intricacies of real estate while putting this together!
Private Restrictions on Real Estate
In every real estate contract, property owners are presented with a list of activities/actions that are, for whatever reason, forbidden to take place on said property. These disallowed activities listed in real estate contracts are known as restrictions. In this entry, we will explore restrictions that are applied to private property and their ramifications.
Restrictions leveed on private property are classified as encumbrances. An encumbrance is a burden on the title of a piece of property. These burdens deal with claims against, limitations, and liabilities against a piece of real estate that dictate a property owner's use of property. These encumbrances are as follows:
1. Covenants, Conditions, and Restrictions (CC&R)
CC&R's are the fundamental restrictions, built into real estate contracts, that each property owner must follow. CC&R's are often a simple set of guidelines, written into the deed, that are usually outlined by the homeowners association that the property falls under. These rules, maintained by homeowners associations, are often put in place to ensure the maintenance of property value in said neighborhood, and are often aesthetic issues dealing with structures. In my personal experiences with CC&R's, I've learned that they are, in most cases, non-negotiable. Some years ago, my family was attempting to sell our home. After agreeing in principle to sell our home, the prospective buyers expressed their desire to build an entry gate at the end of the driveway. After almost finalizing the sale, we needed only the approval of the homeowners association for the gate construction to complete the deal. However, the CC&R's of our neighborhood forbade the construction of structures at the end of driveways. As a result, the deal fell through and we lost the sale.
2. Liens
A lien is a claim against property made by someone in order to secure the payment of a debt. The most common form of lien is a mortgage, where a property owner borrows money to pay for a house, with the house serving as collateral. Collateral is an asset (the house) that serves as security on the value of the loan. Should the loan default, the creditor has the right to repossess the house in lieu of the outstanding loan balance. Liens can be voluntary or involuntary, as well as specific or general in nature. Voluntary liens are placed on the property by the owner (mortgages), whereas involuntary liens serve to protect the interests of persons/entities that have claims against the property (tax liens). Specific liens are placed on specified portions of real estate to protect creditors that have interest in these items, i.e. a mortgage on a house or a construction lien on construction of structures. Conversely, general liens are leveed against the entirety of a piece of property, not just specifically an item/object on the property.
3. Easements
Easements are rights granted by property owners to a specific party that allow use of a piece of property in a certain manner. In the event of an easement, the property owners maintains ownership of the property, but shares access/usage of it with the easement holder. There are two different types of easements: easement appurtenants and easements in gross. In an easement appurtenant, there is a dominant estate, or the property benefitting from the easement, and a servient estate, the property that is burdened by the easement. A common easement appurtenant occurs when a piece of property is landlocked by another piece of property. In order to access the landlocked property, the owner must negotiate an easement where the surrounding property owner grants passage over his land for access to the landlocked property. In this example, the landlocked property is the dominant estate, and the surrounding property serves as the servient estate. In the event of transference of ownership of either property, the easement will remain valid. The second type of easement, an easement in gross, only contains a servient estate. An example of this is a power company gaining permission to run power lines across a piece of property. Because there is no property gaining an advantage, there exists no dominant estate.
As far as creation of an easement, there exist several avenues to achieve validity. The easiest, and most common, form of creating a lien is known as express grant or reservation. In this scenario, one property owners expresses his desire for use of another piece of property. The owner of the servient estate would then expressly grant permission for use, creating an easement. An easement can be created in good faith, however, without express consent. This practice, known as implication, occurs when a property owner or party begins using a foreign piece of property and is not met with opposition from the owner of the property. Should the owner of the servient estate object to the use of his land, an easement isn't completely unattainable, though. In the event that usage of land occurs for an extended period of time, an easement has been legally created, regardless of the desires of the servient estate's owner. This practice is known as prescription, and usually applies to something similar to a bike trail through a backyard that has been in use for a number of years.
4. Profit A Prendre
Profit a prendre is a nonpossessory right to remove the soil and/or produce from a piece of property. A common example of profit a prendre is the mineral rights of a piece of land belonging to someone other than the owner of the land.
