Land, Land a Go-Go

Posted: March 6, 2019 in Uncategorized

It’s been awhile ,, but I’m back! Ready to write about the REAL stories of commercial real estate happening in Denver and in the Denver area and some in Las Vegas.  

Recently, went under contract on a piece of land in Aurora CO. My client was/is looking for land to build a daycare,event center, church concept. We identified a piece of land with 2 parcels, each parcel was about 3.77 acres. 

Listing agent mentioned there were a few offers coming in and the owner preferred selling both lots for $3 a sq ft. Otherwise the lots would be sold separately for $5 a sq ft. WHAAAAT????  Both listing agents have been land specialists for over 20+ yrs. , but something didn’t sound right. If you have multiple buyers all wanting to buy just one of the lots, why not mix and match the lots to accommodate the buyers you have. But NOOOOOO,  the lead agent push for my client to buy both lots. It was puzzling why this agent would not maximize his clients take by selling to 2 buyers. 

The other oddities / red flags are listed below

+ Selling agent was pushing for a bargain and sale deed 

No survey, no original sale docs for the property, Plat used by title had a different address

Asked agent for address of land (not on any of his flyers) and when the agent/lawyer countered the given address was taken out and TBD was used.

+Land Titles rep (LD) wrote me an email stating it was perfectly fine to have a TBD address to open escrow.

+Critical documents from owner and his law firm were incomplete, and completed just a week ago. These docs were originally from 1980, 1975. 

Incomplete HOA termination docs were presented. The listing agent after being questioned a few times admitted he was aware of an HOA easement. 

=Lot 2 had a fire dept easement that rendered the property useless for any use. Listing agent only disclosed the benefits of 2 curb cuts approved for Lot 2. Curb cuts are not a benefit is they are for an intruding fire dept easement. 

+ Owners agreed to a 2 yr owner carry, BE CAREFUL WITH THIS!!! Owner carry financing saves $$$ thousand of dollar in fees, but could cost you client much more.

It is not the responsibility of the commercial land agent to do your due dilligence, HOWEVER< if asked it is ethical and REQUIRE for the agent to disclose info known by the agent. Colorado requires all agents to work in good faith. Having law firms from the real estate company OR seller tender incomplete documents, having direct due diligent questions not answered or ignored is wrong. As i discussed with the title company, having partial documents given to title by a law firm most often has more intent to deceive. If an owner forgets a paper, it can be consider a mistake. Having a paid legal professional tender an incomplete document is improper and when you consider the agent and owner withholding info, it appears the partial document tendered was a more educated/calculated withholding and deception 

There were other issues with zoning and the city of Aurora. Aurora deemed the land to be zoned M1 M2 M3. However zoning docs from the agent/owner showed the city of aurora considered this land Multifamily use / ResInd , mixed use. However Dan at the city of Aurora cited an undisclosed document to substantiate his findings of M1 use, EVEN THOUGH ithe city of Aurora website specifically identified this are as city center ‘core’ or ‘peripheral’ area. The good new is although Dan has not substantiated his policy reference to using M1 zoning, Dan mentioned this land was going to change its zoning from M1 in a few months,, maybe this is from his secret policy doc. 

Dan went a bit further before disclosing the zoning was slated to be changed. In Aurora, churches can be built in ANY zoning. All zoning allows for accessory use for all uses. This allow up to 25% of your use to be outside the scope of the zoning for normal activities not cited in the zoning. For example, if you own a home, you can use a room or up to 25% of your home for office use, salon, within the overrights, (no lights sign, etc). 

My client was told they could not have an area for receptions for weddings, celebration events and this was not allowed!!!???! This problem was resolved after i spoke with the zoning dept. and it seemed we had these issues taken care of to moved forward with the purchase. 

But we needed to terminate due to the liens, restrictions in the title commitment (Sch. B exceptions) Hidden within the 20 exceptions were uglies that were known to the agent but not disclosed fully, even after he was directly asked about this. IN the end, there were 2 HOA restrictive documents, 1 of the HOA was taken off title, but there was a 2nd HOA restrictive doc. 

There was another problem specifically to Lot, a fire department easement. The agent was well aware of there being 2 curb cuts approved for Lot 2 and had to have known this was for a fire dept easement. FOR THE LIFE OF ME, not sure how this agent could state with a straight face this was a benefit to a buyer!!!!

In the end, we terminated the deal BUT, I continued to work with Land Title to try and remove the fire dept easement and other issues. I mentioned that it appears from their survey, there was a difference address for the property when the owner purchased it and the address was changed at his closing 10+ years ago. If this is the case, there could be argued the fire dept easement and HOA lien did not survive the address change and the lot description may have changed. The end game is to get the title company sufficient info so they can remove the liens from the Schedule B.

Lesson

When buying undeveloped land, it is wise to give your self at least 10 days to 2 weeks for you due diligence and maybe a week or 10 days longer for off record issues, such as zoning, easements, ground hogs, fire dept issues. Yes, ground hogs!! This same client identified another property off of Chambers Rd in Aurora that we put in a contract. While talking to the storage company who neighbored this other property, I was asked what i was going to do about the ground hogs. By talking to the neighbor, i found out there was an endangered ground hog on the property being purchased by my client. My client would have had to move these ground hogs before developing the property. The selling agent said he was aware of this, but did not tell me until he was asked. 

Keep your eyes open! Real all of the title commitment Schedule B exceptions and open all of the attachments. Ask the agent your questions, and follow up with your client by putting your questions (and your clients questions) in an email. Send this email to all parties asking the listing agent to verify your email, his answers, etc. 

If there is an owner carry offered, you need to be extra careful since you will not have a bank reviewing the title ,docs, etc.

Have the owner provide a survey, original purchase docs,and other pertinent documents. Verify lot description from original docs, verify/ask agent the where he received the docs tendered, make sure docs are complete. 

Take copies of all flyers with claims of use, zoning and verify.

I learned if an agent gives you an address and then he or his law firm changes the address to TBD, you might consider countering back to change back to the address previously given, EVEN IF THE TITLE COMPANY SAYS AN ADDRESS IS NOT NEEDED.  With each decision that is made, think about what would a judge say to you if there was a problem. The listing agent will say,  ‘he didn’t ask. instead ask and be able to say ‘he didn’t tell me’ . 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s