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TERRA FIRMA Official Publication of the REALTORS® LAND INSTITUTE 430 N Michigan Ave. Chicago, Illinios 60611



THE IMPORTANCE OF LAND KNOWLEDGE FOR REAL ESTATE PROS Being the Expert Communication Information Sources



The Best Stop Here!







Get Early Bird Rates through 1/31/2017 at rliland.com/national-land-conference




WINTER 2017 | ISSUE 06


LAND, RANCH AND RECREATIONAL PROPERTIES. The Wall Street Journal produces special advertising features reporting on the benefits of investing in the various land categories. From ranches, farm, timberland and more, reach your target market by advertising on a local, regional, national or global level. Our audience is primed to purchase–39% of the WSJ audience owns an investment or rental home, and 17% are looking for a farm/ranch home as their next secondary property.

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Winter 2017 Issue 6

News Brief from National

24 Education Update 28 Government Affairs Briefing 30 The Importance of Land Knowledge 34 The Top Three Title Issues Realtors® Need to Know

Government Affairs Briefing

37 A Guide to Real Estate Mapping


40 Do Your Buyers Know What to Expect When Buying Rural Land?

44 Section 1031 Like-Kind Exchanges: Current Threats to a Hundred Year Old Tax Tool 48 Agritourism Trends and the Informed Realtor® 53 Recognizing the Value and Uses of Pore Space as a Property Right

Section 1031 LikeKind Exchanges: Current Threats to a Hundred Year Old Tax Tool

57 Auctions Just Don’t Work in My Area

44 Winter 2017 Edition Issue 6

Publisher Aubrie Kobernus, Chief Executive Officer

Cover Photo Copyright 2017. All rights reserved.

Published by the REALTORS® Land Institute 430 North Michigan Avenue Chicago, Illinois 60611

Editor-in-Chief & Creative Director Jessa Friedrich, Marketing Manager

Reproduction in whole or in part without permission is prohibited. Views expressed within the publication are not necessarily endorsed by the REALTORS® Land Institute and information should not be construed as recommendations for any course of action regarding financial, legal, or accounting matters.

Telephone: 1.800.441.5263 Fax: 1.312.329.8633 E-mail: rli@realtors.org Website: www.rliland.com

Contributing Editor Amanda Jenkins, Education Manager


Winter 2017


NEWS BRIEF FROM NATIONAL PRESIDENT’S MESSAGE I am honored to be your 2017 REALTORS® Land Institute President and to have the opportunity to serve the members of our prestigious organization. Last year, under the leadership of Bob Turner, ALC, the ground work was put into place for RLI to become a more member-centric and valuable organization for all of its members. As President, I look forward to continuing on these tracks to bring more value to our members and ensure we gain recognition in the industry as the elite organization that we are for land professionals. With the support of the full Board of Directors, the Executive Committee met in December in Chicago with a highly revered strategic planner to further assist in aligning RLI towards continued growth and prosperity for years to come.

formats, including Land 101: Fundamentals of Land Brokerage; Land Investment Analysis; Site Selection; Transitional Land Real Estate; and Agricultural Land Brokerage and Marketing. Plans are in place for 2017 for updating other LANDU courses. With both a new CEO and the addition of a Chapter and Membership Specialist, we have a full staff in place to execute our strategic plan in the coming year. I have full confidence that our staff has the expertise to carry through our strategic plans and implement any changes that need to be made. If you have ideas or would just like to chat, feel free to contact me. I am looking forward to another bright year for RLI as we continue to be the premier professional development and membership organization for land real estate professionals. Sincerely,

The networking and camaraderie “provided through RLI has no doubt enriched my knowledge in the industry as well as provided me with valuable, trustworthy contacts that have helped me to further my business as well as become good friends of mine.

In the coming year, I aim to lead our Board and Committees in enhancing the many benefits and opportunities which have contributed to these types of successes for land real estate professionals across the country. In 2016, the Board of Directors approved the hiring of a branding company to conduct research and assist RLI in understanding and advising next steps towards clarifying our brand image and messaging. At their suggestion, RLI is creating two separate logos, one for the Institute and another for the ALC designation. In addition, efforts to expand recognition and awareness of both our organization and our designation within the REALTOR® family are already afoot. On track with an initiative set in motion last year, five courses have been updated to provide the most relevant and up to date information possible. The courses will be offered this year in their updated


Winter 2017


Brandon W. Rogillio, ALC 2017 RLI National President

JERAMY STEPHENS, ALC, ELECTED RLI VICE PRESIDENT The REALTORS® Land Institute is proud to announce Jeramy Stephens, ALC, Partner / Principal Broker with National Land Realty from Little Rock, AR, as the 2017 RLI National Vice President. “I am extremely honored to be nominated as the 2017 Vice President of Realtors® Land Institute and look forward to serving the membership. RLI is a member driven organization and I will continue the growth of our membership through education, networking opportunities and a voice in D.C. to advocate on behalf of issues in the land industry which will help members to improve their individual businesses,” said Stephens upon hearing the news.

MEET RLI’S 2017 BOARD OF DIRECTORS Get to Know RLI’s Executive Committee Brandon Rogillio, ALC 2017 President Rogillio Real Estate Baton Rouge, LA brandon@rogilliorealestate.com Brandon Rogillio, ALC, is the Owner/ Broker of Rogillio Real Estate in Baton Rouge, LA, and began practicing real estate as a profession while studying economics at Southeastern Louisiana University. In the spring of 2009, he earned the Accredited Land Consultant designation through RLI. Among the marketplace, Rogillio is one of the most respected and trusted land experts. He is extremely involved in his community and has played a large role in the recovery of his community after devastating floods swept through the area earlier this year. Brandon is currently the only Realtor® in Louisiana to hold both the esteemed ALC and CCIM designations. Jimmy Settle, ALC 2017 President Elect Crye-Leike Real Estate Services Clarksville, TN settle.land@gmail.com Jimmy Settle, ALC, has been a licensed REALTOR® in Tennessee and Kentucky as well as a member of the Clarksville Association of REALTORS® (CAR) since 1993. Settle joined RLI in 2000 before receiving his ALC designation in 2004. He has been an active within the Institute as President of the RLI Tennessee Chapter, Chairman of the Education Committee, and Chairman of the ALC Designation Committee. He has also served on various CAR Committees before becoming President of the Association in 2007. During this time, he also served as the Tennessee Association of REALTORS® Director. Jeramy Stephens, ALC 2017 Vice President National Land Realty Little Rock, AR jstephens@nationalland.com Jeramy Stephens, ALC, is a graduate of Arkansas State University with a Bachelor of Science degree in Agriculture Business with an emphasis in Farm Management and Ag Marketing. He specializes in row crop farm sales in the Mid-South Delta, timberland properties throughout the South, and hunting / recreational

properties. He has also become active in commercial land in the past several years. Jeramy has served RLI as the Vice Chair of the 2016 Education Committee and as the 2016 President of the RLI Arkansas Chapter. Bob Turner, ALC 2017 Immediate Past President Southern Properties Cordova, TN bturner@southernprop.net Bob Turner, ALC, is a proud REALTOR® and has been a Land Broker for over thirty-seven years. Turner has been an active member of RLI since 1996 and earned his ALC designation in 2006. Among his many contributions to the organization, he has served on the RLI Board of Directors, as the RLI Representative to the NAR Executive Committee, RLI Tennessee Chapter President, and as the chair of the RLI 2012 National Land Conference. He personally operates farms, mobile home parks, Residential and Commercial developments, and brokers land in Tennessee, Mississippi, and Arkansas.

2017 RLI Board Members Aaron Graham, ALC Future Leaders Committee Chair Land Pros Realty Gretna, NE aaron@nationalland.com

Renee Harvey, ALC Education Committee Chair Century 21 Harvey Properties, Inc. Paris, TX rharvey@c21php.com

Flo Sayre, ALC ALC Designation Committee Chair Farmers National Company Pasco, WA fsayre@farmersnational.com

Minor Taylor, ALC Government Affairs Committee Chair Property Connections Real Estate Brenham, TX minor.t@sbcglobal.net

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Winter 2017


Ray Brownfield, ALC Government Affairs Committee Vice Chair Land Pro LLC. Oswego, IL ray@landprollc.us

Fletcher Majors, ALC Education Committee Vice Chair Great Southern Land, LLC Wetumpka, AL fletcher@greatsouthernland.com

Norma Nisbet, ALC ALC Designation Committee Vice Chair Vista Properties & Investments St. Louis, MO norma.nisbet@att.net

Caleb McDow Future Leaders Committee Vice Chair Crosby & Associates, Inc. Winter Haven, FL caleb@crosbydirt.com

George Clift, ALC Treasurer Clift Land Brokers Amarillo, TX george@cliftlandbrokers.com

Russell Riggs RLI Government Affairs Liaison for NAR National Association of REALTORS Washington, D.C. rriggs@realtors.org

RLI’s Representatives to NAR Committees Business Issues Policy Committee Renee Harvey, ALC


Winter 2017

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Commercial Committee Brandon Rogillio, ALC Jimmy Settle, ALC Commercial Legislation and Regulatory Advisory Board Randy Hertz, ALC Commercial Real Estate Research Advisory Board Mark Cumbest, ALC John Brocker Executive Committee Bob Turner, ALC Federal Financing and Housing Committee Barry Upchurch, ALC Global Business and Alliances Committee Jason Gavan Institute Advisory Committee Aubrie Kobernus Brandon Rogillio, ALC Jimmy Settle, ALC Insurance Committee Tim Kellogg Land Use Property Rights and Environment Committee Paul Bottari, ALC Ray Brownfield, ALC Professional Standards Committee Christina Asbury, ALC Public Policy Coordinating Committee Randy Hertz, ALC Resort and Second Home Real Estate Committee Chia Valdez-Schwartz

Get to Know RLI’s Staff Aubrie Kobernus, MBA Chief Executive Officer 312-329-8837 | akobernus@realtors.org As the CEO, Kobernus is responsible for the overall management of RLI. This includes working together with the Board of Directors to develop the vision, goals, objectives, and related policies for the organization. Within that framework, Kobernus organizes and directs the staff, programs, financial performance, and activities of the Institute. Members may contact her if they have any questions or concerns.

Karen Calarco Manager of Operations 312-329-8287 | kcalarco@realtors.org Karen manages and controls expenditures within the set budget, and member records. Members may contact her for assistance changing their profile information, paying dues, and answering financial inquiries about their account. Jessa Friedrich, MBA Marketing Manager 312-329-8353 | jfriedrich@realtors.org Jessa serves as the staff liaison for the Future Leaders Committee and Government Affairs Committee as well as the Marketing/Branding Task Forces. Members may contact her with any member or Chapter news regarding awards or accomplishments, for publishing a blog post, for contributing to Terra Firma, or with questions about member benefits, the website, or social media. Amanda Jenkins Education Manager 312-329-8441 | ajjenkins@realtors.org Amanda serves as the members’ staff liaison for the ALC Designation and Education Committees. Members may contact her with any questions regarding LANDU Education Programs, including the courses, webinars, and teleconferences. Bill Stanton Chapter & Membership Specialist 312-329-8519 | bstanton@realtors.org Bill Stanton is RLI’s Chapter & Membership Specialist. His past experience has prepared him to work for RLI in developing a stronger relationship between national RLI and its chapters across the country as well as assisting them to achieve their goals. Members may contact Bill with any questions regarding general membership, the ALC designation/application process, or FLI Chapters.

