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Law Offices of Ronald W. Rutz
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February 15, 2003: Considerations When Purchasing Rural Real Estate

Q: I do not remember the sponsoring organization anymore but I do recall your excellent presentation, even after all of these years, about concerns that potential rural property buyers must address before purchasing real estate. Over the years I lost my notes and reading "Code of the West" was not really helpful, at least for my concerns.

A: I am embarrassed to admit I do not recall either, although I have talked and written on the subject. But here is a short list, in no particular order, of factors to review when purchasing acreage.

First, satisfy yourself that you are actually getting the number of acres that you expect to acquire. Many contracts are worded to give significant wiggle room on what the seller must convey, even if the approximate acreage is listed.

Unless you have direct public access to the property, examine the ingress and egress easements carefully to be certain that you have valid access to the property and that you can use the easement as you contemplated (transport machinery, run water or electrical lines, etc., in addition to just traveling back and forth). Additionally, determine who is responsible for the easement repairs and/or maintenance charges. If several users share expenses, is there an effective mechanism to force contribution?

Remember that there is no easement for your "view," so do not expect neighbors to be sensitive to your use, unless there are enforceable covenants in place or the appropriate zoning ordinances exist that you could use for your benefit.

Check the property for unrecorded easements (people using the property) because others may have the right to cross the property, cut trees, hunt, run livestock, mine rock, etc., even if this use does not appear as a recorded document. Walking the property and looking for signs of such activities is a must.

Check the fences carefully. Are they located in the right place and in good repair (otherwise, very expensive for a new owner to fix)? Note that cowboys and rural property owners actually spend a significant amount of their time unromantically fixing fences instead of hanging with the female bovines or moseying along on ponies.

If water is involved, has it been more than ten years since part or all of the water was used or leased? If yes, then the unused part of the water right could have been forfeited under the abandonment rules, even if you paid the "owner" for it as part of the purchase price. For ditch water, will the running charges be increased after the sale and do you have enough shares in the ditch company or lateral company to open the headgate? Where is your headgate? Are there lateral ditch easements in place, by which water is brought from the main ditch across other's property, to the real estate you are interested in purchasing. Even if you bought water, do you have the right to use the lateral ditch from the main ditch to run the water? Often stock ownership in the lateral ditch is required, too.

What is your domestic water source? Do not automatically assume that a well you drill will hit potable water. And check out the septic system to be sure that the "leech field" or the containment tank you were planning will be permitted or the one in place is still proper.

Will you have an insect problem, such as from pine beetles, or a weed infestation problem? It would be a shame to buy that property covered with trees only to have many of them dead the next year or to find that the ground is covered with noxious vegetation, which could be costly to eradicate.

Are there environmental problems such as with oil and insecticide spills (such as when farmers in the past changed oil or mixed sprays at one particular site), old tires, a trash dump that the previous owners created, etc.? And even though the ground is barren and dusty, it could be classified as wet lands or even a flood plain. Be certain that there are no threatened or endangered plants or animals present on the property. Otherwise you may learn more about environmental laws than you ever wanted to know.

Have certain development or conservation "easements" been conveyed away? Remember you are stuck with the property "as is" even though someone back up the chain of title decided to cash in on the then current estate planning fads. Unless properly negotiated, these restrictions last forever and do inhibit land use and depress property values. As an example, property taxes continue to increase but you hit a glass ceiling where your economic decisions to increase income are restricted and prevent you from keeping up with the ever increasing expenses.

Even with agriculturally zoned land, an owner can keep only a certain number of animals per acre, depending on the kind of animal and intended use. Thus, you may not be able to become that ostrich baron after all without securing zoning changes or variances.

Be sure to understand the true cost to run power or telephone lines to your building sites. Remember, it is your obligation to abide by their rules and charges if you want some of these basic services.

Check to see if the structures on the property can be insured. Under the current rules, among other things, if either the previous owner or you have filed a claim, even though involving other real estate, coverage can be denied.

What stays with the property and what goes? The grain storage bins, the well pump, the gas tank, the propane tank, irrigation tubes, livestock panels, movable buildings, etc. may be long gone by the time you arrive after the closing. Unless noted in the sales contract, the buyer may not have the right to such property.

Are you getting all of the mineral rights? If not, realistically assess how this will impact what you plan to buy and to use. A diamond mine opening up in the middle of your pasture might financially reward you, but might not be the reason why you chose to live there in the first place.

Take your neighbors as they are (just like relatives). If you move near a feed lot, a lumber mill, an area set aside to store or grind hay, or ensilage pits, you may have problems adjusting.

Out of space. Must stop. Hope the foregoing points were as "good" as you had remembered them to be.

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