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!
Wednesday, January 30, 2013
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..
Entry #1: An Introduction
Howdy!
My name is Wes Taylor and I am a junior, finance major from Lufkin, Texas.
I enjoy any Texas A&M sporting event, being outdoors, trivia and part-time sports journalism. I dislike city traffic, indoor confinement, physics and Big 12 fanbases.
I hope to gain a solid foundation of the business of real estate speculation from this class. I've always been interested in owning rental property in College Station after I graduate; so, I hope to use this class as a basis of knowledge of the market to aid myself in the future.
As far as my career goes, I would like to start working in banking or investments right out of school. Ideally, I would find a job that would put me through grad school within five years of graduation, but that isn't a necessity. I'd like to establish myself in a larger company before moving back to a smaller town, similar to the one I grew up in. Upon relocating, I'd like to partner up in an investment firm or become an officer/executive at a bank. At this point, I'd like to invest in rental property in College Station as a form of supplemental income. Ideally, I'd like to have multiple properties paid off by the time I turn 60, so I can retire to Aggieland with financial security.
Regarding any unique traits, I really don't have any. My east Texan twang is pretty distinct, which often leads to inquiries as to where I'm from. Other than that, I am awfully ordinary. I am a third-generation Aggie, which is something I'm extremely proud of, but isn't overly uncommon these days at A&M.
My Bucket List hasn't really developed into much of one at this point in my life. I hope to visit every campus in the SEC when A&M visits for a football game. So far, I've made Ole Miss and Alabama, and plan to add Arkansas, LSU and a return trip to Ole Miss next fall. Sticking with the Ags, attending a National Championship Game featuring our boys has been, is, and always will be the first item on my Bucket List...hopefully I can cross it off sooner than later! Other entries on the list are: own a large piece of land that I can play around on, visit London, Rome and Boston, coach as many little league teams as I can and get an article published in some print medium.
Here are a few of my favorite websites:
AggieYell
Gigem247
Both of these sites cover the latest happenings with Texas A&M Athletics and Recruiting. Both also provide message boards for members to discuss and debate Aggie sports, as well as news, politics, pop culture, etc.
Twitter
Social media site that provides me with everything from sports rumors to what my friends are doing.
Lands of Texas
Site that lists thousands of plots of land for sale around the state. I enjoy browsing them and looking forward to purchasing one of my own.
Thanks for reading and I look forward to continuing this blog!
My name is Wes Taylor and I am a junior, finance major from Lufkin, Texas.
My sister and I
I enjoy any Texas A&M sporting event, being outdoors, trivia and part-time sports journalism. I dislike city traffic, indoor confinement, physics and Big 12 fanbases.
I hope to gain a solid foundation of the business of real estate speculation from this class. I've always been interested in owning rental property in College Station after I graduate; so, I hope to use this class as a basis of knowledge of the market to aid myself in the future.
As far as my career goes, I would like to start working in banking or investments right out of school. Ideally, I would find a job that would put me through grad school within five years of graduation, but that isn't a necessity. I'd like to establish myself in a larger company before moving back to a smaller town, similar to the one I grew up in. Upon relocating, I'd like to partner up in an investment firm or become an officer/executive at a bank. At this point, I'd like to invest in rental property in College Station as a form of supplemental income. Ideally, I'd like to have multiple properties paid off by the time I turn 60, so I can retire to Aggieland with financial security.
Regarding any unique traits, I really don't have any. My east Texan twang is pretty distinct, which often leads to inquiries as to where I'm from. Other than that, I am awfully ordinary. I am a third-generation Aggie, which is something I'm extremely proud of, but isn't overly uncommon these days at A&M.
My Bucket List hasn't really developed into much of one at this point in my life. I hope to visit every campus in the SEC when A&M visits for a football game. So far, I've made Ole Miss and Alabama, and plan to add Arkansas, LSU and a return trip to Ole Miss next fall. Sticking with the Ags, attending a National Championship Game featuring our boys has been, is, and always will be the first item on my Bucket List...hopefully I can cross it off sooner than later! Other entries on the list are: own a large piece of land that I can play around on, visit London, Rome and Boston, coach as many little league teams as I can and get an article published in some print medium.
Here are a few of my favorite websites:
AggieYell
Gigem247
Both of these sites cover the latest happenings with Texas A&M Athletics and Recruiting. Both also provide message boards for members to discuss and debate Aggie sports, as well as news, politics, pop culture, etc.
Social media site that provides me with everything from sports rumors to what my friends are doing.
Lands of Texas
Site that lists thousands of plots of land for sale around the state. I enjoy browsing them and looking forward to purchasing one of my own.
Thanks for reading and I look forward to continuing this blog!
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