RLI MAKES A SPLASH IN ORLANDO The REALTORS® Land Institute Leadership and Staff headed to Orlando for the 2016 NAR Conference & Expo to generate awareness about RLI and the ALC Designation. An RLI Member Meeting was held on

November 3, as a place to network with other members and to hear the latest updates. Throughout the conference, RLI had a strong presence that spread awareness about our organization and the ALC designation. Brandon Rogillio, ALC; Danny Smith, ALC; Norma Nisbet, ALC; Phil McGinnis, ALC; and Bill Eshenbaugh, ALC, presented as a panel on Land: Optimal Commercial Use Options & Opportunities. Bob Turner, ALC, 2016 RLI National President, also took the floor in the NAR Commercial Marketplace Theatre to speak on The Future of Land Investment. In addition, RLI’s CEO Aubrie Kobernus was in the spotlight on the Commercial Real Estate Show. RLI also had a booth in the NAR Commercial Marketplace where staff spoke with attendees and brought in new members. “The National Association of REALTORS® has been a long-time advocate of commercial and land issues. It is important for RLI to show our support of NAR’s efforts by having a visible presence at the NAR meetings, especially the Legislative meetings each May. Please join us in May 2017—and don’t forget to identify yourself as a member of RLI when registering!” – Aubrie Kobernus

RECORD NUMBER OF MILITARY TRANSITION PROGRAM MEMBERS IN 2016 The REALTORS® Land Institute Military Transition Program (MTP) has grown to new levels with almost 30 active members currently involved. The program is designed to assist transitioning service members into the land real estate industry. It offers unparalleled networking and comraderie amongst land professionals as well as the opportunity to learn from fellow members’ knowledge and years of experience. The Military Transition Program is for anyone who has served in the US Military starting in 2000 or later and offers benefits valuing over $1,800: • • • •

First year of membership—FREE! ($445 value) Land 101: Fundamentals of Land Brokerage course—FREE! ($445 value) One additional LANDU elective course—FREE! ($445 value) The John Eshenbaugh Military Scholarship ($500 value)

For more information about this program, visit www.rliland.com or contact RLI at 1-800-441-5263.

Terra Firma

Winter 2017


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Alabama Chapter

The Land Education Foundation (LEF) contributes funds to students of the REALTORS® Land Institute’s LANDU educational programs and their Military Transition Program. They also contribute to other activities and educational conferences promoting Land and the ‘wise utilization thereof’ in the industry.

The Alabama Chapter is excited about their well-attended Agricultural Land Brokerage and Marketing course in midSeptember. They had almost thirty brokers and agents from Alabama, Georgia, and Florida attend the two-day course. LANDU Approved Instructor Ben Crosby, ALC, did a great job presenting the material to the room full of land professionals. They were privileged to have Mr. John McMillan, Alabama’s Commissioner of Agriculture and Industries, speak to the Chapter about The State of Ag in Alabama. The Chapter is looking forward to 2017 under the leadership of their board and incoming president Craig King as they move forward with a lot of momentum for the coming year.

Please be reminded that there are $500 scholarships available through LEF to RLI members. If you or someone you know might be interested, applications and more information on the Land Education Foundation can be found at www.landeducationfoundation.com

RLI CHAPTER NEWS The REALTORS® Land Institute offers strong and engaging chapter programs because of the superior commitment and dedication of its volunteers. RLI Chapters routinely offer local LANDU courses, information, networking opportunities and an array of professional development programs.

For more information about the Alabama Chapter, visit www.alabamarli.com

Carolinas Chapter

RLI Members may elect to join one or more RLI Chapter organizations and benefit from participation on a regional or local basis. Members must be in good standing with National to join chapters.

New Chapter Specialist at RLI RLI is excited to announce Bill Stanton as the new Chapter & Membership Specialist. Bill has been in the association world for over a decade, working at the American Bar Association, the American Marketing Association, and the Association for Corporate Growth. His past experience has prepared him to work for RLI in developing a stronger relationship between National RLI and its chapters as well as assisting the chapters in achieving their goals. “I am very excited to join the great staff, leadership, and membership of the REALTORS® Land Institute,” Bill said of his new position at RLI.

The Carolinas Chapter held their Annual Chapter Membership Meeting on June 28 in Greensboro, NC. The twenty-two attendees were given a presentation on the Economic Development Partnership in North Carolina by John Loyack, VP of Global Business for the Economic Development Partnership. After installing their 20162017 President and Officers, Dick Havens presented the Chapter’s Land REALTOR® of the Year Award to Eric Andrews, ALC. For more information about the Carolinas Chapter, visit www.carolinasrli.com


Winter 2017


Colorado Chapter

Iowa Chapter

The Colorado Chapter held the Real Estate Mapping Technologies & Techniques LANDU Course on October 5-6 in Breckenridge, CO. The nineteen attendees learned ways to reference and/or locate everything on the Earth’s surface in x and y space, reviewed mapping programs, and various GIS systems for capturing and analyzing data, examining patterns and trends. The Chapter also recently inducted their 2016-2017 Officers at their membership meeting on September 8 in Grand Junction, CO.

The Iowa Chapter of RLI held a technology class, as well as its Annual Dinner and Board Meeting September 1314 in Coralville, IA. New officers were installed during the Iowa Chapter Annual Dinner: Matt Adams was sworn in as President by RLI 2016 National President Bob Turner, ALC; Kirk Weih, ALC, was sworn in as President-Elect; and Travis Smock as Vice President.

Congratulations to Justin Osborn, President of the Colorado Chapter, for being selected Colorado’s Land REALTOR® of the Year. Joey Burns, last year’s LROY, presented Justin with the Chapter trophy at the September membership meeting. For more information about the Colorado Chapter, visit www.coloradorli.com/

Illinois Chapter

The Illinois Farm & Land Chapter of RLI held its 63rd Annual Meeting on September 14. Highlights included Luke Worrell, ALC, receiving the 2016 Illinois Land Broker of the Year Award. Luke’s father, Allan Worrell, ALC, received this award in 2015 making them the first father and son recipients. Luke Worrell, ALC, was elected President-Elect; and John Leezer, ALC, as Secretary/ Treasurer; and Jim Erlandson, ALC, as the 2017 Illinois RLI Chapter President. The Chapter also held a managing broker course (Illinois REALTORS® continuing education) December 13-14 in Mahomet, IL. For more information about the Illinois Chapter, visit www.rliillinois.org


Winter 2017

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The Chapter also presented the following awards: Eric Schlutz, ALC - Farm and Land Broker of the Year; Troy Louwagie, ALC - Volume and Acres Sold; Jon Hjelm, ALC Good Neighbor of the Year; Austin Maas – Rising Star; Loyd Brown, ALC – Longtime Dedication to Iowa RLI; and Jacob Hart – Deal of the Year. For more information about the Iowa Chapter, visit www. rlifarmandranch.com

Kansas Chapter

The Kansas Chapter is excited that the 2017 LANDU Week will be held in the Sunflower State, also known as the Jayhawk State, the Midway State, and the Wheat State. Why the Sunflower State? Because the wild sunflowers grow in profusion across the state, and the sunflower is also the official State flower. Why is it known as the Wheat State? It is one of the nation’s leading agricultural states, it was number one in all wheat produced, wheat flour milled, and wheat flour milling capacity in the year 2000. This region of plains and prairie is the breadbasket of the country, growing more wheat than any other state in the union. LANDU Week will take place at the Kansas City Regional Association of REALTORS® on June 4-12, 2017. Come for the courses and take in all that Kansas has to offer, with small town charm and big city attractions. So, whether you

call it the Sunflower State, the Wheat State or one of the other nicknames it has, the Kansas RLI Chapter members look forward to welcoming you to the great state of Kansas! For more information about the Kansas Chapter, visit www.ksrli.com

Oklahoma Chapter

The Oklahoma Chapter held their annual membership meeting on October 5, the evening prior to the Oklahoma Association of REALTORS® annual convention. The new and returning board members were sworn in and are anxious to continue to grow the Chapter and offer members networking opportunities. The Chapter had a booth in the exhibit hall where they introduced attendees to what the REALTORS® Land Institute and the Oklahoma Chapter are all about. For more information about the Oklahoma Chapter, visit www.okrli.com

Colorado & Kansas Chapter

Agwest about trends/forecasts in the commodity markets and what to watch for in the months ahead. Afterwards they continued networking during a fulfilling steak dinner! The next joint meeting between Colorado, Kansas and Nebraska will be held in Colorado in the Summer of 2017.

Pacific Northwest Chapter

The Pacific Northwest Chapter has increased membership by almost 20 percent as a result of the RLI courses that they hosted this past year! The Pacific NW Chapter will continue to offer networking opportunities to our members and affiliate groups in 2017. They will be hosting the LANDU Timberland Real Estate course in Pendleton, OR, on April 24-25, taught by LANDU Approved Instructor Rick Taylor, ALC, Registered Forester/Broker. This course will be followed by a marketing session on the 26-27, giving members and attendees the ability to network with other brokers and grow their business. In September, the chapter will host a Mapping with Smart Devices course in Pasco, WA. They are on the road to more great classes in 2017 and will continue to try and host two courses per year. For more information about this Chapter, contact Chapter President Flo Sayre, ALC, at fsayre@farmersnational.com

Texas Chapter

A Nebraska Chapter Organizational meeting and tour of Valmont Valley Irrigation Manufacturing Plant was held in McCook, NE, on July 20-21. It is the intent of the Colorado and Kansas RLI Chapters to help organize an annual rotating agricultural meeting among the three chapters representing the region to bring more marketing, networking and educational opportunities to members of RLI. The meeting was well attended by Colorado, Kansas and Nebraska professionals who do business across the three state lines in the region. On July 20, attendees discussed how a Nebraska Chapter would be beneficial to the region; attendees pitched a few agricultural properties, discussed Ag markets and heard from Paul Mussman of

The Texas RLI Chapter has grown quite a bit in 2016. The Chapter made an effort to promote themselves at various meetings and conventions with a booth where they spread the word about RLI, the ALC, and membership in their Chapter and the National organization. Their efforts paid off and the results were obvious by the growth in the Chapter’s membership numbers.

Terra Firma

Winter 2017


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They also held a Chapter Retreat in Fredricksburg, TX, where they toured the Nemitz Museum, wineries and even blended their own wine! An earlier stop at a brewery also was included. The camaraderie and networking was fun and educational for all attendees. For more information about the Texas Chapter, visit www. texasrli.com

Virginia Chapter

education credit approved class. The State Engineers are writing a follow-up Water Rights 102 class, which will be offered in the Spring. The Chapter is grateful to have such a great relationship with the State Engineers staff and very much appreciates their partnership. The goal of the Chapter is to offer both Water classes in the four corners of the state. The Wyoming Chapter congratulates Tim Rogers for receiving his prestigious ALC designation last year; this brings the total to ten Wyoming Chapter members to hold the elite ALC designation. For more information about the Wyoming Chapter, visit www.wyoming4land.com

WELCOME ALCS The Virginia Chapter is rebuilding after a real estate downturn which has affected land transactions in Virginia since 2007. On November 17, twelve members attended a work session to strengthen our Chapter. They hope to offer several Land 101: Fundamentals of Land Brokerage classes throughout the state and get this class accredited for Continuing Education (CE) credit. They are also working on one-day seminars that will deal with topics of interest, i.e., 1031 Tax Exchange, Timberland, Wetlands, and Surveying. They will be meeting again on February 9 to discuss the location of classes and the accreditation of Land 101 for CE approval. For more information about this Chapter, contact Chapter President Bill Burruss, ALC, at WHB3@Acreage4U.com or 434-841-8316.

