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Category Archives: real estate development

Recording a real estate document gives notice, but lack of recording doesn’t?


By Missouri statute, the recording a document relating to real estate in the office of the county recorder of deeds gives notice to all of the contents of the recorded document (called an “instrument”):

Every such instrument in writing, certified and recorded in the manner herein prescribed, shall, from time of filing the same with the recorder for record, impart notice to all persons of the contents thereof and all subsequent purchasers and mortgagees shall be deemed, in law and equity, to purchase with notice.

Is lack of recording notice that something did not occur, even though it should have been recorded?

According to the Missouri Court of Appeals, in the case Warren County Concrete v. Peoples Bank & Trust and Warren County Title Company,  purchaser of real estate had no duty to check to see whether a release of a deed of trust had been recorded, even though the purchaser had provided the money to pay off the deed of trust to a title company that closed the transaction.

The purchaser claimed to have no idea that the bank had not released the deed of trust until four years later, when the purchaser received a notice that the bank was foreclosing on the property. A year later — more than five years after the purchaser closed its purchase of the property — the purchaser filed a lawsuit against the bank and the title company, alleging that they were obligated to record the release.

The bank and title company claimed that the five-year statute of limitations period had run for negligence and breach of contract, and the purchaser was out of luck. The trial court agreed.

The purchaser appealed, claiming that the statute of limitations only began to run when the purchaser became aware that he had been wronged, which would have been the date the notice of foreclosure was delivered to the purchaser.

In the appeal, the bank and the title company argued that the purchaser should have checked the recorder’s office after the closing to make sure that the release had been recorded. The appeals court reversed the trial court’s judgment, stating that the burden of searching the public records after the closing was “a duty we are unwilling to place on the purchaser.”

The Court of Appeals was probably influenced by the injustice that would result when a purchaser hires a title company to close a transaction and provides money to pay off an existing loan, but the title company fails to follow up to make sure that the lender receives the payoff and records a proper release.

The Court of Appeals’ opinion isn’t specific about the reason for the mix-up, but it looks like the bank recorded a release after receiving the payoff, but that the release described a different piece of real estate than the piece that purchaser bought.

Glaize Creek Sewer District blows condemnation case, but gets new chance


At a condemnation trial, Glaize Creek Sewer District (in Jefferson County, Missouri, just south of St. Louis), didn’t put on any admissible evidence of damages to the Gorhams’ property. The Gorhams put on proper evidence of damages, showing that the value of their property after the sewer line was installed declined by $29,000. The Missouri Court of Appeals reversed the jury verdict of zero damages (based on an appraiser‘s unsubstantiated opinion testimony), and sent the case back for a new trial.

Two things are unusual about this case: Read the rest of this entry

Kimberling City’s acceptance of sewer system didn’t negate contractor’s warranty


Kimberling City occupies several ridges and valleys where Missouri Highway 13 crosses the heart of Table Rock Lake. You would have a hard time finding a place where the installation of a sewer system was more difficult and expensive per customer, due to the steep and rocky terrain and the necessity of pumping the wastewater collected in each valley over the hills to eventually reach the treatment plant.

Kimberling City grew from almost nothing to a population of nearly 5,000 since the completion of the dam that created Table Rock Lake in 1959. Permanent residents and vacationers are attracted to Read the rest of this entry

What good are economists if we don’t listen to them?


Economists, as a group, have been criticized for not predicting the collapse of the economy in 2007 and 2008, even though there were a few lonely voices. We need to learn to listen to the ones who sometimes tell us what we don’t want to hear.

Here’s Raghu Rajan from his blog, Fault Lines: Read the rest of this entry

Never mind, Missouri cities can charge different tap fees in different parts of town


Earlier this year, I wrote that the Eastern District of the Missouri Court of Appeals, in  City of Sullivan v. Sites,  had struck down an ordinance of the City of Sullivan that established a higher tap fee for connecting to the city’s sewer main in a particular part of town. The voters of the City of Sullivan had approved a $3.3 million bond issue to extend sewers to a part of  the city without sewer service. The city’s board  of aldermen adopted an ordinance imposing a connection fee in the newly-served area that was higher than the connection fee charged in the remainder of the city.

