Frequently Asked Questions
We want to sell our property, can you handle the sale
and how much will it cost?
Brashear Realty has been in the real
estate industry for 30 years.
We have extensive experience in land, farms, acreage, investment and
commercial real estate.
We have successfully handled thousands of property transfers over the
years. We
will be happy to assist anyone in the sale of their property.
We can show you what are the most sellable features of your property as
well as any potential pitfalls.
It is our business to make your property sell.
How to start process of listing and
selling (brief)
As to the cost of selling your property we will charge a 10% commission of the selling price on all acreage tracts and commercial properties. Estate tracts and others with homes we will try to negotiate a fair commission for all parties involved. We it important to remember that you only pay us for services if we are successful in bringing a buyer to the closing table. If we can’t sell your property then you owe us absolutely nothing.
What are percolation tests?
On many properties out in the rural country you will often find that there is no city or county water or a sewage system. In these cases it becomes necessary to install your own well for water and a septic system for your sewerage needs. Before you can have a septic system installed you must first have the property inspected by the county health officials. On many tracts, it is merely a formality as a quick visual inspection by the county official will be enough to approve the septic system. In some cases however, a more detailed inspection by a licensed soil engineer is required. This is a percolation test.
Percolation tests are tests done on property to determine if it is suitable
to hold a septic system. These
tests are done to ensure that the soil can absorb water and other liquids
quickly enough to leave the surrounding area unpolluted by waste materials.
These tests are conducted by drilling holes into the soil, filling them
with water and logging the amount of time it takes to dissipate into the soil.
They also take into consideration the types of soil on the property and
depth of the soil formations.
By doing these tests an engineer can tell you if the soil can support the kind of septic system that will be required for your home. If the soil is problematic they can usually tell you where on your tract will be suitable or suggest other special septic systems that might work.
What are the advantages and disadvantages to owner
financing?
There are many advantages and a few disadvantages to owner financing. As a potential seller or buyer you should know the benefits and potential pitfalls of both. Owner financing is a very valuable tool. This is an option many sellers and buyers will often discard without giving it any serious thought. This could be a mistake.
For the Seller
The greatest asset to owner financing is that it allows many potential buyers consider your property that would be left out by asking cash or by expecting them to get a loan through more conventional means. This can greatly increase your prospective pool of buyers thereby making your property more likely to sell, and more likely to sell quickly. Many buyers who may be interested and can easily afford your property may have problems that make it cumbersome to obtain a loan conventionally. They might not have the large down payment normally required by banks. They might be afraid of the intimidating process of financially qualifying. Perhaps they have a new spouse with prior financial problems? They also may not have a good relationship with their bank or may distrust financial institutions.
A second advantage could be substantial tax savings. If you owner finance certain sales of capital assets, the government allows you to elect to declare the income as it is received instead of paying it in the year of sale. If you have a moderate income, a single lump sum sale can place you in a bracket much higher than you might otherwise be. Spreading the income out over a period of years reduces the rate at which it is taxed.
A third advantage
to owner financing is that it is usually far simpler for both the buyer and the
seller to close the sale. Banks can
be slow and cumbersome. Often they
require loads of paperwork and months of loan qualifications. They can take interminable amounts of time with no guarantee
that they will even close. With
owner financing there is very little paperwork and can usually be closed as
quickly as the parties can come to terms and the lawyers can generate the
paperwork.
A fourth advantage
to owner financing is that it can generate a steady income stream.
This can be a wonderful thing to many people, particularly retired
individuals living on fixed incomes. Cash
in the bank has traditionally yielded a poor interest rate return. Sellers
can supplement their monthly income and relieve some of the stress that may come
from having expenses that equal or exceed their income.
The seller can determine the length of the financing which means they can
structure the financing for as little as a few months or as long as thirty
years. Thirty years of supplemental
income on a monthly basis can be very helpful to many individuals.
In addition to this asset the seller can control the terms of the
financing instead of a bank. For
example, if a buyer needs a lower down payment but can make a substantial
balloon payment in six months or a year a seller can work out these type of
details where as a bank may not. Receiving
a balloon payment at a specified period of time might make it easier to plan
when you might buy a car or other big-ticket item.
This allows you to control your income stream as you see fit.