Wyoming Chapter

Bo Burkes, ALC Tom Smith Land And Homes Starkville, MS bo@tomsmithland.com Bo is a military veteran, native Mississippian and holds a MBA in real estate and mortgage finance from Mississippi State University. He specializes in selling large tracts of recreational, hunting and timberland. Under his leadership, The Starkville Office of Tom Smith Land and Homes was recognized by the Starkville Main Street Association as Best New Business of 2015. Fred Hepler, ALC AgVictus Capital Management Edmond, OK winealmds@gmail.com Fred is the Director of Acquisitions for AgVictus Capital Management in Edmond, OK. He specializes in locating agricultural investments for clients. He also possesses a strong background in agricultural business management, farm management, agricultural business consulting, and farm real estate brokerage. Jack Gabriel, ALC Mossy Oak Properties of Tupelo Scottsboro, AL jgabriel@mossyoakproperties.com

The Wyoming Chapter was busy the last half of 2016. In June, the Chapter hosted twenty-two students for the Land 101: Fundamentals of Land Brokerage course in Casper, WY, taught by LANDU Approved Instructor Kirk Goble, ALC.

Jack is a Real Estate Agent with Mossy Oak Properties representing the Tupelo and Jackson areas of Mississippi, specializing in recreational tracts and investment properties. He has acquired the skills and knowledge to help clients achieve their goals.

In September and December, the Chapter offered Wyoming Water Rights 101, a 4-hour continuing

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Winter 2017


Mike Garrett, ALC Garrett Land Brokers Emerson, GA mike@garrettlandbrokers.com Mike is a Land Agent and Owner of Garrett Land Brokers. He specializes in both listing and selling land in northwest Georgia. He has extensive knowledge of the land market including commercial, industrial, transitional, agricultural and commercial/ residential development which also encompasses farm, ranch, timber, and row crop income producing properties. Kirk Gilbert, ALC Whitetail Properties Quincy, IL Kirk.gilbert@whitetailproperties.com Kirk graduated from Arkansas State University in 2005 with his Bachelors of Science Degree in Business Finance and a minor in real estate. Joining up with Whitetail Properties has allowed him to combine his knowledge and experience in real estate and investing with his passion for the outdoors. Gilbert specializes in knowing how to safely invest your money into a piece of property that will actually pay you to enjoy it. Paul Gonwa, ALC The Overby Company Jackson, MS paul@PaulGonwaLand.com Paul is a Broker Associate and Registered Forester who leads The Overby Company Land Division. With over thirty years of experience in the land and timber business, he specializes in helping his clients buy and sell recreational, hunting, timber and equestrian properties. Jeffrey Hignight, ALC Glaub Farm Management, LLC Jonesboro, AR jeff@glaubfm.com Jeffrey is a Partner in Glaub Farm Management, LLC located in Jonesboro, AR. He specializes in management, brokerage, and consultation of agricultural land within Arkansas and Mississippi. He also has a strong background in resource economics and developing plans to help landowners achieve their goals.


Winter 2017


Mark Knight, ALC Davis DuBose Knight Forestry & Real Estate, PLLC Little Rock, AR mknight@forestryrealestate.com Mark is a Co-Owner & Principal at Davis, DuBose, Knight Forestry & Real Estate PLLC in Little Rock, AR. Knight has a MBA from the University of Arkansas, and over ten years of experience as a real estate broker. He specializes in financial analysis, marketing of rural real estate and timberland, and timberland acquisition analysis. Rod Osterloh, ALC Close-converse Brainerd, MN osterloh@closeconverse.com Rod is a Senior Land Broker for CloseConverse, Inc., in Brainerd, MN. Through the firm’s LandRadar.com website, he markets land for hunting, recreation, development and commercial uses in North Central Minnesota. He represents Potlatch Corporation, a land and timber REIT, selling non-strategic timberland in nine counties.

RLI MEMBER NEWS Paul Bottari, ALC, is the Owner/ Broker of Bottari & Associates Realty Inc. in Wells, NV. Paul was awarded the “Nevada Realtor® Active in Politics” Award by the 15,000 member strong Nevada Association of REALTORS® at their Annual Meeting and Installation Ceremony. Ray Brownfield, ALC, is the Owner/ Broker of Land Pro LLC in Oswego, IL. Ray was recognized for fifty years of membership in and service to ASFMRA. Ray is very active in RLI, serving as the 2012 RLI National President, as Vice Chair of the 2017 Government Affairs Committee and various other positions within the organization. Cathy Cole, ALC, is the Owner/Broker of Heritage Texas Country Properties in Brenham, TX, was recognized by Continental Who’s Who as a Pinnacle Professional in the field of Real Estate. Cathy served as Chair of the 2016 RLI Government Affairs Committee as well as various other positions within RLI.

George Harvey, RLI Member, is the Owner/Broker of The Harvey Team in Telluride, CO. He was installed as the Regional Vice President (Region XI) of the National Association of REALTORS®. Harvey serves on the 2017 RLI Government Affairs Committee and previously served as the Representative to the NAR Global Business and Alliances Committee. Jenna Hawkins, ALC, is the Owner/ Broker of RE/MAX Trinity in Graham, TX. In 2014, Jenna received the RE/MAX Hall of Fame/Lifetime Achievement Award ($1,000,000 in commissions) which less than 1 percent of REALTORS® ever reach. In 2016, she earned the RE/ MAX Platinum Award ($250,000 in commissions) in for the fourth time in her career. Wendy Johnson, ALC, is the Owner/ Broker of Texas Land Agent, LLC with Keller Williams Farm & Ranch in Rockwall, TX. Wendy was recently installed as one of the RLI Texas Chapter Directors for 2017-2020. She is proud to have received the elite Accredited Land Consultant (ALC) designation at the 2016 National Land Conference.

Russ Russell, ALC, is the Owner/ Broker of Russ Russell Commercial Real Estate in Alabama. Russ became the first REALTOR® to deliver a listing agreement to a client by drone. Russ is also the only broker to have his own real estate mascot. Dean Saunders, ALC, is the Owner/ Broker of Coldwell Banker Commercial Saunders Real Estate in Lakeland, FL. Dean brokered a $4.3M sale of 2,526 acres to the State of Florida as a perpetual conservation easement.

Ricky Ward, ALC, is the Owner/Broker of RE/MAX Champion Land Brokers in Poteau, OK. Ricky was named the #1 Agent for RE/MAX Oklahoma for Commission Earned. He was also named the 2015 Oklahoma Miracle Agent for contributions and support for the Children’s Miracle Network. Ricky serves as President of the RLI Oklahoma Chapter.


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Winter 2017


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Let’s Make Deal$ LIVE

How often do you get the opportunity to tell your clients that you presented their property to over 250 brokers? Reserve a place in the spotlight and have the opportunity to present your hottest or toughest property to a room full of the best in the business.


This fun filled event is brimming with energy, drinks, and laughter. Place your bid on exclusive items like hunting trips, autographed memorabilia, vacation packages, and unique items. All proceeds will go to the Land Education Foundation (LEF). Have an interesting item or trip you can donate? We are ready to promote your piece—and you!—as the donor. For more information on how to donate to the auction, please contact us at rli@realtors.org.

Shindig in Charlotte Bash

A private NASCAR Nite Out Welcome Reception will be held at the NASCAR Hall of Fame. This is a can’t miss part of the 2017 National Land Conference experience! Attendees can rev up their engines while enjoying hors d’oeuvres and an open bar. Plus, they can test their hand on the race track in a one-of-a-kind experience in the NASCAR simulator.

Get ready to party at the finish line at the Shindig in Charlotte Bash. Live it up with live music, eats and drinks while networking in an engaging atmosphere. Get ready for a good time with great company!

“The Annual Land Conference gets exponentially better every year! This year’s conference was the best yet, threefold—one of the very best real estate programs I’ve ever attended. The knowledge and takeaways are unparalleled.” - Larry Ilfeld, ALC, Sperry Van Ness Commercial Real Estate Advisors

“It was one of the best values for my hard earned dollars. This is a signature event for my business. The conference provides a terrific opportunity to learn from top industry leaders about breaking trends in the land business.” - Glenn Thomas, ALC, Hart County Realty Inc.

NLC17 FEATURED SESSIONS 1031’s vs 1033’s: What’s the Difference? – Jim Miller, Esq. Sometimes your client has a choice of using section 1031 or section 1033 to defer taxes. Which is better? This session will discuss basic elements of both sections as well as what types of events trigger the eligibility for section 1033. Attendees will see how section 1033 can be more restrictive than section 1031 in some situations and less restrictive in others and thereby be better equipped to assist their client to ask proper questions of their tax advisor.

7 Deadly Title Issues to Watch Out For – Timothy W. Grooms A real estate transaction has many complications and the involvement of competent title examiners is critical to a successful transaction. In addition, title insurance with knowledgeable coverage and endorsement selections can provide protection to a buyer and incidentally the real estate professional. Learn what the seven most deadly title issues are, and how to protect yourself and your buyer.

Is Agritourism a Viable Option (For You or Your Client)? – Melissa Hunt With agritourism becoming more prevalent among farmers, there are factors for your clients to consider in assessing the viability of becoming an operator. From legislative and liability to zoning and permitting issues, the opportunities to expand from land ownership to business ownership can be complex. Successful agritourism operations are helping expand awareness about land stewardship and where/how food is grown. Find out why farmers are choosing to go into agritourism and learn ways to help your clients navigate challenges that arise.

How & Why Drones Can Make You More Productive – Caleb McDow Drone, UAV, UAS – It’s not important what you call it. The important part is using these tools to increase clients, listings, and closings in your business. Come and learn how to provide value and save time and money with the use of aerial photography and video. You’ll also get the latest updates on FAA regulations for education and licensing to fly your drone safely and legally.

“Where else can I glean that much knowledge in three days from that caliber of sources? I leave the National Land Conference every year a better land consultant, broker and farm manager. The quality and depth of the education keeps me coming back year after year.” - Luke Worrell, ALC, Worrell Land Services










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nest egg in all types of private assets, including land, real estate, promissory notes and much more.

Stay ahead of the curve and enhance your expertise by attending a webinar presented by the REALTORS® Land Institute in 2017. This year, the Education Committee will be presenting three complimentary webinars exclusively for RLI Members.

Quincy’s presentation takes a factual approach at explaining the many uses of these types of accounts and outlines both the pros and cons. Quincy further delves into the topic by explaining the different types of accounts that can be used to invest tax free. The beauty of Quincy’s presentation is that it will provide each listener with information that directly relates to their personal financial goals. Whether you’re focused on creating an impressive investment portfolio, diligently saving for your children’s education, or creating an account that funds all of your health expenses completely tax free, Quincy’s presentation will provide you the essentials to get you on the path to self-directing your retirement account.