5. Encroachments
An encroachment is defined as an unauthorized invasion or intrusion of a fixture, building, or other improvement onto someone else's property. In practice, encroachments grant a property owner the right to remove an object deemed as an encroachment onto their property, unless an easement exists allowing the presence of said encroachment. A common encroachment is the overgrowth of vegetation across property lines. Encroachments are often touchy subjects amongst neighbors, and can spawn ugly disputes over who is in the right. For an example, check out this LA Times article on disputes over fences as encroachments.
6. Adverse Possessions
In the strange occurrence of an adverse possessions situation, an individual can legally obtain title to land they do not own. How is that possible? Well, in the event that an individual openly possesses a piece of property for an extended period of time, between seven and twenty years, they gain the right to acquire the title to said property. This would apply to a squatter on someone else's land, but the squatter must exert actual and exclusive, open and notorious, and hostile and continuous possession of the property over the time period to qualify as "openly" possessing it.
Restrictions leveed on private property are classified as encumbrances. An encumbrance is a burden on the title of a piece of property. These burdens deal with claims against, limitations, and liabilities against a piece of real estate that dictate a property owner's use of property. These encumbrances are as follows:
1. Covenants, Conditions, and Restrictions (CC&R)
CC&R's are the fundamental restrictions, built into real estate contracts, that each property owner must follow. CC&R's are often a simple set of guidelines, written into the deed, that are usually outlined by the homeowners association that the property falls under. These rules, maintained by homeowners associations, are often put in place to ensure the maintenance of property value in said neighborhood, and are often aesthetic issues dealing with structures. In my personal experiences with CC&R's, I've learned that they are, in most cases, non-negotiable. Some years ago, my family was attempting to sell our home. After agreeing in principle to sell our home, the prospective buyers expressed their desire to build an entry gate at the end of the driveway. After almost finalizing the sale, we needed only the approval of the homeowners association for the gate construction to complete the deal. However, the CC&R's of our neighborhood forbade the construction of structures at the end of driveways. As a result, the deal fell through and we lost the sale.
2. Liens
A lien is a claim against property made by someone in order to secure the payment of a debt. The most common form of lien is a mortgage, where a property owner borrows money to pay for a house, with the house serving as collateral. Collateral is an asset (the house) that serves as security on the value of the loan. Should the loan default, the creditor has the right to repossess the house in lieu of the outstanding loan balance. Liens can be voluntary or involuntary, as well as specific or general in nature. Voluntary liens are placed on the property by the owner (mortgages), whereas involuntary liens serve to protect the interests of persons/entities that have claims against the property (tax liens). Specific liens are placed on specified portions of real estate to protect creditors that have interest in these items, i.e. a mortgage on a house or a construction lien on construction of structures. Conversely, general liens are leveed against the entirety of a piece of property, not just specifically an item/object on the property.
3. Easements
Easements are rights granted by property owners to a specific party that allow use of a piece of property in a certain manner. In the event of an easement, the property owners maintains ownership of the property, but shares access/usage of it with the easement holder. There are two different types of easements: easement appurtenants and easements in gross. In an easement appurtenant, there is a dominant estate, or the property benefitting from the easement, and a servient estate, the property that is burdened by the easement. A common easement appurtenant occurs when a piece of property is landlocked by another piece of property. In order to access the landlocked property, the owner must negotiate an easement where the surrounding property owner grants passage over his land for access to the landlocked property. In this example, the landlocked property is the dominant estate, and the surrounding property serves as the servient estate. In the event of transference of ownership of either property, the easement will remain valid. The second type of easement, an easement in gross, only contains a servient estate. An example of this is a power company gaining permission to run power lines across a piece of property. Because there is no property gaining an advantage, there exists no dominant estate.