A final advantage
of owner financing is that it can often allow a seller to get a slightly higher
price for their property than if they didn’t offer it. Because of the relative ease on the part of the buyer and by
the lower degree of difficulty in getting the loan, buyers will often be willing
to pay a slightly higher price if they know they won’t have to deal with all
the paperwork or the embarrassment of being denied a loan.
The main
disadvantage to owner financing is that many sellers simply aren’t in position
to do it. If you have a large loan
that must be paid off in order to sell a property (such as a mortgage on a
home), your terms will hardly be competitive with a bank if you can’t afford
to pay off the note yourself. Secondly,
many sellers need the large lump sum of cash for a specific reason. A down payment on a new home for example.
They are more in need of a lump sum of cash than they are in need of
steady income stream.
The second
disadvantage of owner financing is the possibility of default by the buyer. If the buyer fails to pay you have lost your income stream.
You are now forced to foreclose. This
isn’t as huge a disadvantage as many perceive it to be.
Georgia is a non-judicial foreclosure state.
This means you don’t have to go to court to foreclose. Any attorney can handle this for you and takes merely 30 to
45 days. Its cost is usually
nominal in relation to the funds owed. The
cost of a foreclosure is usually as little as $500.
At foreclosure you will either get your property back and you keep all monies
that have been paid to you, or you are paid in full, including any costs
incurred collecting your money.
Seller Beware of any agreements asking you to subordinate your loan to any other loans. This is fraught with danger and may cost you lots of money to protect your funds. If you are not the first lien be very careful before proceeding.
For the
Buyer
Owner financing is the most expeditious way to purchase raw land. Banks or other lenders usually require down payments in the range of 25 to 50 percent of the price at which you want to purchase, unless you have other collateral to include in the loan. The closing costs may incur additional expenses which are not necessary in owner financing including loan origination fees, appraisal fees, loan application fees, credit reporting fees, and discount points. Interest rates charged on land loans are usually substantially higher than those associated with home loans. Owner financing can be a competitive rate advantage.
The closing time for owner financing can much shorter since many of the complexities are not a part of the transaction.
On the down side there are fewer protections to the buyer. You must negotiate your own best deal based on your knowledge.
What are closing costs?
Closing costs are
those costs that usually incurred at the time of closing.
Closings are usually conducted by attorneys, although they are not
required. The attorney will handle
all aspects of the closing and will solve the paperwork nuisances that sometimes
crop up. The costs incurred at a
farms or acreage closing usually include attorney’s fees, intangible tax,
pro-rata share of ad valorem taxes, real estate commission, and recording fees
and any loan origination fees. Many
real estate closings are done for well under $500.
Often the most expensive costs are the attorney’s fees and, depending
on the size of the loan, the intangibles tax.
Attorney’s fees vary with the attorney but usually range from $250 to
$350 on most simple transactions. This
can change depending on the complexity of the closing.
Intangibles tax is a tax paid to the state based on the amount of the
loan. The amount varies from state
to state but in Georgia it is calculated at $1.50 per $500 in loaned funds.
In small loans, the tax is fairly small, but you can see that if it is a
large transaction with borrowed funds this can be a substantial cost.
Next are prorata share of ad valorem taxes.
These are the property taxes for the year.
They are usually paid by both parties in proportion to the amount of time
they owned the tract in the year of the sale.
For example, if the seller owned the tract for the first three months of
the year and the buyer closed on the property on the last day of the third
month, the seller would pay one quarter of the yearly bill while the buyer would
pay the remaining three quarters. Real
estate commissions are considered a closing cost but are simply deducted from
the seller’s proceeds at closing. They
are whatever the seller and broker have agreed to.
It can be a flat fee or a percentage of the selling price.
Recording fees are the fees required by the county to record the deed and
security deed. They vary from
county to county but are not a large expense.
Loan origination fees are fees required by many lenders to process the
paperwork necessary for a loan. These
costs are most often associated with bank loans and not with owner financing.
In residential
sales there are quite often many other costs that may or may not also be
included such as termite letters, survey costs and home inspections.
As we specialize mainly in land sales I will not get in a lengthy
discussion of these however we are vastly experienced in all aspects of the
closing and the costs associated with it and would be happy to discuss these
items at further length with you about your property.
Closings costs,
with the exception of the commission and their portion of the property taxes,
are customarily the responsibility of the buyer.