The Trail to Becoming an Accredited Land Consultant (ALC) Thursday, January 19 | Noon CT Complimentary for Members

Elevate your Elevator Pitch and Networking Skills Wednesday, March 8 | Noon CT Complimentary for Members Presenters: Brandon Rogillio, ALC, 2017 RLI President; Flo Sayre, ALC, 2017 ALC Designation Committee Chair; and George Clift, ALC, RLI Past President Is earning the prestigious Accredited Land Consultant (ALC) designation one of your New Year’s Resolutions? If it is, don’t miss the opportunity to hear from three prestigious ALCs in this webinar. These leaders will share the importance of the ALC designation in their business, and how having the ALC has made them successful. Flo Sayre, ALC, will give an overview on the most efficient path to fulfilling the ALC requirements and submitting your portfolio. All three ALCs will be available to answer any questions regarding the designation.

How to Use an IRA to Invest in Land? Wednesday, February 8 | Noon CT Live Webinar Pricing: Members - $59 / Non-members - $89 Presenter: H. Quincy Long, Esq. President of Quest IRA The presentation will feature exceptional Self-Directed IRA education from H. Quincy Long, President/Owner of Quest IRA. Quincy will share the needto-know facts about self-directing retirement account and creating tax free wealth for the future. Utilizing a Self-Directed IRA provides investors with the opportunity to invest their


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Presenter: Holly Priestner, Director of Talent Acquisition at Keller Williams Holly has never met a stranger, literally. Her enthusiasm for people and their stories enables her to connect people to resources that can make both their professional and personal dreams come true. This is advantageous when recruiting top talent to KWRI, with recruits quickly recognizing that their goals matter to Holly and that she cares about their happiness and success. How many times have you’ve attended a networking event, conference, or listing appointment, and felt that wide-eyed feeling of panic that takes over when somebody shakes your hand and says, “So, tell me a little about yourself!” You want to summarize yourself in a way that concisely portrays how successful, informed, and professional you are. So, it’s smart to be proactive with an “elevator pitch” response and ready to go. Join Priestner as she dissects the components of the perfect elevator pitch, and helps you create one of your own. She will share tricks to help you feel more comfortable and approachable at networking events as well as explain the immediate steps you should take following the meeting to make that referral or land the deal. If you are attending the 2017 National Land Conference, you can’t afford to miss this complimentary webinar!

Excel Tips and Shortcuts for the Land Professional Wednesday, May 10 | Noon CT Complimentary for Members Presenter: Phil McGinnis, ALC Managing Broker of McGinnis Commercial Real Estate Do you know how to use Excel to build quick analyses but would like to learn how to reuse what you build? The biggest challenge for Excel users is to learn how to build Excel sheets that are not only powerful, but also contain reusable components. Join McGinnis as he provides land and commercial transaction case studies and shows how using Excel has helped him save time and money when landing the listing or closing the deal for a client. This information-packed webinar will show how to calculate various aspects of a property’s present value including the internal rate of return, net present value, mortgage payment and more.

How to Create Successful Public-Private Partnerships for Land Development Wednesday, June 14 | Noon CT Live Webinar Pricing: Members - $59 / Non-members - $89 Presenter: Bob Hunt Managing Director JLL Hunt brings over twenty-eight years of experience in helping organizations develop real estate and workplace strategies that address a wide range of needs, including portfolio planning, development advisory, public private partnership formation, facilities planning, workplace innovation and R/E, IT and HR integration. Presenter Bob Hunt will share his years of knowledge on successfully creating a Public-Private Partnership (PPP). He will share his real life examples of ways he has strategized land development partnerships. He will explore the public sector involvement in real estate development and an understanding of resources required to manage the complex blend of governmental and political powers and conflicting goals and agendas that are essential in public/ private development. Hunt will identify and briefly discuss several key issues associated with the use of PPPs in these two specific areas of economic development practice. These include governance issues, partner selection, deal structuring and negotiations, the role of publicly owned real estate, government impediments to expanded use,

and accountability and monitoring issues. Our purpose is to highlight these issues and offer some guidance to practitioners engaged in or planning to utilize PPPs for economic development purposes

What you Need to Know About Title Reports & Boundary Surveys Wednesday, October 11 | Noon CT Live Webinar Pricing: Members - $59 / Non-members - $89 Presenter: Gary Kent The Schneider Corporation When a Land Title Survey is ordered, a collaborative effort is set in motion typically involving a surveyor, a title company, a seller, a buyer, a lender and the respective attorneys. Surveyors normally play an integral role in that process and it is helpful - if not necessary - for everyone involved to understand what that role is, what it is not, and what support surveyors can provide to assist in the realization of a successful transaction. In this webinar, we will examine the surveyor’s role in the commercial transaction, which primarily revolves around the ALTA/ NSPS Land Title Survey, the title commitment and the dynamic between the parties to the conveyance. Participants of this webinar will be able to identify the primary elements of an ALTA/NSPS Land Title Survey and explain how each supports the party’s needs in a transaction. Outline the relationship of the ALTA/NSPS Land Title Survey and the title commitment from the surveyor’s perspective. In addition, they will have the knowledge to explain what a surveyors certification can say, what it cannot say, and why

2017 EXCLUSIVE ALC-TO-ALC NETWORKING TELECONFERENCES RLI invites all of its elite Accredited Land Consultants to attend tri-annual exclusive teleconferences to network, share experiences, and build relationships. Each teleconference has a theme which attendees are able to discuss, sharing insights and tips on the topic. The calls are designed to help ALCs gain additional expertise and information that will help them to grow their business and increase success. All ALCs are welcome to attend and will receive an email prior to the event with call-in details.

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Impactful Negotiation Strategies for the Land Professional Thursday, April 20 | 11:00 a.m. CT You’ve made the offer on behalf of your client, the other agent counters, now what do you do? Listen and learn from experienced ALCs ways to seal the deal while making your client happy. Our ALCs will give tips to negotiate before you get to the table, how to overcome obstacles, and identify any ethical issues in the negotiation process.

The Transition for Transitional Land

Being Your Best – Reduce Stress, Maximize Productivity, and Stay Healthy Thursday, November 16 | 11:00 a.m. CT With the holidays right around the corner, most professionals are rushing to tie up end of the year projects, buy gifts, and plan holiday events. Let ALCs share with you how they reduce their stress during busy times, maximize their productivity when deadlines loom, and stay healthy while being social.

Thursday, July 20 | 11:00 a.m. CT ALCs will share their best ideas for transitioning a property from one use to another. Whether this is a corner five acre piece of land ready to be a gas station, or a gas station in need to transition back to raw land. Join your peers to hear their unique ideas on how to transition a piece of land, the steps you should take, and how to determine the best use.

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LANDU Calendar For more information, visit www.rliland.com



Hybrid Course

Hybrid Courses



ALC Designation


+Land Investment Analysis +Timberland Real Estate +Google Earth Mapping for Real Estate +Real Estate Auctions

19 Webinar: Earning & Using the

April Hybrid Course

+Tax Deferred 1031 Exchanges


20 ALC-to-ALC Teleconference:

Mastering Real Estate Negotiations

8 Webinar: Using an IRA to Invest in

May Online Course

+Mineral, Oil & Property Rights

Hybrid Course

+Ag Land Brokerage & Marketing


10 Free Webinar: Excel Tips & Shortcuts for Real Estate Professionals

July Online Courses

+Mastering Real Estate Negotiations

Hybrid Courses

+Transitional Land Real Estate



Hybrid Courses


8 Free Webinar: Effective Conference Networking Skills & Perfecting your Elevator Pitch 31 The National Land Conference:

THE BEST STOP HERE! Charlotte, NC | White Paper Course Option


June Events

4-12 LANDU Education Week

+Tax Deferred 1031 Exchanges +Land Investment Analysis +Land 101: Fundamentals of Land Brokerage +Site Selection +Mastering Real Estate Negotiation Skills +RE Mapping Technology & Techniques 14 Webinar: Public-Private Partnerships


Hybrid Course

Hybrid Courses

Online Course


+Land 101: Fundamentals of Land Brokerage +Marketing Strategies for Real Estate Professionals

20 ALC-to-ALC Teleconference: Managing Successful Entitlements



+Land Investment Analysis +Introduction to Land Valuation

13 Free Webinar: Mixed Use Urban Land Developments

November Hybrid Course

+Google Earth Mapping for Real Estate + Timberland Real Estate +Tax Deferred 1031 Exchanges





ed ge

pe rt

16 ALC-to-ALC Teleconference: Being Your Best – Reduce Stress, Maximize Productivity, Stay Healthy



ow l

11 Webinar: Title Reports & Boundary Surveys

+Legal Aspects of Real Estate



Online Course

GOVERNMENT AFFAIRS BRIEFING By Russell W. Riggs RLI Government Affairs Liaison, National Association of REALTORS ®


development, he will have valuable input to offer Congressional tax committees. It appears, however, that with Republicans at the helm, several tax incentives could be at risk.

With Trump in power and Republicans taking the House and Senate, what does this mean for real estate practitioners and homeowners?

When politicians say we must “simplify tax codes,” Giovaniello hears it as a euphemism for “going after homeownership incentives” like the Mortgage Interest Deduction (MID). There are already proposals on the table, and Giovaniello says they’re already talking to the authors on both sides of the aisle.

Did the election help or hurt real estate? Regardless of how you feel about the national election results, it appears homeowners, REALTORS® and the real estate industry overall will benefit from them. ‘It was a great night for us,’ NAR Senior Vice President Jerry Giovaniello said regarding the REALTOR® Party results. RPAC won over 90 percent of races in which it was involved. In addition, RPAC was also extremely successful in state and local races. For example, RPAC supported Governor-elect Gary Herbert (R-UT), Governor-elect Phil Scott (R-VT), and a constitutional amendment in Missouri to ban sales taxes on services.

Will Trump support tax reforms such as changes to the Mortgage Interest Deduction or 1031s? Under a Trump administration, Giovaniello says that because of Trump’s knowledge of real estate and


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“The REALTOR® platform did mention that [the MID] is important, but they weren’t very specific, nor were Democrats on this,” noted Giovaniello. What does a Trump presidency mean for the MID? “We’re not exactly sure,” given that what will be prioritized won’t be clear until he is sworn in. Trump has indicated he supports the MID, however, and Giovaniello points out that Trump “knows the tax code as far as real estate is concerned, and has used it very successfully.” 1031 exchanges are in the crosshairs, and Giovaniello says both Congress and the administration have said we should limit these tax deferrals. There are proposals from both sides to limit 1031s, with the belief that the same numbers of transactions will happen regardless. “That’s just not the case,” Giovaniello asserts and NAR and RLI will be working hard to make sure 1031s remain unchanged in the tax code and are kept as a valuable tool for investing in commercial real estate.

