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Real Estate - 290
Land Use Restrictions - Public and Private
| Question | Answer |
|---|---|
| Physical Conditions-You should not buy real estate " by remote control". Looking for a property is important: | 1. Title issues can be detached by observation-encroachment, easements, and evidence of prescription.2.)Boundary issues can be important: being sure you are buying the right property, that access is clear, and that it is as large as you thougt. |
| Pysical Conditions: Looking for a property is important: reason #3 | #3.) Finally, determining whether there are physical conditions that will hinder the use of the porperty. |
| Physical Conditions: Contract Provisions | 1.) Inspection Contingency, Site Assesment, and related provisions:RM 7018 Commercial Offer to Purchase. 2.) Notice of obligations to remediate underground tanks and other issues(RM 7020 Option to Purchase, lines 70-73) and other warnigngs to parties. |
| Physical Conditions: Common Issues for developed land | 1.) For developed land- the integrity of the structures and detection of pests, contaminants or other conditions that would affect saftey, utility or value. |
| Physical Conditions: Common Issues for undeveloped land | 2.)For undeveloped land-issues relating to the suitability of the land for development ( soil stability or wetland status) and the presence of contaminants that would "taint" the property. |
| Hot topics for Improved Properties | 1.) Lead-disclosure may be required-Wisconsin "Addendum S"(RM 7015)and federal EPA pamphlet. 2.) Mold- currently a very hot topic(and a difficult one).3.) Radon- an odorless, cancer causing gas that leaks into building foundations. |
| Hot topics for Improved Properties: #4 Conecern | Asbestos: formerly a common building product, now known to be dangerous if particles become airborne. |
| Physical Conditions: Not so usual issues of concern | 1.) Indian Burial Mounds- Web link to Mounds2.) Migrating Bird Pathways-opponents of wind farms for production of electricity cite danger to birds.3.) Trees-urban areas, large unhealthy trees can drop limbs, cuasing damage..expensive to remove. |
| Enviromental Law: Resource Conservation and Recovery Act( RCRA- 1976) | Requires permits for manufacture of hazardous waste( allows tracing of the movement) and creates federal-state cooperation on UST's(Underground Storage Tanks) and LUST's( Leaking UST's). |
| Enviromental Law: Comprehensive Enviromental Reponse, Compensation and Liability Act (CERCLA or Superfund Law-1980 and amendments) | imposes liability for clean-up of hazardous substances with a Federal responce( cleanup), if necessary, out of the Superfund trust. |
| Who are PRP's | current owners and operators, past owners and operators( at time of the pollution), those who transport or arrange for transportation of hazardous substances. |
| Wide and Inadvertent Liability | wide net that CERCLA casts on people who send hazardous materials to waste sites( unless they can prove the limits of their involvment). |
| remember that the investigation into land use restrictions as part of your due diligence really only helps you | if you are protected by an appropriate contract contingency or have an option-you need to be able to avoid buying a property you cannot use |
| Deed Restrictions “Taking Subject To” restrictions – the importance of notice, especially constructive notice from recordings Compare to easements Compare to conditions (Defeasible Fees) | the importance of notice, especially constructive notice from recordings 1.Compare to easements 2.Compare to conditions (Defeasible Fees) 3. examples of deed restriction on a single parcel, see RM4001 and RM4004 |
| Consider a developers’ attempt to create neighborhood restrictions – deed by deed – as lots are sold. | 1.As seller/developer conveys each parcel, Deed restricts use of land in a particular way 2.As each buyer accepts his Deed,buyer accepts restriction 3.restriction is recorded as part of Deed, and shows chain of title4.restriction applies to later buyer |
| this kind of restriction, imposed parcel by parcel, raises questions: | 1.Who can enforce the restrictions? 2.What if the restrictions are inadvertently left off one or more of the deeds?3.How can the restrictions be changed? Do the restrictions go on forever |
| restrictions are routine and important in modern real estate development | Complex sets of “Conditions, Covenants and Restrictions” – or “CCR’s” – are frequently created |
| Today, it is common for a developer to “declare” a set of CCR’s that are applicable to an entire subdivision or development before any lots are sold | 1.In many cases, restrictions may be added as part of negotiations with local government as the subdivision is being created 2.Because the declaration is recorded, it is in the chain of title for every buyer, each of whom “takes subject” to the CCR’s. |
| see RM 4003 for a portion of an aold example of restrictive covenants | see RM 4005 for an interesting modern example of residential covenants |
| CCR’s can impose both affirmative and negative obligations to create the project the developer envisions Issues: | 1.Do covenants Run with the Land or are they personal agreements between developer & buyer2.How does Developer maintain control until he passes control to owners 3.What is scope of control - architectural controls 4.Is there an owner’s Association |
| More issues for CCR's | 5.Who enforces the CCR’s? Owners assoc, gov,other 3rd parties?6.What vote of property owners required to change restrictions? 7.anyone else’s approval required for a change? 8.How do covenants terminate 9.relationship of CCR’s to public land restrictions |
| CERCLA Wide Net: Part I | What are creditors?:Lenders, tax authorities and other lien holders. Key to avoiding liability is avoiding ownership and participation in the decisions of the polluting company. |