However, this is not the law and the seller and buyer may negotiate any
or all of these costs as they see fit.
Can I get a well?
When dealing with rural property you will rarely ever find that county or city water will service your tract. In this case you must install a well. Well’s are very common in Georgia and can be found in almost all areas of Georgia. In order to get a well you must hire a well driller. They will come out and inspect your property and where you wish to have the well and will then go about installing one. They will basically drill to a depth at which they reach water. In some cases this may be as quickly as twenty to thirty feet, in others it may be as deep as six hundred feet. The cost is usually related to the depth the well must be drilled. Cost vary typically from $2,000 to $5,000.
In
most areas of Georgia, wells are common and hitting a good stream of
potable water is not a problem.
Do
I get the mineral rights to my property?
The short answer
to this question is yes, usually.
However, there are certain times when they are not included.
This is question that is sometimes asked by buyers, particularly in areas
where minerals are often mined.
Many buyers who are familiar with the kaolin industry in Washington
County, Georgia understand that this may be an important question to ask. In
certain areas where there are important or valuable minerals, such as the kaolin
in Washington County, this problem can come up quite often.
When a person owns a property fee simple this means they own the property
and all the rights with it.
A piece of real estate conveyed fee simple consists of the surface
rights, the subsurface rights, the mineral rights, the timber rights, and even
the air rights.
You would own all of these rights without exception.
The problem occurs however when someone sells some portion of their
rights in a property without the rest.
In areas such as Washington County, it is not uncommon at all for
individuals to sell or lease the mineral rights of their property to a kaolin
company. I
have heard of many instances where buyers purchase a tract only to discover
later that there is a mineral lease on that particular property or that the
mineral rights were not included.
When a seller sells a tract, they can only sell what rights they have in
a property. If
a seller sold the mineral rights, and then subsequently chose to sell their
property, they can indeed sell their property but the mineral rights will not be
included.
This can be a real problem for both buyers and sellers. When mineral rights are sold, they are sold. They cannot be retrieved without purchasing them back from the corporation or individual who now holds title to them. Mineral rights are just like any other piece of Real Estate, they can be bargained, sold or traded as many times as the owners may choose. As mineral rights are quite often purchased by large corporations, many times these corporations have no interest in selling them back. A mineral lease is nearly as bad, for the lessee has all rights of ownership on the minerals for a predetermined amount of time. These leases are negotiated by corporations, so their duration is usually very long. Sometimes as long 50 years with options for renewal.
The question is what does this mean to a buyer or seller. Well, without the mineral rights to a property its value is substantially diminished. Building a home becomes a virtual impossibility. When someone else owns the mineral rights, they have the right to remove them whenever they wish. If they have to timber the property and remove your house to get at them then so be it. If they choose to mine your property it could be a disaster for the owner. As a buyer you must recognize that the without the mineral rights you are buying a piece of property that could be mined at any time. The worst part of this is that you were not even paid for them. The owner who sold them received all of the funds. From a landowner’s point of view, trying to sell a property without the mineral rights will be a very daunting task. Many prospective buyers will balk at the concept of purchasing a property without the mineral rights. Those buyers who are willing to purchase it will not usually offer you anything near what would be considered market value for your tract if it contained the mineral rights.
Now this does not
mean that all mineral leases are bad.
For some owners this is a very reasonable option.
In many cases, properties where the mineral rights are leased or even
sold the tracts are never mined at all.
For someone who wants a steady income stream to help pay property taxes
or simply for supplemental income it can be a good choice.
They simply must recognize the consequences of selling or leasing these
rights may have for the future marketability of the tract.
The bottom line of
all of this is that in most cases and in most places you will get the mineral
rights to the property. As
a buyer, you should get an attorney to check the title on the property.
If the mineral rights have been sold or leased a title search should
reveal this fact.
As a seller you should inform any prospective buyers that the mineral
rights are not included.
While this may eliminate some buyers it may prevent a lawsuit later.
Why is it so hard to find property with big trees at
a reasonable price?
This is a very
common question that has a very simple answer.
Large, mature trees can have a substantial monetary value.
When buying a property you pay not only for the dirt that you stand on
but also for location, improvements and anything that holds value on the
property. Many people do not
realize how much money 150 acres of timber can be worth.