Will fear chill foreign investments? Some areas are doing quite well as a result of foreign investments in the real estate markets, but will the perception regarding Trump’s attitude impact sales? Trump “has very strong opinions on immigration, so whether that leads to a chilling effect in the short term” is unclear, notes Giovaniello, reiterating that until priorities are set, we simply don’t know. “It’s something we have to be alert to,” he said. In particular, the EB-5 program has been used successfully to jumpstart real estate development in all areas of the country. However, there has been a call from critics to reform the program and make it more transparent and accountable. A Trump Administration could increase the pressure to end the program or make it more difficult to use effectively by foreign investors.

Are federal regulations in the crosshairs? The Trump Administration has described an aggressive attack on burdensome and overreaching federal regulations. For example, Trump has blasted DoddFrank on the election trail, and much conversation has centered around loosening Dodd-Frank regulations as the economy has improved. Trump also mentioned the Clean Air Plan, the regulation that was created to reduce carbon dioxide emissions from power plants, and the Clean Water Plan, the regulation that sweeps in more waters of the U.S. under federal jurisdiction, as rules that he could withdraw, rescind or limit.

incentives for high-income Americans. That appears to be the direction incentives will head.

Gridlock and gobs of governors? Will there be gridlock under a Trump presidency? Giovaniello doesn’t think that’s going away, but says “The American people voted for change. I think either party that doesn’t embrace that is going to be in bad shape.” What will RPAC do? “Make your friends before you need them,” said Giovaniello. “We’re about to have a new, impactful class of governors, so we need to get in early now, before campaigns start,” noting they must proactively engage the candidates. The goal of the REALTOR® Party is to coordinate national, state, and local levels and leverage their national scale to enable those at the local level that know their communities best. In conclusion, Giovaniello says of the election results, RPAC “did very well,” winning 90 percent of the races they were involved in, but are now preparing for postelection life now that the chips have fallen, by planning for the coming battle over federal and state regulations and a massive national gubernatorial race. About the author: In his position with the National Association of REALTORS®, Russell Riggs serves as the RLI’s Government Affairs Liaison in Washington, D.C., conducting advocacy on a variety of federal issues related to land.

Will there be incentives to purchase homes? As homeownership rates creep back up, Giovaniello doesn’t anticipate new tax credits for the purchase of a home under a Trump administration, noting a more likely scenario would be student loan refinance initiatives. Republicans believe that FHA should be available for first-time or low-income borrowers but want to end

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THE IMPORTANCE OF LAND KNOWLEDGE By Fred Hepler, ALC Hepler & Associates Real Estate

Accurate, reliable and timely information is vital to effective decision making in almost every aspect of human endeavor, whether it be for personal or business gain. It is absolutely essential for making the most informed decision. As one of our responsibilities as licensed real estate professionals we are to “protect the public.” In the absence of accurate information, people will make bad decisions. Being a member of the REALTORS® Land Institute provides the public with the information that we are considered as “the land experts.”

BEING THE EXPERT In today’s world of more highly educated adults and, more specifically, the millennial sector, the qualification of being more than fifty miles from home with a brief case doesn’t qualify a person as an expert. As part of today’s college educated society, the process for making a business decision in a specialty area outside that of your educated profession is to hire an “expert.” When a client hires an expert, the most important quality they look for is someone who presents themselves as a professional. A potential client will evaluate a REALTOR® on how articulate they are, their personal appearance, and the degree of comfort they demonstrate with the specific area of expertise. Most likely you’re already fluent in several specific areas of real estate. You may know a little bit about several different types of real estate, but stressing overall knowledge doesn’t let you stand out from your competitors. Alternatively, consider your unique interests, experience and passion for a specific area of agricultural real estate. Look at your business and calculate where the source of the majority of your transactions comes from. In essence, what is it about real estate that attracts you and gets your juices going? Do a strong and precise evaluation of what you know best, what you wish to know more about, and what will get traction in your area. Then, focus on those issues that come out at or near the top of the list. In order to gain the edge, you will need to acquire all of the detailed information that is available in that area. Sources can be online, seminars, and/or professional meetings with networking opportunities. Accurate information is crucial to nearly every professional and academic discipline because facts are the only way humans can ascertain truth. With that said, the purpose of this article is to emphasize the importance of providing accurate information to our clients and some processes to attain that information.

COMMUNICATION OF INFORMATION IS KEY Based on nearly forty years of experience in farm land sales, management and consulting, I have prepared what I consider to be a comprehensive checklist of detailed information that is the basis for listing a property for sale or when representing a buyer, it’s used to acquire the right information. One of the most frustrating issues for me is when I am evaluating a property for a potential buyer and the listing agent provides only a general summary of the information and, in some cases, inaccurate information. As a perfect example of this issue, I will describe an incident that I experienced recently. No names will be used of the parties involved as that is not the point of the example. I received information on a farm provided to me by a farm broker that was not his listing. That fact was disclosed, which is the correct process. The property included a nice residence and several outbuildings. The large barn had been refurbished into a family party facility. The farm did contain some tree and berry crops. The information packet from the listing broker contained significant information about the improvements but very limited information concerning the crops, soil types, crop varieties, historic crop yields, and lease history. I am using this as an example to illustrate two things: First, in my opinion this is not providing the seller of the property appropriate fiduciary service on selling their farm. Second, as a farm buyer’s agent, I will either pass on the farm or have to spend significant time acquiring the appropriate detailed information required to make an informed decision for my client. The “rest of the story,” as Paul Harvey always said, is that the broker whom presented this property to me did do the work researching the appropriate detailed information. However, he had a very difficult time of acquiring all the usual crop history, even though he attempted, because it was a bit difficult working with the listing agent. Again, the farm broker worked very hard and did the best he could. The point of this example is three-fold: First, you would not be providing your client (the seller) “expert” service, because as a result of not providing adequate detailed information, many potential buyers will simply pass on the deal. Second, as a member of the elite RLI you would not be appropriately representing our society. Third, you will be losing deals. With the technology available today, your goal should be to provide 95 percent of the information which a potential buyer will need to make an informed investment decision. I use 95 percent because no two investment experts think alike so there will always be some unique information that every potential buyer will request.

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WHERE DO YOU GET THE INFORMATION? First, start with a very detailed interview with the seller, the current tenant, and the respective Farm Security Administration (FSA) office. Be certain to get a letter signed by the seller giving you permission to access their information at the FSA office. Second, verify the information provided. Even though the information is provided by the seller, I have found that sometimes their memory may not quite be totally accurate. Third, you can use websites available for aerial, soils, topo, land-use, water permit registrations, drainage, and FSA information. I have a list of websites that may be of interest and am happy to share if you drop me an email. Fourth, contact your fellow ALC colleagues for information about areas which you may NOT be real knowledgeable. The MOST valuable resource of information for my business is the tremendous network of colleagues that I have created through all the years of being a member for professional agricultural organizations like RLI. That is why I feel so honored to have earned the ALC designation this year and to become a member of the most “elite land experts” in the nation. I have known many of the ALCs for years and am certain that when I call on one of them for assistance, their response will always be “what can I do to help you out?”; which would always be my response as well. However, if I have the opportunity to list a property which is outside my area of expertise, I contact one of my ALC colleagues whom I know is an expert in that particular type of real estate and refer the listing to them. For me, that is me providing the “expert” quality service to my client. The network of professionals you create by attending the annual meeting, your local chapter events, and attending education classes will continually expand that network knowledge base for you to draw from. Having been in the business for many years I have been blessed with having done sales, management or consulting work on more than forty different crops in the thirty-nine of the fifty states. There are many other members with similar experiences and we all are your best resources to draw from for information. Accurate, reliable and timely information is the key to “protecting the public,” which is a responsibility of our real estate license, providing our clients the top level “expert” fiduciary service, and will bode well for building a very successful business. The best information resource you have available is your fellow RLI ALC members. As a reminder, always make certain to use a disclaimer statement on all of your brochures.


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One last testimony: I contribute a very large percentage of my success in the farm land brokerage, management, & consulting business to the networking relationships that I created through RLI. Whenever I have called a colleague for help the answer has ALWAYS been, providing they knew the answer, “How can I help you?” In the cases where the person did not know the answer, they always knew someone to contact. I am willing to share my listing due diligence information checklist if you happen to be interested or if I can help you with any type of project, please contact me—my information can be found at rliland.com/find-a-land-consultant. About the author: Fred Hepler, ALC, has been involved in the land business for over forty-two years and is a licensed broker in multiple states for over twenty-five years. He has experience in selling, managing, and/ or consulting in thirty-nine states. He is a past president of ASFRMA where he held numerous positions on committees at the state and national levels and is now looking forward to becoming more actively involved in RLI.

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THE TOP THREE TITLE ISSUES REALTORSÂŽ NEED TO KNOW By Timothy W. Grooms and R. Seth Hampton Quattlebaum, Grooms & Tull PLLC Nothing is worse in the eyes of a real estate professional than discovering an issue with the title to real estate on the heels of a scheduled closing. Title issues come in a multitude of varieties, forms and fashions, and depending on the severity of the issue, can stop a real estate deal dead in its tracks, as well as render the title essentially worthless. The good news is that a solution for nearly every issue exists. The remedies available depend greatly

on the issues and factual circumstances. In any event, identifying the problem as soon as possible is essential to resolving the issue in the most efficient and inexpensive manner. Before committing to purchase an interest in real estate, due diligence in the form of reviewing a title commitment and current survey is imperative to discovering and resolving potential issues with real estate titles. A thorough review of a title commitment and current survey will reveal most title issues, including three of the most common title issues encountered by real estate professionals: (i) blanket

easements, (ii) boundary issues and (iii) errors and omissions in the chain of title. Below is a brief overview of these top three title issues, along with some suggested solutions and practice pointers for the real estate professionals who encounter them.


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BLANKET EASEMENTS A blanket easement, also known as a floating easement, is basically an easement that is not limited to a specific portion of the servient tract over which it was granted but, instead, encumbers the entire tract. In some instances, the grantor and grantee intend the easement to be blanket in nature. A conservation easement or flowage

easement are both examples of easements generally intended by the parties to be blanket in nature. Other times, blanket easements arise contrary to the parties’ intentions and as a result of the instrument granting the easement failing to limit or describe the area over which the easement is located. Regardless of the scenario, a blanket easement generally constitutes a significant title defect, because the easement holder’s rights significantly limit or prohibit the right of the landowner to use and enjoy the servient tract.

Often times, an unintended blanket easement will arise from an instrument containing ambiguous language, such as language conveying an easement over “a twenty foot (20’) wide portion of the Northwest Quarter (NW1/4) of Section Ten, Range Three West, Township Four North.” While, by the terms of the grant, the easement area is limited to a twenty-foot wide portion of the subject tract, the instrument essentially grants a blanket easement over the entire tract because it fails to specify which twenty-foot wide portion of the tract is encumbered by the easement. Blanket easements on this nature create significant title issues, especially from a development standpoint. Continuing with this example, consider a scenario where the landowner has entered into an agreement to sell the servient tract to a developer who intends to develop a shopping center on the tract, contingent upon a satisfactory review of the title. Assume also the blanket easement is one for the installation and operation of an underground pipeline, and the instrument prohibits construction of buildings, fixtures and other above-ground improvements within the twenty-foot wide easement area. Since any development within the 20-foot wide easement area is prohibited and the easement area could consist of any 20-foot wide portion of the servient tract, title to the tract is defective because any development is prohibited as a result of the blanket easement. So what’s the solution? The good news is there may be several, all of which depend on the facts and circumstances surrounding the grant and use of the easement. For example, if the pipeline has not been installed, one solution commonly utilized is to obtain and record an amendment or modification to the easement instrument from the holder that terminates the easement as it applies to the entire tract and establishes the specific 20-foot wide easement area. Additionally, the accommodation doctrine recognized in many jurisdictions generally provides that where an easement instrument does not establish a definite location of the easement area, the grantee does not acquire a right to use the servient tract without limitation, and the owner of the servient tract processes the right to establish its location, provided such right must be exercised in a reasonable manner, with due regard to the rights of the easement holder. If the owner of the servient tract can produce evidence establishing the parties intended the easement to apply to a certain 20-foot wide portion of the tract, the owner may also seek to have a court reform the instrument to limit the easement area to a specific portion of the servient tract. If the pipeline has been installed, the common law in many jurisdictions provides the undefined boundaries of an easement granted for a specific purpose can become fixed by use of the land for the prescribed purpose with the consent or acquiescence of the owner.