The Sites trust challenged the constitutionality of the ordinance establishing the higher connection fee, claiming that the ordinance violated Article III, section 40(30), which prohibited the passage of local or special laws where a general law would suffice. A general law relates to persons or things as a class, while a special or local law relates to particular persons or places.

However, Missouri Supreme Court’s opinion in City of Sullivan v. Sites, reversed the Court of Appeals decision and affirmed the trial court’s decision upholding the ordinance. The Supreme Court reviewed court decisions that recognize that prohibitions against special or local laws “should not prevent necessary geographic classifications premised on legitimate distinguish characteristics.” The Supreme Court determined that the Site trust’s property was not singled out, but was a part of a geographic area n area that was defined as a class.

The Supreme Court held that “the city was justified in creating the class of new sewer connections charged higher connection fees,” having demonstrated good financial and practical reasons for requiring property in the newly-served area, noting that the imposition of higher fees in the new area “contributed to the City’s ability to fund the sewer project as a whole.”

Purchase option is assignable without consent, but there can still be a fight


The Hulls signed a real estate lease with a purchase option and put down a deposit of $56,000, which could be applied to the $198,500 purchase price, but would otherwise be non-refundable. The Hulls created a limited liability company (LLC) called Briar Road, and Briar Road attempted to exercise the purchase option. Stenger, the seller, refused, claiming that it had not approved the assignment of the purchase option by the Hulls to Briar Road.

What difference does the identity of the purchaser make? Read the rest of this entry

Real estate tax in the health care bill?


I received an email from a Realtor friend which included some strong rhetoric about the 3.8% tax on gains from the sale of residential real estate included in the new health care law, the Patient Protection and Affordable Health Care Act.

The point of the quoted rhetoric was to fuel voter sentiment against Democrats running for Congress in November by alleging that the bill is “set to screw the Read the rest of this entry

Branson Landing and the dilemmas of economic development


Cliff Sain’s excellent report on Branson Landing in the July 18 Springfield News-Leader contains statements that illustrate some of the dilemmas faced by developers and local governments when planning a large project.

Branson’s aldermen (none of whom were in office when the Branson Landing project was approved for construction) have chosen to take $1.4 million from the city’s general fund and $1.2 million from the city’s transportation fund Read the rest of this entry

The defunct HOA problem continues in Missouri, legislation needed urgently


Homeowner associations (HOAs) are given responsibility by recorded subdivision and condominium documents for maintaining, insuring and operating private communities’ common properties, such as streets, drinking water systems, sewer collection and treatment systems, and recreation facilities.

With many developers having abandoned projects before the HOA is operated by residents, the residents and other lot or unit owners (such as lenders that have foreclosed) are often faced with HOAs that cannot properly Read the rest of this entry

Branson Commerce Park opens new possibilities for Branson

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With its infrastructure complete, the streets, water and sewer systems of Branson Commerce Park were turned over to the City of Branson today. This 200-acre development on the north side of Branson is designed for commercial, light-industrial and residential development. In the photo, owner’s representative Phil Lopez and Branson mayor Raeanne Presley prepare to cut the ceremonial ribbon.

The original developer of Branson Commerce Park took advantage of Missouri’s Community Improvement District (CID) statutes to finance the installation of streets and water, sewer and underground telecommunication lines. Rather than install the infrastructure in phases, with years of construction traffic, the digging and disruption is over, except for what takes place on each lot. The CID program as used here does not involve the use of any taxpayer outlays or liability. However, a portion of the cost of installation of the infrastructure is allocated to each lot annually, collected with property taxes and remitted by Taney County to the trustee for the bondholders. The bondholders, through the purchase of the CID’s bonds, provided the construction money.

The Branson area is a popular destination for vacations and retirement, with not many private sector jobs outside these industries. Branson Commerce Park provides an ideal location for enterprises that support Branson’s extensive medical facilities and its many resorts, hotels and restaurants.

But there’s more. Because of its telecommunications infrastructure, Branson Commerce Park is a practical location for businesses that can be wherever there’s a good electronic link to the world. Entrepreneurs and employees who are attracted to the Ozarks may appreciate Branson Commerce Park’s proximity and easy access to residential neighborhoods, shopping, medical facilities, K-12 schools, and Branson’s RecPlex.

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