Their value varies depending on age, size, and species of tree and the
strength of the timber market. At
the right time, with the right timber, I have seen some tracts net more than
$3,000 per acre for their timber. If
you have 150 acres at that price you are looking at nearly half of one million
dollars in one lump sum!
Sellers
are usually quite aware of the fact that large timber can be of great value. Because of this they have two options to consider when
selling their property. They can
either timber the tract for the funds and then sell the land, or they can sell
the property as is with timber standing. Sellers
usually have a set idea of what they believe their property to be worth.
They will attempt to arrive at this price or better regardless of which
option they take. What this means
to a buyer is you’re going to pay for the value in the trees if they’re
still on the property. This means
you will be paying what seems like a high price, but you are simply paying the
seller for what he could have gotten on the tract by cutting the timber, plus
the value of the land. Now however,
you own the timber and may exercise the right to cut it to recoup some of your
costs. The other option
is to cut the timber and then sell the land after the timber is removed.
This will remove some of the “sticker shock” but the property will
look less aesthetically pleasing.
Many buyers make
the mistake of comparing properties by price based on location.
While this is one factor involved, it is by no means the only one.
Just because two tracts are right next to each other does not mean they
are worth the same thing.
Many buyers don’t understand that there can be substantial value in the
timber. If
they don’t want to pay the seller enough to leave the timber standing he will
simply generate the revenue by cutting the timber.
Then he can sell the much less attractive piece for a low enough price to
seem competitive.
This is why tracts with big timber always seem to have much higher prices
compared to other tracts in the same general area.
How can I tell if the property has a pond site?
The best way to answer this question is by first defining what a pond site is. A pond site is an area or location on a tract where it is possible to construct a pond. One thing that many prospective buyers do not truly understand is that many tracts simply don’t have a pond site. I have spoken to many buyers who strongly desire to own a pond. Upon discovering they can’t afford, or can’t find a tract with one already on it, they then begin to discuss building one.
There is more to
building a pond than some people think.
There are several factors that come into play when building a pond.
The first, and unquestionably the most important, is to have a source of
water. Just
because you dig a whole does not mean it will necessarily fill with water.
In most cases it will not, beyond a few inches of rainwater.
There are two main sources that are used for building a pond.
These are either springheads or creeks.
Both of which are usually very reliable as long as they produce a steady
year round flow of water.
Some creeks and springs have a seasonal flow or a flow that is sporadic.
These can still be used to build good quality ponds but you must realize
that in times of drought your pond may lose depth and may even go dry.
Spring fed ponds
tend to be more a little more dependable.
They are more consistent in regards to their depth and they are less
affected by the weather than creek fed ponds.
(Some people have trouble determining if and where they have a spring.
The best way is to go looking in the bottoms and hillsides for areas that
appear to be wet or are holding standing water after it has been dry and sunny
for a week or so.
If you still have standing water or very wet muddy soil in these areas it
is likely there is a spring.)
Creek fed ponds tend to go dryer in times of drought and fill to nearly
over capacity in extended times of heavy rain.
You are more likely to have a dam break on a creek fed pond than on a
spring fed pond.
However, a good engineer can correctly assess and handle most of these
problems without too much difficulty.
There are many obstacles
that can be overcome when building a pond but if you do not have a source of
water it is very difficult to make it work.
I have seen ponds that have been built using wells to fill and regulate
them and their depth. This can be
done but it is far from ideal. A
well can be an expensive cost to add to this process and even then it may not
guarantee a successful pond.
In addition to
having a source of water, proper terrain is very helpful.
The best type of terrain is to have a low point flanked on two sides by a
steep slope with the source running directly through the center. This allows for the pond to be constructed with smallest dam
possible. This is important because
the largest cost involved in pond construction is usually the cost of the dam.
It is very important when constructing a pond that the dam is built
capable of containing the influx of water that will be running into and out of
your pond.
The source and
terrain are the two most important factors for prospective buyers and sellers to
look for when determining if there is a pond site on a tract.
There are others factors involved but for a simple determination these
two things will suffice. Beyond
this it will take an expert in the construction field or an engineer to best
determine the way to most effectively construct a pond.
As long as you have a water source, be it spring or creek or even a well,
it is possible to construct a pond. However,
with a proper pond site it is much less difficult and lot less costly.
Can I put the title in my child’s name?