BOUNDARY ISSUES Boundary issues are common title issues that generally result from the true boundary being located somewhere

other than where the owner believes it to be. The discrepancy in boundary line locations may also be the result of natural forces, such as accretion or avulsion caused by waterways. Other times, boundary lines may change as a result of the owner’s action or inaction. Boundary line issues attributable to the owner include changes in the location of boundary lines that result from adverse possession or agreements with adjoining landowners. Additionally, some states recognize the doctrine of boundary by acquiescence, which is similar to adverse possession and arises when adjoining landowners tacitly agree to recognize a boundary other than the true surveyed boundary shared by the parties. Determining whether boundary issues exist before purchasing real estate is an absolute necessity because unresolved issues can eventually result in the record owner being divested of title to all or a portion of its property, as well as the improvements located thereon. The only means for confirming whether a boundary line issue exists is a current survey. A survey, however, is only as good as the surveyor who prepared it. When selecting a surveyor, keep in mind that, like real estate attorneys, not all surveyors were created equal. Thus, it is equally important the surveyor selected has sufficient experience, is licensed in the state where the property is located and is of good repute. Along those lines, consider retaining a surveyor who is a member of the National Society of Professional Surveyors and familiar with the area where the property is located. If the current survey reveals a boundary issue, several methods for resolving the issue are available. An obvious solution to the issue is for the landowner to either convey or purchase the encroachment area. Another common solution is a boundary line agreement between the adjoining owners, whereby the owners agree to the true location of the boundary, regardless of the parties’ past or future actions, or the existing location of boundary markers (such as drainage ditches or fences). An easement agreement may also be utilized if the encroaching fixture or improvement will remain in its current location. Alternatively, a quitclaim deed from the adjoining owner may also be used to extinguish any interest the adjoining owner may have acquired through adverse use or acquiescence. If a quitclaim deed is utilized, however, encroaching fixtures or improvements should also be removed in conjunction with the conveyance or the issue will likely resurface at a later point. If these remedies are unavailable, boundary issues may be resolved by a quiet title action or an action for a declaratory judgment.

CHAIN OF TITLE ERRORS AND OMISSIONS Title issues commonly arise from errors and omissions in the chain of title and are often the result of sloppy drafting and undocumented conveyances. Incorrect and invalid legal descriptions; mistaken, misnamed and omitted

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parties; and ineffective acknowledgements are common examples of chain title issues arising from careless drafting. Chain of title issues caused by undocumented conveyances are commonly the result of undocumented intestate transfers between family members, as well as failures to open a probate estate for a decedent/ landowner. Some chain of title issues are not substantive issues or constitute title defects—other times, the result may be a complete failure of title. In many instances these issues can be corrected through a correction instrument, modification agreement, or scrivener’s error affidavit. Because these corrective measures generally require one or more of the parties or their attorneys to execute the remedial instrument, time is very much of the essence. If the issues are not discovered until many years after their creation, the remedies available are significantly limited. Below is a list of some practice pointers for real estate professionals to avoid or remedy chain of title issues: 1. Use a Valid Legal Description. An instrument purporting to affect the title to real property must contain a valid legal description, which are usually in the form of a platted, lot and block description or a metes and bounds description. Tax parcel numbers and property addresses are generally invalid legal descriptions. Most importantly, if the legal description is referenced as an exhibit, don’t forget to attach the exhibit. 2. Attach the Legal Description. It is easy to make a typographical error when retyping a legal description. An instrument affecting title to real property must contain a valid legal description, and in order to be valid, a metes and bounds legal description must “close.” Often times, errors or omissions in retyped descriptions can result in the legal description failing to close, rending the instrument ineffective. If possible, copy and paste the legal description from another instrument in the chain of title, a title policy or a survey. If you must retype the description, have someone read aloud the original legal description used by you while you follow along reading the retyped description you prepared. 3. Correctly List the Parties. Always review the chain of title to ensure the current grantor is the same party listed as the grantee in the immediately preceding conveyance instrument. For individuals, driver’s licenses and birth records should also be reviewed to confirm correct spelling is used and ensure the parties’ names are listed correctly. Also, be sure to include suffixes such as “Jr.” and “Sr.” and confirm whether the individuals are


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married. With respect to corporations, limited liability companies and limited partnerships, review the entity’s filings with the appropriate secretary of state’s office to ensure correct spelling. As for trusts, the trust documents should be reviewed to confirm proper names and spellings. If the applicable state law provides for trust certificates, also consider having the trustees execute and record a certificate of trust verifying the names of the trust and the trustees. 4. Use a Proper Acknowledgement. In some cases, a defective acknowledgement can render the instrument ineffective. Arkansas for example has a form acknowledgment set by statute. Be sure to review applicable state law to ensure the instrument’s acknowledgment conforms to any state-specific requirements. 5. Correct the Record. As noted above, many issues can be resolved by correcting the errors and omissions in the chain of title via a corrective instrument. However, before preparing a corrective instrument and tracking down the requisite person or persons to sign the instrument, check with a title insurance underwriter to confirm the corrective instrument will have its intended effect. At the end of the day, the question is whether the title to the property will be insured in connection with a conveyance. Accordingly, consult with an underwriter to confirm your plan and form of corrective instrument will result in an insurable title. About the author: Timothy W. Grooms is a founding and managing member of Quattlebaum, Grooms & Tull PLLC in Little Rock, Arkansas, where he concentrates his law practice on real estate and general commercial lending transactions. He is a member of the American College of Real Estate Lawyers (ACREL) and a Fellow in the American College of Mortgage Attorneys (ACMA). He serves as counsel to numerous real estate industry groups and is a frequent lecturer to title, banking, real estate, real estate brokerage, and construction industry groups and industry regulators. About the author: R. Seth Hampton is an associate with Quattlebaum, Grooms & Tull PLLC in Little Rock, Arkansas. His law practice primarily focuses on real estate, agriculture, commercial finance, regulatory compliance, and business succession and estate planning for farm families and closely-held agribusiness corporations.

A GUIDE TO REAL ESTATE MAPPING By Helen Thompson, Esri Smart land agents will embrace technology advances and use them not just to survive but to thrive. Others may cling to their brochures and rolodexes, hoping that they can continue to be successful because things were better in the old days and that’s how things have always been done. Unfortunately, history and my experiences have shown that nostalgia and longing are rarely good business strategies. Real estate technology innovation is booming. The first wave focused on residential real estate with companies producing solutions like Realtor.com, Zillow, RedFin and StreetEasy. The residential market was ripe for disruption because the internet was a natural place to expand listing services, engage people through interactive digital marketing and differentiate the realtor’s business with better information, not just lawn signs. Innovation in residential real estate led industry leaders in other markets to more broadly adopt technology. However, the uptake has been slower despite promises to make their businesses and the lives of their customers better. For many decades, there’s been no reason to change workflows or processes because immense wealth has been created without disrupting the status quo. However, in the past three years we’ve seen a sea change in technology. It’s now far easier to use and deliver bigger benefits more quickly. Buyers expect an interactive, digital experience and marketing automation. How do you make sense of all the hype, especially if you are a small business owner who is not tech savvy? Above all, where do you start?


yourself and experience tree top flights. Today, that immersion comes in the form of virtual reality-like 3D interactive experiences that let you fly around and view the scene from any perspective. In the University of Oxford example, shown below, the drone flew multiple paths over the city. The raw video imagery is used to create a full 3D model of the buildings, including exquisite detail for the build frontages, rooflines, gargoyles and chimneypots. You can literally fly down the streets and lanes, and land in any courtyard to explore the buildings.

The same data feeds used to map Oxford can be used in land management to create terrain surfaces which show perspective and hill-shading. This can be used to detect slopes, hollows, banks and hidden landscape features which are not obvious in aerial or satellite imagery. Low level drone flights also create very high resolution data which can show changes in vegetation and land development with high degrees of precision such as in this montage below where we not only can see where a new road has been laid but also changes to the height of vegetation and small hollows where water is ponding or eroding the land.

The excitement around drones has increased immensely in the past year and with good reason. New Federal Aviation Administration rules have reduced uncertainty on who can fly and where and, more importantly, the technology is at a point where anyone can now use them for a small investment. Drones used to be used exclusively in marketing real estate. A drone mounted camera can produce costeffective shots of a property. For large, high-end homes or big expanses of land, dramatic videos let you immerse

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Immersive scenes are immensely valuable for supplementing existing online marketing. What’s more the video data can also provide new perspectives, often quite literally. I recently worked with a land broker who was selling a large tract of land along California’s Mendocino Coast. She had a drone fly over the pasture and old growth forest, up fern filled gullies and fishing ponds. Only after did she realize that the views of the homestead from the private vineyard were missing. They had flown the house and grounds but had not flown towards the house over the vineyard. The great thing was that even though the drones had flown different routes, we could still recreate a full 3D model of the house and grounds. Rather than have a static video, our client created a virtual fly through along the rows of grapes glistening in late summer evening sun, and then up and over the house to show the full grandeur of the setting. Better still, her clients can take the same virtual tour or browse a set of interactive snapshots she has created. She didn’t need to organize another drone flight. Everything she needed to properly promote her ranch was in the data files the drone had collected, we just needed to process it.

DATA IN THE CLOUD – EVERYWHERE FOR EVERYONE We’ve all experienced Google Maps and Google Earth. They have changed how we find and view maps and land data. The revolution Google drove is for online data. Today, there are millions of map layers from every corner of the globe forming a Living Atlas of the World. Local, regional and national Governments, private companies and even crowdsourcing volunteers are publishing authoritative and personally collected data into open libraries which anyone can use. In the United States we have Federal Government data on everything from cropland to wilderness areas, maps of geology, soils, landscape, forest, flood zones, wetlands and hundreds more. Every one of these is freely available to use for analysis and overlay. In many rural areas, the data is better and more useful than cities. One of the most valuable datasets is satellite imagery. Every frame of Landsat data, which has been imaging our planet since 1972, is available online. This is a valuable source of land surface change information and provides insights into seasonal changes in vegetation, soil moisture, crop growth and much more.