As far as creation of an easement, there exist several avenues to achieve validity. The easiest, and most common, form of creating a lien is known as express grant or reservation. In this scenario, one property owners expresses his desire for use of another piece of property. The owner of the servient estate would then expressly grant permission for use, creating an easement. An easement can be created in good faith, however, without express consent. This practice, known as implication, occurs when a property owner or party begins using a foreign piece of property and is not met with opposition from the owner of the property. Should the owner of the servient estate object to the use of his land, an easement isn't completely unattainable, though. In the event that usage of land occurs for an extended period of time, an easement has been legally created, regardless of the desires of the servient estate's owner. This practice is known as prescription, and usually applies to something similar to a bike trail through a backyard that has been in use for a number of years.
4. Profit A Prendre
Profit a prendre is a nonpossessory right to remove the soil and/or produce from a piece of property. A common example of profit a prendre is the mineral rights of a piece of land belonging to someone other than the owner of the land.
5. Encroachments
An encroachment is defined as an unauthorized invasion or intrusion of a fixture, building, or other improvement onto someone else's property. In practice, encroachments grant a property owner the right to remove an object deemed as an encroachment onto their property, unless an easement exists allowing the presence of said encroachment. A common encroachment is the overgrowth of vegetation across property lines. Encroachments are often touchy subjects amongst neighbors, and can spawn ugly disputes over who is in the right. For an example, check out this LA Times article on disputes over fences as encroachments.
6. Adverse Possessions
In the strange occurrence of an adverse possessions situation, an individual can legally obtain title to land they do not own. How is that possible? Well, in the event that an individual openly possesses a piece of property for an extended period of time, between seven and twenty years, they gain the right to acquire the title to said property. This would apply to a squatter on someone else's land, but the squatter must exert actual and exclusive, open and notorious, and hostile and continuous possession of the property over the time period to qualify as "openly" possessing it.
Monday, January 21, 2013
Entry #2: My Favorite Parcel of Real Estate
The Blue Hole
Located in the Angelina National Forest, about 40 minutes southeast of my hometown, lies the mythical "Blue Hole". If you grew up within an hour of the Blue Hole, chances are that you share my opinion of it. You see, some years ago, the Blue Hole was a quarry that provided much of the rock used in the construction of the Galveston Sea Wall. Rumor has it that, during operations in 1950, an underground spring was struck, causing the quarry to flood and trapping a train car, car, and truck on the bottom of the quarry. Over time, the sulfur in the limestone has caused the water to turn a bright shade of blue, as evidenced in this picture. (For a more accurate recollection of the history of the Blue Hole, view this video.)
Throughout my high school years, my friends and I would venture to the Blue Hole several times every summer. There was always a locked gate at the end of the entry road, so gaining access required a bit of a hike. As you walk down the dirt road, you're engulfed by the mammoth pine trees that dominate the landscape of east Texas. The quarry itself isn't visible until you reach the edges of it, which provides you a few minutes to observe the remainder of the property. This observation showcases a beautiful wildlife utopia. These 1500-plus acres that don't contain the quarry are completely untouched and natural, teasing you until they open up to this...
During these ventures out to our picture of paradise, first-timers were presented with the ultimate test of courage: jumping off the cliffs into the water. Near the entry, two separate cliffs protruded far enough into the water to provide a safe jump...the test was in the belief that it was safe.
Friends of mine contemplating a jump
Every time I went back to the Blue Hole, I learned to appreciate it even more than before. The scenery is second to none, the rarity of the place is unprecedented, the seclusion and purity are mystifying, the ties with the history of locals are as deep as the water, and the memories I forged with my friends are irreplaceable. Every single aspect of the property always struck me as something I would never see again, forever cementing its mythical status in my mind. I've always longed to own it, if for no other reason than to ensure that future generations can experience the same things I did at the Blue Hole. I know it's a natural wonder that can never be replicated and, as a result of corporate mergers, this natural wonder is now a piece of real estate. For a paltry $5,326,200.00, you can purchase this east Texas treasure (you can view the listing here.) I can only hope that the next owner will allow the local youth to share in the same joyful summer afternoons that my friends and I enjoyed..
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