You may title a
tract that you have purchased in the name of your minor child, you may use and
enjoy the property just as if you owned it as the child’s guardian.
The property, however, becomes legally owned by the child with all the
rights and empowerments that go with it.
The problem lies in the fact that the child may not sell it.
In the state of Georgia, minors may not sell or give title to real
estate. While
there is nothing in the law that would prevent them from buying it or it being
given to them they may not sell it.
This means that once the property is bought it cannot be sold under any
circumstances until the minor reaches the age of majority.
Once the child reaches the age of majority they may sell it keep it or
dispose of it however they wish.
Regardless of whether you approve of what they do with it or not.
You may have wanted to invest money in the land and then sell it for
proceeds to fund education.
Unfortunately if the child chooses to sell it and go romping around the
world for a year or two they can.
As it is legally their property, any proceeds will be in a check made out
to them at closing.
You would have no control over the funds.
This is the main problem with titling a property in the name of a minor
or adult child.
There is no problem with it as long as you accept that you will have
little to no control over how it is used or how it is disposed of.
Depending on what
your goals are for possibly placing the property in your child’s name, there
may be a better alternative.
A trust is a valuable tool for many individuals who wish to use it.
You can place real estate, funds and other items in a trust for a child
in which you or anyone you choose can be trustee.
The funds within the trust can be used for any purpose that is allowed
for in the original trust agreement.
The trust can be structured to accomplish a wide variety of goals while
still allowing for you to have control over your minor child’s future funds.
I strongly advise that before creating a trust or titling property in a minor’s name that you consult an attorney versed in these fields and explain to them exactly what you are trying to accomplish. There are many things that may be involved in these actions and you should be aware of them all before making a decision on what is right for you.
Do I need a new survey, and who pays for it?
The best way to
answer this question is to deal directly with what a survey does.
Why is a survey ever done?
A survey is done for a couple reasons.
The first reason is to define exactly where the line is.
It is absolutely vital for any property owner to know where their
property lines are situated.
On residential property this is usually not necessary.
The line is clearly defined by a fence or some other man made object.
The lines are almost never in question and are quite obvious to a quick
inspection. For
acreage property this is quite often not the case.
Very likely the lines are differentiated by nothing at all except for a
plat recorded in the courthouse in which the property lies.
These lines are not usually discernable by a quick inspection of the
property on the ground.
If the survey is recent the lines may be cut down and either pins or
fence posts may be placed on the lines.
If the survey is old however, the lines may be overgrown and nearly
impossible to find without a compass.
Even then they may be difficult to locate.
In this case it is often advisable to have a survey done.
Some owners may know exactly where the lines are even if there are no
visible indicators of where it may lie.
As long as the two owners who share the line are in agreement it rarely
causes a problem.
If however the line is not easily and clearly marked or the owners are in
some dispute over where the lines are it is wise to have a survey done to remove
any question as to where the line actually is.
The second reason a survey is done is to determine whether or not there are any encroachments present on the property. Sometimes when a line has not been defined for a long period of time a neighbor may build a fence, put a garden, erect a permanent structure or begin to otherwise encroach onto your property. This can cause a myriad of problems for an owner. They can create a cloud on the title and can even lead to loss of acreage in the case of adverse possession. It is important to be aware of your property lines and to be ever watchful of your neighbors. Time is against the owner in these circumstances and the faster you recognize an encroachment the better. A survey will spot any encroachments and bring them to your attention.
A
third reason to have a survey done is to correctly gauge acreage.
If you deal in farms and acreage tracts long enough you will inevitably
come across a tract that has been held in one family for many generations.
In this case you will quite often find that a recent survey has not been
done. There may not even be a
recorded survey in the courthouse. (In
my area I have even found a few circumstances in which the plat was once
recorded but was burned, along with the courthouse, by Sherman’s Northern
armies on their march to the sea.) The
surveys that they have, if they are recorded in the courthouse, may be well over
100 years old. These surveys are
done in chains or, if they old enough, in paces.
Needless to say these surveys are not nearly as precise as the surveys
that are done today. The boundaries
on the ground may be very clearly defined and agreed on by all parties, but may
not agree with the survey in the courthouse.
The acreage on the ground may not coincide with the acreage on the plat.
In this case a survey should definitely be done. Especially
if the price to be paid is based on a per acre price.