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Many satellites have collected data which has been used to collect a high-resolution terrain model of the world. Since this data is also open to everyone, land owners and consultants can use it to understand more about the property throughout the buying process. One common use is gaining an understanding of soil drainage, as it has an important impact on crop production together with water and fertilizer use. Terrain profiling tools, like those shown above, can provide detailed analysis on changes in topography, drainage direction and soil moisture variations. In the example, we can see how the land slopes across the mile-long profile. Even small features of a few feet can be understood by tracking the profile against the aerial imagery. It is possible to identify old stream beds and even the site of a small quarry and ditch.

SKETCHING, MARKUP AND MARKETING Many land specialists just want simple tools to access land parcels and property data. Open map and data standards mean that many communities are sharing their parcel data as online map services or files. Desktop and online software allow you to upload and fuse these files, trace parcels lines and find out ownership details like those shown in this suburban example below. Map services are simple, syndicated data feeds which create layers for each one you open in free mapping applications like Google Earth or ArcGIS Earth. These “services” are more than pictures. You can query them, see attributes and, in many cases, use them to draw property boundaries by sketching straight onto the map.

Map services also now support social media and online storage sites like Facebook, Photobucket and Flickr. Photos which have been captured with your GPS on your smart phone or tablet contain location data that these sites use, so that these photos can automatically be positioned with your map. Tools to change the color, transparency, outline and shape of any symbols allow you to create high quality digital and print materials with no additional software, as shown below.

THE REAL ESTATE DIGITAL REVOLUTION The full impact of the digital revolution in real estate is yet to be seen. The huge improvements in the simplicity of building web apps, promoting properties through interactive marketing tools and using different map layers, are producing a strong movement towards empowering the consumer and land specialist alike. Today, buyers expect to be able to access online information and experience the property without having to visit in person. They are more discerning buyers with many choices for who they do business with. Mapping, analytics and marketing in the real estate industry are moving on, and fast. Shouldn’t you be making the most of it?

You can drag and drop spreadsheets with property addresses or GPS coordinates onto a web browser automatically turn them into online maps. A few clicks, and no coding later, the same spreadsheet can become an interactive property promotion or marketing resource. Rather than creating and mailing out paper books, land specialist can now email links to their properties, so clients and prospects can browse them at their leisure. Since the mapping services which underlie these apps are dynamic, they automatically change when new entries are added to the spreadsheet. Better yet, web analytics tools embedded on your website can tell you how many people are browsing your properties and which ones are the most popular. Having real time listings, web analytics and links to your CRM means you can better market your properties and keep your clients coming back for more.

About the author: Helen Thompson is responsible for global marketing strategies in the commercial business development team at Esri. Her twenty years of experience in applied spatial analysis has helped advance the understanding and use of spatial technology in business and society. She is a graduate of spatial science and computing at the University of Wales Institute of Science and Technology and geography at Plymouth University.

Ray L. Brownfield, ALC AFM | Managing Broker, Owner 630.258.4800 | ray@landprollc.us Chip Johnston | Broker 815.866.6161 | farms1@comcast.net Doug Deininger, ALC | Broker 815.439.9245 | doug@deininger-land.com

It’s what we know.

2683 US 34 | Oswego IL 60543 | 331.999.3490 | landprollc.us


Winter 2017


DO YOUR BUYERS KNOW WHAT TO EXPECT WHEN BUYING RURAL LAND? By Cathy Cole, ALC Heritage Texas Country Properties As fall and winter are around us, I can think of nothing better than to drive out in the open country side and appreciate the views, the rolling pastures and the calm. You may want to stop and smell the fresh air and the crispness as it surrounds you. No vehicles except for an occasional farm truck or tractor. This is the country. For me, this is the land that lies between Houston and Austin and San Antonio. Our offices are constantly asked about moving to the country. Their reasoning is the return to their hometowns, different lifestyle, out of the hustle and bustle, maybe the love of the land. But it is also investment. This is all the land we have. There cannot be any more manufactured for growth, enjoyment, or recreation. Our location is rural, from towns of less than 100 to those of 15,000 or more. But the air is cleaner, fresher, the small town lifestyle of festivals, fiestas, parades and other fun and unique gifts of small town living abounds. So what is rural living? Obviously the population is much less. Our houses are spaced more widely apart. Even in town, lots are larger. Go outside city limits and tract size grows by leaps and bounds. There is room for grazing animals, large pieces of agricultural land and greenery. We live in nature, which has a very positive effect on our

health. Pollution levels are lower due to fewer vehicles and less industry. Our technology is catching up, and many people in rural areas have short to no commutes and work shorter work weeks. You have privacy, it is peaceful, and there is tradition. Groceries, pharmacies, and medical facilities are more accessible than ever. Hard working people, who still care about what they do, provide services equal to or better than those found in urban areas. People hold the door open and ladies or the elderly are first to pass through. Politeness and manners still matter more than in most urban areas and are always noticed. It is safer, but as the larger cities grow out towards our country towns, the reality is you still need to take heed of what is around you. However, being in the country, you will also find many people carry handguns and you will still see pickups with a gun rack—a natural deterrent in the country. The problem arises when the property is more expensive than expected, when a buyer thinks they are aware of the costs of building, upkeep and hard work that is needed to own a country property. This is no different from any other area of the country. Most of all, they think fifty acres is their goal but have no idea what it means. They get out on property and they are shocked to see how big it is; quickly twenty acres or ten acres is much more in their plan. Naturally, there are still large parcels available for the farmer or rancher want-to-be’s. That is part of what we do in the farm and ranch business. It is essential that we as land specialists help the buyer with what purchasing a farm or ranch really means. Property for $5,000 to $100,000 per acre and, all inbetween, are possible to locate. But where do you want to be? Are you going to live permanently on the property or is it a weekend, future retirement property. Our property in this triangle is not inexpensive. That being said, I just sold a half-acre lot in a very desirable in town subdivision for $200,000! A question remains: How are we going to be proactive in rural areas and not hang on to the success of the


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past? How do we encourage young people to want to be involved in rural farming if you don’t have a proactive message? You are competing against the world and opportunities everywhere in more urban areas. Young people need opportunity to continue to run the family farm or ranch or to stay in their hometowns and not feel they cannot make a living in small town America. Rural America encompasses nearly seventy-five percent of the land area of the United States. It only accounts for fifteen percent of the country’s population. The census bureau classifies rural areas as open country and settlements with fewer than 2,500 residents. Industry and college educations have pulled our young citizens into urban areas where they marry and grow their families. Most of them do not return to their rural roots. However, as we see in our area of Texas, more young families are coming back, not in droves but in steady thoughtful ways. Family roots, family farms and ranches and a slower pace. We still need to find a way to make rural America enticing enough for those in their twenties and thirties and forties to stay, work and raise their family. How do we do that? This area for certain is seeing growth due to our most desirable location in that magical triangle spoken of before. An hour to Houston, 1.5 hours to Austin and 2.5 hours to San Antonio makes this a great place to be. Our economy has turned to tourism as a major factor to entice the public here. Fifty years ago, it was the primary economic driver. Now, new companies are eyeing our area due to the location, as our Economic Development and Chamber of Commerce work diligently to increase work places and jobs. Second home ownership is driven by amenities and age. Let’s get the children back to our family roots and be

closer to grandparents. Let’s buy a weekend place so we can breathe, relax and socialize in a different way. If our area is 60 percent second homes, that is a huge population to get engaged when owners only come to the country maybe twice a month, if that. Another point of rural living is scientific. It is confirmed what every urbanite has long suspected, life in the city is more stressful. People who are born and raised in urban areas may be more likely to suffer from anxiety, depression and other illnesses than those brought up in the countryside. Studies show, that exposure to green space reduces stress, boosts health and makes us less vulnerable to depression. This information comes from a study of the brains of volunteers from urban and rural areas. Pollution, toxins, or noise could all contribute, however, other studies show access to green space soothes frayed nerves and improves wellbeing. Further studies show, that those with access to the county side are less likely to have heart disease or strokes. Is this what contributes to the rise in retired people moving to our area? I say so, but also our area is culturally diverse. Orchestra performances, plays with professional actors, restoration of old buildings, shops with high end goods, restaurants and other venues for concerts and music of all types as well as restaurants with more refined menus are popping up all over. The rural arts are benefiting all age groups as spectators or participants. Renovations to existing buildings are giving them the ability to support more activities for young people, drive the younger residents to stay and enjoy events, and to invite their friends from the big cities. If we can culturally capture their interest, it is much better

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About the author: Cathy Cole, ALC, Owner/CEO of Heritage Texas Country Properties, the largest real estate company in south central Texas. She served as the Chair of the REALTORS® Land Institute’s 2016 Government Affairs Committee and as President of the Texas Chapter of RLI. Cathy serves on the Nominating Committee for Texas Association of REALTORS® and is currently a member of their Land Use Sub-Committee. She is also a founding member of the Texas Land Brokers Network.

as they experience the benefits for all citizens. Years ago I would hear people say there was nothing to do here…. Not anymore! Also, a small community lets you participate in helping others for fundraising to save a theater, museum, parks, libraries and hospitals. A great fear for country towns is not only the loss of the countryside itself but also the way of life and the community involvement. General concern and care of neighbors and generations of tradition is the focus. We take care of each other and work together to bring a new soccer field, sports complex and other fights for the community. One thing about living in the country is that when the power goes out after a major storm, it could be days or weeks before power is restored. If a piece of equipment breaks down, it may take weeks to repair and this can mean trouble when it is essential to the running of your farm, ranch or small property. There are no push mowers on properties with twenty acres or more! You become self-sufficient because you have to be. You do a lot more hands-on repairs that you never dreamt of needing to do. It’s an exercise in patience, willingness to learn, taking turns and helping neighbors. In that way, you earn a pat on the back, a handshake, a beer on the porch and know that the person you just helped get a job done is a person you can rely on to assist you, too. Neighbors are key in the country. It is a pace of life you learn to live with. That is not to say that being part of the country community can take some getting used to. From uninvited visitors, human and wildlife, to the internet not working, cell phones dropping calls in low areas, septic tanks instead of sewers, no streetlights or pavement, it is a far cry from many newcomers previous urban lifestyles. I hope people will come to visit and stay a little longer than for an ice cream cone or a beer. I hope people come to experience our way of life, the more they can enjoy, appreciate and support it. Our future lies in being able to deliver sustainable communities with thriving local economies made for and by the people who live there.


Winter 2017


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Winter 2017


SECTION 1031 LIKE-KIND EXCHANGES: CURRENT THREATS TO A HUNDRED YEAR OLD TAX TOOL By Suzanne Baker Executive Vice President and General Counsel of Investment Property Exchange Services, Inc. Almost one hundred years ago, Congress enacted Internal Revenue Code Section 1031, permitting deferral of capital gains and recapture tax on like-kind exchanges. Two primary purposes of the tax law were: 1) to avoid unfair taxation of ongoing investments in property and 2) to encourage active reinvestment. These purposes are even more relevant today in our global economy than they were in 1921. Section 1031 not only permits efficient use of capital to preserve and manage cash flow, it also encourages U.S. businesses to reinvest in their domestic operations, rather than offshoring business activity.