| CERCLA Wide Net: Part II | 2.) What about heirs or beneficiaries?: Consider the use of disclaimers-the refusal to accept a gift. 3.)What about Buyers? 4.) What about innocent neighbors?:"innocent landowners defense" and "contiguous property owner". |
| CERCLA: State Parallels | States have laws dealing with some of the same( and some additional) issues as are dealt with by federal laws. Leaking underground petroleum tanks-focus of major state programs. There are CERCLA- types state laws requiring reimbursement to clean up effort |
| CERCLA Problem/Issues | 1. Escalating costs clean-up2. Enforcments Tools- Enviromental Liens3. Cleanup costs are secured by a "super priority".4.)Lien on the real estate inolved: Deed Restrictions and Extraordinary damages. |
| How do you deal with enviromental issues in the context of transactions? | 1.) Don't get into a problem in the first place.2.) Focus on Avoidance Tools- mandatory disclosures by Seller, representations in contracts, enviromental site assessments(ESA's)and other investigations. |
| How do you deal with enviromental issues in the context of transactions? Part II | 3.) Look at forms in RM regarding Inspections and Enviromental Evaluations. |
| Enviromental Site : rules for conducting effective ESA's | grew out of an effort by private industry, through a non-profit organization called the American Society for Testing and Materials(ASTM), to answer to question |
| Enviromental Site: rules for conducting effective ESA's Part II | :"What is enough if an investigation to entitle buyer of commerical property the benifit of the innocent landowners landowner defenses. |
| Phased Environmental Site Assessments (ESA’s) | 1.) A Phase I is a cursory look around without testing. Available public records are reviewed, a site visit is made to look for easily identifiable harms, the history of the property’s ownership (and use) is checked from public record... |
| Phased Environmental Site Assessments (ESA’s)Part II | and interviews are conducted with people currnetly responsible for site. 2.)If a Phase I turns up any reason to be suspicious.Phase II or other specific inquiry involving sampling and more intensive investigation is recommended or required by lender |
| Phased Envirmental Site Asssessments (ESA's) Part III | ASTM site assessment procedures were adopted by industry and became the de facto standard (not only for the “all appropriate inquiry” test for CERCLA’s innocent landowner defense, but for general due diligence.) |
| Does the ASTM protocol protect a buyer who follows its procedures, gets a “no reason to suspect a problem” report, but ends up with contaminated property? | 1.)In 2003, the US Environmental Protection Agency approved the ASTM Phase I Standards as the legal standard for the “all appropriate inquiry” test of the innocent landowner. |
| Does the ASTM protocol protect a buyer who follows its procedures, gets a “no reason to suspect a problem” report, but ends up with contaminated property?Part II | 2.)A permanent federal rule creating Federal standards for ESA’s became effective as of Nov. 1, 2006 defense.3.)The ASTM Standards have been revised to catch up with the new federal rule. |
| The new rule for “All Appropriate Inquiry” requires an inquiry and written report by an “Environmental Professional” . Part I | 1.)The term “environmental professional” is a defined term – qualifications can be academic or experience-based, or a combination of each. |
| The new rule for “All Appropriate Inquiry” requires an inquiry and written report by an “Environmental Professional” . Part II | 2.)The report must render an opinion whether there are conditions indicative of releases or threatened releases of hazardous substances (including, in some cases, petroleum products, controlled substances and other specific materials). |
| Like a Phase I under the previous ASTM standards, an inquiry must include: | 1.)Interviews with past and present owners, operators and occupants2.)Reviews of historical sources of information (to the extent reasonably obtainable).3.)Title searches for environmental liens and “dirty users”. |
| Like a Phase I under the previous ASTM standards, an inquiry must include: Part II | 4.)Reviews of federal, state, tribal & local government records (for the property & adjoining lands) regarding releases of contaminants, LUST’s, landfills & other public health concerns. |
| Like a Phase I under the previous ASTM standards, an inquiry must include:Part III | 5.)Visual inspections: are made of the property (and adjoining lands).6.)Other “commonly known or reasonably ascertainable information” must also be considered. |
| Like a Phase I under the previous ASTM standards, an inquiry must include:Part IV | 7. As before, no testing or sampling need be done, but…“Data Gaps” must be identified and explained and, if helpful, sampling and analysis may be used to address data gaps. |
| Like a Phase I under the previous ASTM standards, an inquiry must include:Part V | Finally, certain issues concerning the person protected (the purchases)..have to be considered, including any special knowledge or experience that person has and, in some instances, whether the price being paid reflects a discount for contamination. |
| Proactive Legislation: for enviromental lawBrownfields Incentives - governmental assistance (tax breaks and grants) and protective environmental clearances designed to foster re-use of contaminated lands . | 1.) Boost to urban areas.2.) Sometimes funded through grants to local goverments that accomplish the clean up.3.) Consider Wisconsin's Brownfields Program. |
| Enviromental & Other Federal Laws of Significance: National Enviromental Policy Act (NEPA-1969). | 1.)Requires Environmental Impact Studies (EIS) for proposed federal actions (eg-highways and other issues).2.) There are state parallels – for state government action and, in some cases, for private actions (major real estate developments). |
Created by:
rainesv