If the tract is large enough the difference could be as much as ten to
twenty acres (although this is rare).
A
final reason is to correct prior survey error.
This is an extremely rare circumstance but it occasionally does happen.
Surveyors are human and sometimes make mistakes.
A lot of times these mistakes are difficult to detect as most people
simply accept what the surveyor tells them.
Usually you won’t ever know, but if there is a discrepancy between the
distances on the plat and the distances on the ground you should probably have
another survey done.
The
bottom line on all of this is a survey is not absolutely necessary, but it can
be very wise. If you are dealing
with a property where the lines are clearly discernable, all parties agree on
where the lines are, and there are no noticeable encroachments, it probably
isn’t required. If any one of these is not true then it may be wise to have a
survey done to clear up any ambiguities that may exist.
The
next question is who pays for a survey. If
you are someone not looking to sell and you discover a potential problem,
obviously you would pay for the survey. What
happens if you are selling and a buyer wants a survey?
It is customary for a buyer to pay for the survey, but like most things
in real estate, this is totally negotiable.
What does the attorney do at a closing?
This
is a question I must get asked at least once for nearly every buyer I have.
I also get “Why do we even need an attorney?”
A lot of people who own farms and acreage property are not businessmen.
Quite often they don’t ever use attorneys and view them with thinly
veiled distrust. They may not have
used an attorney when they bought it or may have inherited it and never dealt
with one. While many attorneys
would chastise me for saying so, an attorney is not legally required to conduct
a closing. There are only three
categories of people who may legally conduct a closing.
Principals (i.e. buyers and sellers), real estate brokers, and attorneys.
Nevertheless, they should almost always be used.
The reason is the services that they provide.
While none of them are absolutely necessary almost all of them are very
valuable and well worth the fairly nominal cost.
The
first and foremost service of the attorney is that the attorney will search the
title. This is by far the most
important service that the attorney provides for a closing.
The attorney will go and search the title for any clouds, liens,
encumbrances or defects. If there
is something there that a buyer is not aware of then this will reveal it.
If for example the mineral rights have been sold, a title search will
reveal this fact. As a buyer this
fact will not be readily apparent from a visual inspection of the property but
it will clearly affect your use of the property.
The property could also have another type of title defect.
For example, a seller may not be totally honest and may have other owners
who they don’t tell you about. They
might have a sibling or estranged spouse who they don’t want to know they’re
selling their land in hopes they can leave with all the funds.
The problem here is that a seller can only sell their interest in a piece
of land. If they only own a half
interest they can only sell a half interest.
If you don’t have an attorney do a title search you may not realize
that all parties are not present. You
may pay what you believe to be a fair price for the whole tract and acquire only
a half interest. You may discover
the circumstances after the fact but the other seller may be long gone with your
funds. An attorney will discover
these facts and prevent you from making these types of mistakes.
A
second thing that attorneys do is to prepare all the legal documents.
This is a very important service as faulty documents can be the death of
a sale or can lead to potential lawsuits down the road.
They will prepare the deed, which is of vital importance in a sale.
You MUST have a deed that will withstand a legal challenge in order for
you to have good title to a tract. They
also will prepare a security deed. If
you are owner financing this is the most important document at a closing.
Without it you have no means to foreclose on the property to protect your
loaned funds. They will also
prepare an owner’s affidavit and determine what your share of prorata taxes
will be for the year. These are all
important facets of what an attorney does at closing. Without proper preparation of these documents you are asking
for trouble down the road.
A
third thing an attorney can do at closing is to offer title insurance.
This is something you don’t see a whole lot of in Georgia. Many states use title insurance but it is a service that has
not caught on in Georgia. Some
relocation programs and large national lenders require it but many do not.
The truth is as long as you receive a warranty deed and pay for an
attorney to certify a title; title insurance may be redundant coverage.
A warranty deed means the seller is guaranteeing to defend the title
against anyone claiming an interest at their own cost.
An attorney would also be liable if the incorrectly certified a title.
You could sue for indemnification from either or both.
Still you cant’ get blood from a stone.
If they can’t financially do it your title insurance will cover the
cost. A competent attorney will
most likely discover any pitfalls before closing and either fix them or inform
you of them and let you decide whether or not to proceed to close.
