A Land Developer’s Nightmare
By Allen G. Dorin, Jr., MAI, SRA, RW-NACArticle printed in the November/December 2003 issue of Right of Way magazine published by the International Right of Way Association
The possibility of all of the events and circumstances occurring collectively in this article is highly unlikely. However, individually each can and has occurred in substance on projects with which KDR Real Estate Services has been involved. Some of these situations, especially those involving additional expense, can be prevented, or at a minimum mitigated, through condemnation, assuming this option is available. However, we have found that dealing with most landowners in a fair, equitable, consistent, and patient manner with respect, regarding their loss of real property rights is the best way to attain settlement.
While we cannot promise quick negotiated settlements at the lowest price, our past experience and gained knowledge of the process can and will result in less time, effort, anguish, and cost on your part. Whether your acquisition needs involve road right of way, slope or permanent easements, temporary construction easements, or any type of utility easement, call us for assistance in what can be a very complex process.
The following story is not entirely true . . . but it could happen. It is a prime example of Murphy’s Law, i.e., if something can go wrong, it will. May it never happen to you.
Max Proffitt, a local residential subdivision developer, had recently purchased a 100-acre tract of land subject to, among other requirements, the obtainment of 500 feet of right of way for a transition lane along the road with which the entrance to his proposed subdivision, Green Acres, was to intersect. Unfortunately, the 100-acre tract had limited frontage on the road and he was going to have to acquire off-site right of way from four private landowners across whose properties the transition lane had to be constructed.
Max was not an impatient sort, but because he was into his friendly lender, Inequity Partners, Inc., for what many less capitalized citizens would likely consider more than adequate as a retirement fund, he was anxious to minimize his interest expense and sell lots as soon as possible. The county in which Green Acres was located had a Public Works Department with a staff that was capable of handling the acquisition of the needed right of way for Max. However, because of a demanding workload, they could not accommodate him for several months. But by then the interest component of Max’s development loan would become a significant percentage of his total costs, a scenario that he did not find especially appealing.
Being an intuitive entrepreneur who had become accomplished at navigating the regulatory quagmire so often associated with governmental bureaucracy, Max approached the county with a proposition to acquire the needed land on his own behalf and then simply convey title to the county once all the right of way was in place. Simple enough, and besides, he was having to pay for all of it anyway. The county was receptive to Max’s proposal, but reminded him that he was not a public service corporation or otherwise empowered by the state to acquire real property interest through eminent domain. Max, the artful negotiator he believed himself to be, assured the county that the threat of condemnation would not be necessary and that he would have all the required signatures within 30 days.
The next day Max stopped by the county Real Estate Assessor’s office to gather information on the four properties from which the right of way was to be obtained. Although not part of his normal daily routine, Max reasoned his effort would result in time saved in lieu of having someone else do it . . . and time is money. In researching the assessment records, Max collected the following information. Dr. Charles Puller, LLC, owned the parcel farthest from the proposed entrance to Green Acres. The other parcels were titled in the names of the Church of Enlightened Brethren, Joseph and Beatrice Smith, and, closest to Max’s property, Ida B. Noe-Diehl.
Before contacting the respective owners by telephone, Max thought it best to mail letters of introduction and briefly explain his project and what he needed. A few days later he began making his phone calls. His first call was to the dentist, Dr. Puller. After several attempts and finally reaching him between patients, Max was informed by Dr. Puller that preliminary plans for his new office building on the parcel that was the subject of his letter had been submitted to the county Planning Department and, once approved, he was going to begin construction. Dr. Puller was willing to work with Max . . . as long as it did not impact his proposed development.
Contacting the Church of the Enlightened Brethren was a bit more difficult. After talking to the pastor of the church, Max discovered that only the Trustees of the church could convey title, and even after obtaining their signatures, the transfer would have to be approved by the county circuit court. Further delay would occur because the Trustees met only once a month . . . and the last meeting was two days ago.
Max started to have a sinking feeling. One of his landowners had a pending project that may be impacted by losing some road frontage and in his second situation it looked like it may take well over his 30-day deadline to obtain clear title. At least the remaining two properties should be easy since they involved only individuals and not corporate entities.
Max found several “Joseph Smith’s” in the phone book; however, none was the one he was looking for. It turned out his “Joseph Smith” died intestate in 1947 and his wife, Beatrice, who acquired title as the surviving spouse, passed away two years later with no will and seven children, two of which were by her first marriage and three who were also deceased. There were several grand children; most of whom lived out of state, and some whose names were not known by the family spokesperson. No one had bothered to notify the Real Estate Assessor of the deaths of Joe and Beatrice and because the heir who resided on the property was paying the taxes, no one knew any better.
Max now wonders how much worse could it get. He soon found out. When he calls Ms. Noe-Diehl she informs him that she is a self-professed strict environmentalist who has been cultivating exotic plants in her front yard for the past ten years. Her rarest species are located in the area that Max needs for his right of way. After hanging up on him the first three times that he called, Max (using his artful negotiating techniques) was finally able to convince Ms. Noe-Diehl to part with some of her plants… but it would cost him.
A year later, after converting his potential development profit into loan interest paid, Max finally got clear title to all of his needed right of way. What ensued during that period is summarized as follows:
Property of Dr. Charles Puller, LLC – The right of way Max needed encroached into the proposed parking lot on a site where land area was limited. Dr. Puller would have had to downsize his office building had he gone through with his plans. Instead, he took the money Max offered him (after Max paid a real estate appraiser what he believed was an exorbitant fee to provide an estimate of the value of the acquisition and damages resulting form the loss of parking) and built a larger office building on a more favorably located and larger site.
Property of the Church of Enlightened Brethren – After three meetings of the Board of Trustees (two of which resulted in a tie vote), the Board agreed to part with the land Max needed conditioned upon receipt of an appraisal (at Max’s expense) and the installation of a sidewalk along the property’s road frontage . . . at Max’s expense. Because the circuit court docket was full, it took three months to finally obtain approval so that the deed could be recorded.
Property of Joseph and Beatrice Smith – After tracking down all the missing heirs, one of whom was serving time in an out-of-state penal institution, and three of whom were minors that required a guardian ad litum to serve on their behalf, Max had only to prepare 28 checks for distribution and make personal deliveries to three owner recipients due to changed or undeliverable addresses.
Property of Ida B. Noe-Diehl – After five personal meetings with Ms. Noe-Diehl, reimbursing her for a nurseryman’s appraisal fee for estimating the worth of the plants that she would lose (none of which contributed to the market value of the property), and doubling the offer because she believed Green Acres to be a tasteless and unnecessary intrusion into the serenity of the surrounding woodlands, Max needed only to clear the three judgments against Ms. Noe-Diehl that had been recorded at the circuit court and pay off the second mortgage loan that was required by the lender, which also necessitated Max providing yet another approved appraisal for the lender’s file.