Overall,
and in most cases, I highly advise the use of an attorney.
There are some special circumstances in which they may not be necessary,
but as a general rule it is always wise to use one.
If it is an inside transaction between a father and son or between
business partners where a closing has already been done or both parites are in
the loop on all happenings of a tract it may not be necessary.
This assumes that both parties are fully aware of the property and
everything about it. Even then they
must know how to generate the legal documents and properly record them, and
conduct a title search themselves if they are able. These are about the only circumstances that I can readily
think of in which an attorney is not a must.
If you don’t fit that scenario, forego the use of an attorney at your
own peril.
What is a land contract or a bond for title?
Land contract or bond for title is a way for an owner to sell their
property. It is similar to owner
financing with one huge difference. In
standard owner financing a seller gives a deed to the buyer and then receives a
security deed (this will be discussed further in the next question) from the
buyer as collateral for the loan. In
the circumstance of a land contract or bond for title the seller does not give
the buyer a deed at the time of closing. The
buyer signs a land contract agreement and then occupies the property. The buyer then pays a predetermined monthly amount for a
predetermined amount of time, both of which are specified in the land contract.
At the end of the contract term the seller then signs a deed to the
property over to the buyer. In its
most simplistic aspect this basically amounts to a rent-to-own situation for the
buyer.
As with anything, there are pros and cons to this method of selling a
piece of property. Unfortunately
for the buyer, most of the upside lies with seller.
There is very little positive about a land contract for a buyer. The whole concept behind a land contract is that it allows a
seller to owner finance their land without having to deal with the sometimes
onerous process of foreclosure. The
seller never gives the buyer a deed to the property, so the tract is still owned
by the seller, even though the buyer has occupied the land and is paying for it
on a monthly basis. In this case,
as the seller still owns the land, if the buyer ceases to pay for the land the
seller may simply get a dispossess warrant and have the prospective buyer
removed. They need not go through
the foreclosure process. This, in
and of itself, is not so bad as it is just a shorter and less costly form of
foreclosure. The problem with land
contract sales is that buyers have nothing to protect their interests.
In a standard owner-financing situation they become the owners.
They may pay on a note but they own the property and all the rights
accompanying ownership. In a land
contract the buyers have no rights whatsoever besides their land contract.
In the event that a seller does do something unethical the buyer has
little recourse available to them. I
am familiar with one situation where a seller sold many small tracts on a land
contract basis. He also borrowed a
large sum of money with the tracts as collateral. He could not pay the note and the bank foreclosed on the
property. He had sold a large sum
of the property but because it was on land contracts the bank forced the
erstwhile buyers off of their tracts. They
had no real option to defend their right in the property but to sue in court.
As the buyer’s had no capital to pursue this option they thus lost
their property.
The biggest benefit for the seller is not having to go through the
foreclosure process. Georgia is a
non-judicial foreclosure state however, so there is not a real problem in
effecting a foreclosure. A
certified letter, 4 weeks of advertising and an auction on the courthouse steps
are all that is required. I have
spoken to several lawyers on this subject and most have advised me that one
should go through the foreclosure process even if you have sold your property
via land contract for liability reasons. This
really takes away the only major advantage of this process for the seller.
As a buyer I would try to avoid this method if at all possible.
It really gives you no method to defend yourself against an unethical or
misguided seller. If you must go
with this option I would advise you to make the seller sign a land contract that
is in a recordable form. This means
a witness and a notary must sign it. This
allows you to record your interest in the property and anyone, including a bank,
who searches the title will now of your interest and be forced to deal with it.
As a seller this allows you to sell to people with a less than stellar
credit history, but you gain little, as it is some lawyers’ opinion that you
should still go through the foreclosure process.
As a seller I would advise you to consider another option as this one
gains you little but could be fraught with liability.
What is a security deed?
Georgia is a unique state in the union in how it deals with its real
estate. In
Georgia when you borrow money to buy a home or another piece of real estate, you
do not sign a mortgage as in most states.
In Georgia you sign a security deed.
It essentially is a mortgage.
Every time you borrow money with real estate as collateral from a lending
institution or an individual you will sign one.
At a closing the seller will sign a deed over to you.
You, as the buyer, will sign a security deed to the lender.
The deed transfers title to you.
The security deed is a document that pledges the property back to the
lender in the event that you cannot meet the financial obligation you agreed to
in the promissory note.
The reason you sign a security deed and not a mortgage is in the method
of which the property is returned to the lender.
Georgia is the only state in the union which to my knowledge is still a
nonjudicial foreclosure state.
The security deed declares that should you not meet your financial
obligation in what way the lender is to be compensated.
A mortgage is predicated on judicial foreclosure.
In Georgia, should you fail to meet your obligation the lender must do
three things. First,
they must send a certified letter to your last known address.
Next they must advertise the property for four consecutive weeks in the
legal organ of the county in which the property is located.
After this they must auction the property on the courthouse steps of the
county in which the property id located on the first Tuesday of the month
following the four weeks of advertisement.
At the auction the highest bidder gets the property.
Usually the lender is the highest bidder bidding in at what they are owed
plus attorney’s fees.
The security deed is simply the legal document, which allows the lender
to do this. I
have heard some lawyer’s use the phrase “ You don’t pay, you don’t
stay.” That
is the simplest way to describe what the security does.
Georgia is a very friendly state for lenders so buyers should e aware
that if they can’t pay for a property they should be leery of buying it.
In judicial foreclosure states this process can be very costly and as
slow as six months to a year or longer.
In Georgia this process takes usually only four to six weeks.
It is also far less expensive due to less legal fees and court costs.
How do I keep uninvited hunters off of my property?
Uninvited hunters are a
problem that can plague many property owners.
There is only one way to totally insure that unwanted hunters will stay
off of your property.
Live on it.
If that is not your plan for the property in question there are several
things you can do that might reduce the presence of uninvited hunters on your
property.
The first is to make your presence known on the tract.
Hunters are not usually very confrontational.
They know if they are on property where they are allowed or not.
If they think you’re watching or that you might catch them in the act
they will find somewhere else to hunt.
Hunters know if there is an awful lot of vacant land in an area where
they like to hunt.
If they believe you don’t actively visit your land they will become
more adventurous and often will try hunting it in your absence.
Hunters will usually go scouting prior to deer season and you can look
for signs of their activity.
They will leave survey tape and markers a lot of the time so they can
remember where they were scouting and what areas they have visited recently and
whether or not it looked promising.
If you remove their signs they will take it as notice that you are paying
attention and do not wish to have hunters on your land.
Uninvited hunters are not generally hostile.
They simply think you’ll never know the difference.
If you make it clear that you will, they will move on and find an easier
and less well trafficked place to set up shop.
The second is to post your property.
If you post your property with clear and numerous signs stated that no
hunting is allowed hunters will take this as a clear and present sign that you
are paying attention and do not wish to have uninvited guests.
There is also a second benefit to posting your property.
It serves notice to the hunters so if the ranger does catch them hunting
your land unauthorized there will be consequences.
Hunters don’t want to pay fines for something they can do elsewhere
without the threat of fines, even if your land is more fertile with game.
It also makes it more difficult for them to say they mistook your
property for their neighbors/cousins/bosses.
The more signs the better.
They should be placed prominently at all road entrances and along any
public road that your property borders.
The third is to consider
leasing your property for hunting.
Many owners don’t want to lease their property but it can be a powerful
tool. Hunters
very carefully guard their hunting grounds.
If someone is out there who shouldn’t be, then they will quickly and
definitively run them off.
The main benefit to this methid is that you can control who hunts and by
what rules they must abide.
If your land has good hunting, they will work hard to preserve that
lease. The
main reason that some owners don’t want unauthorized hunting is for liability
reasons. If
someone is hurt on your land, even without your permission, you could be held
liable. If
you have a lease agreement with some hunters you can include a hold harmless
clause in your hunting lease.
You can also require them to carry an insurance policy to protect you in
the event that someone should get hurt.
If you lease your property you have basically acquired the best
caretakers you could ask for as long as you select the group carefully.
They will help maintain the property and rid it of unwanted guests.
If you use one or more of these tactics you may not rid yourself of all
unwanted hunting of your property, but you will certainly reduce it greatly.
There are good reasons why as an owner you don’t want unwanted hunters.
They can get injured, they can damage your property, or if you are trying
to sell they can run off good prospects.
The best thing you can do is to not be an absentee owner.
If you are present and involved with your land you can keep the unwanted
guests at a minimum.