IMPACT OF THE PRESIDENTIAL ELECTION Fast forward ninety-five years to the 2016 Presidential election. In a surprise finish to a long and sordid year of

election drama, Donald J. Trump was elected President and Republicans retained majorities in both the House and the Senate. This trifecta of power centers ratchets up the threat to Section 1031. Mr. Trump’s refusal to disclose his tax returns during the campaign, and the disclosure of a $916 million tax loss claimed by Mr. Trump in 1995, set off a firestorm of media speculation about tax strategies that may have enabled a tax loss large enough to wipe out his income taxes for up to eighteen years. A plethora of news articles were published, listing various “special interest tax breaks” that ordinary real estate owners would think of simply as common business tax provisions, such as depreciation. Unfortunately, the §1031 like-kind exchange was swept up in this commentary, mischaracterized as an abusive loophole used by wealthy real estate developers to repeatedly exchange properties and never pay the tax.

This is unfortunate because it is wrong on many levels. First, Section 1031 is not a loophole; it is a legitimate tax tool used by a broad spectrum of taxpayers including individuals of modest means, farmers, ranchers, small and mid-size businesses, as well as taxpayers at the higher end of the income scale. Second, developers that build or rehab properties and then sell do not qualify for tax-deferral treatment, because their properties are considered inventory, not investment assets. Third, tax is deferred, not eliminated. After reviewing more than 1.6 million real estate transactions over an eighteen year period, a recent study concluded that in one-third of all exchanges, some tax is paid in the year of the exchange, and that 88 percent of replacement properties acquired in a §1031 exchange are actually disposed of through a taxable sale, not a subsequent like-kind exchange. Tax is ultimately paid on the overwhelming majority of exchanged properties. The agriculture community has the broadest use of likekind exchanges. Farmers and ranchers use §1031 to combine acreage, acquire higher grade land, exchange breeding livestock and upgrade farm machinery. Retiring farmers are able to exchange their most valuable asset, their farm, for other real estate without diminishing the value of their life savings.

Section 1031 also promotes conservation and environmental goals. Grants of conservation easements can be structured as tax-deferred exchanges, facilitating programs designed to improve water quality, reduce soil erosion, sustain critical wildlife habitat, and provide recreational greenspace for all Americans. Section 1031 makes the economics work so that these landowners can acquire more productive acreage in less environmentally sensitive locations.

BLUEPRINT FOR TAX REFORM In June, 2016, House Ways & Means Committee Chairman Kevin Brady (R-TX) and his predecessor, Speaker of the House Paul Ryan (R-WI), announced the “Blueprint for Tax Reform,” an ambitious Republican plan for radical simplification and complete rewrite of the tax code. With Republican control of Congress and the White House, a comprehensive tax reform package based on the Blueprint is now expected to be fast-tracked through a process called Budget Reconciliation. Tax reform included in a budget bill that has been agreed upon by both the Senate and House could not be filibustered and would require only a simple majority to pass. The whole process could be concluded within the first few months of 2017.

The authors believe that the Blueprint will achieve three distinct goals: 1. Create jobs and economic growth 2. Make the tax code simpler, fairer and less burdensome 3. Transform the IRS into a kinder, gentler, taxpayer focused agency. The Blueprint calls for reduction of income tax rates for all taxpayers, with three brackets for individuals at 12 percent, 25 percent and 33 percent. A 25 percent rate would apply to income generated by pass-through businesses, such as partnerships, and a 20 percent rate would apply to C-corporations. The Blueprint also calls for elimination of the Alternative Minimum Tax (“AMT”) and abolishment of the Estate Tax. Capital gains, dividends and interest income would be subject to a 50 percent exclusion, resulting in effective capital gains tax rates of just 6 percent, 12.5 percent and 16.5 percent. The path to achieving massive simplification and rate reductions appears to be elimination of most deductions and exclusions in favor of larger standard and personal exemptions. On the plus side, businesses would be permitted to claim an immediate expense deduction of 100 percent of the cost of newly acquired tangible and intangible business investments, including real estate improvements, but not land. Unlimited net operating losses could be carried forward indefinitely. The flip side is that taxpayers would lose the expense deduction for interest paid on business debt.

SECTION 1031 AND THE BLUEPRINT The Blueprint is silent as to §1031 but many of the details are still unknown. There is concern that the tax writers may assume that with lowered rates and full expensing, §1031 would be unnecessary. It is imperative that §1031 be preserved for exchanges of land and other assets that are not covered by immediate expensing. Of particular concern to real estate owners is the potential combined whammy of the inability to expense land value with the elimination of the business interest expense deduction. Given that land values represent approximately 30 percent of the value of commercial and multi-family residential improved properties, and up to 100 percent of agricultural land investments, landowners would be particularly disadvantaged if they had neither the option of a tax deferred exchange nor expense deductions for land acquisition and interest on related debt.


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Recent studies on the economic impact of repealing §1031 have concluded that without a tax-deferral mechanism, a lock-in effect occurs. The immediate recognition of a gain upon the disposition of property would impair cash flow and could make it uneconomical to replace that asset. If property owners are faced with reducing the value of their investments and life savings through capital gains or recapture tax, even with lower rates, they will likely hold onto these properties longer. This leads to reduced transactional activity, slowed rate of investment, and reduced property values. Section 1031 removes the lock-in effect, and permits taxpayers to make good business decisions without being impeded by negative tax consequences.

PROPOSALS TO LIMIT LIKE-KIND EXCHANGES For the past several years, the Treasury’s annual proposed budgets have included a proposal to limit annual gain deferral under §1031 to $1 million per taxpayer and to disqualify artwork and collectables from tax-deferral treatment. This Democratic proposal is unlikely to go anywhere in a Republican controlled Congress, but it remains an idea that could be picked up as a “pay for.” Such a limitation would be particularly harmful to the economic stream generated by like-kind exchanges of commercial real estate, agricultural land and other assets. The value of these assets generates substantial gains. Transfers of large commercial and agricultural properties generate economic activity and taxable revenue for brokers, appraisers, surveyors, lenders, inspectors, contractors, attorneys, accountants, title and property / casualty insurers, architects, exchange facilitators and more. High volume equipment exchanges provide inventories of affordable used assets for small businesses and taxpayers of modest means. Turnover is key to all of this economic activity.

SUMMARY A broad coalition of organizations, including the REALTORS® Land Institute, the National Association of REALTORS®, and the Federation of Exchange Accommodators are working to make our policymakers aware that §1031 needs to remain in the tax code. Like-kind exchanges stimulate economic activity in the United States—property improvements that benefit communities, increase property values, and generate jobs ancillary to the exchange transactions. Recent economic impact studies have quantified that either eliminating or restricting like-kind exchanges would increase the cost of capital, slow the rate of investment, lower property values and reduce transactional activity, resulting in economic contraction of up to $13.1 billion annually.

You can make your voice heard by sending a letter to your legislators, letting them know how important §1031 is to you and your business at http://take-action.ipx1031. com/15473/send-message-to-congress/. About the author: Suzanne Baker is Executive Vice President and General Counsel of Investment Property Exchange Services, Inc. She also CoChairs the Government Affairs Committee of the Federation of Exchange Accommodators, and serves on its Board of Directors.







6. David Ling and Milena Petrova, The Economic Impact of Repealing or limiting Section 1031 Like-Kind Exchanges in Real Estate (March 2015, revised June 2015), at 10, available at http://www.1031taxreform.com/wp-content/ uploads/Ling-Petrova-Economic-Impact-of-Repealing-orLimiting-Section-1031-in-Real-Estate.pdf. 7.

Republican Members of the House Ways & Means Committee, A Better Way Our Vision for a Confident America, June 2016, available at http://abetterway.speaker. gov/_assets/pdf/ABetterWay-Tax-PolicyPaper.pdf, and https://waysandmeans.house.gov/taxreform/


Ling and Petrova, Economic Impact, at 7


Ernst & Young LLP, Economic Impact of Repealing LikeKind Exchange Rules, (March 2015, Revised November 2015), at 3, available at http://www.1031taxreform. com/wp-content/uploads/EY-Report-for-LKE-Coalitionon-macroeconomic-impact-of-repealing-LKE-rulesrevised-2015-11-18.pdf


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10. General Explanations of the Administration’s Fiscal Year 2017 Revenue Proposals, at 107, available at https:// www.treasury.gov/resource-center/tax-policy/Documents/ General-Explanations-FY2017.pdf 11. Ernst & Young LLP, Economic Impact at (v) and Ling and Petrova, Economic Impact, at 6


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AGRITOURISM TRENDS AND THE INFORMED REALTOR® By Melissa Hunt Chairman of the National Agritourism Professionals Association


rowing up in Central Florida, I was sort of a city kid. In the beautiful small town of DeLand, I was farm-adjacent, but didn’t pay much attention to the farms around us. Some of my friends were involved in FFA or 4-H, and it was fun to hear their stories about bunnies, crafting projects, and how they did things “in the country.” We lived about half a mile from a dairy, and we drove past it on our twenty-five minute drive to Daytona, but I never once visited it to see what happened. Fast forward to 2016 and after working in agriculture marketing for the past fourteen years at the state agency level, one of the things that excites me the most about my career is being able to visit farms. They are diverse and offer a number of opportunities for visitors. I am not alone in sharing this excitement about farm visits. The trend of agritourism is not new, and it is growing across the country. (The definition of what agritourism is varies state by state, but the basic definition is participating in an activity on a farm.) According to the U.S. Department of Agriculture’s 2012 Census of Agriculture, there were 33,161 farms identified as providing agritourism opportunities. The value of these farms was $704,038,000. In 2007, the numbers were 23,350 farms at a value of $566,834,000. In that five-year time period, the number of agritourism operations grew by 42 percent, while the value grew 24 percent. These are impressive numbers. 2012 Ag Census

2007 Ag Census

2002 Ag Census




Value in $1,000s




Average Per Farm




Agritourism Operations


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Information from 2012 Census of Agriculture, USDA, National Agricultural Statistics Service The information gathered in the Census of Agriculture is interesting, and is broken down by state. For example, in my home state of Florida, the number of agritourism operations grew from 281 in 2007 to 724 in 2012, which is 257 percent growth. How many of us would like our income to increase by that amount in five years? There weren’t increases in this sector in every state (here’s a table that shows a state-by-state comparison), but it is a definite growth trend. Income From Farm-Related Sources—Agritourism and Recreational Services Number of Farms State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky

2012 787 42 323 389 1,699 864 237 43 724 944 233 182 834 277 275 1,000 651

2007 591 28 111 268 685 679 101 24 281 602 121 135 665 267 245 930 428

Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

622 1,133 268 738 1,819 731 497 844 726 393 51 190 347 489 857 1,135 167 649 840 576 729 68 581 606 616 7,775 229 155 814 585 174 692 450

594 688 297 482 1,524 862 506 588 790 301 38 88 322 345 575 602 213 418 616 376 552 43 376 667 510 5,322 191 109 476 342 112 568 464

Information from 2012 Census of Agriculture, Table 6, USDA, National Agricultural Statistics Service While not all of these farms were new land acquisitions (overall farm acreage in the United States has decreased from 922,095,840 acres in 2002 to 914,527,657 acres in 2012), these data provide valuable information for all REALTORS®, including land brokers/consultants. The aspiration to return to the land for business purposes is a very real trend, and one that can help you promote land sales and purchases. If we compare the states and how the numbers changed, some dramatically, it is important to note that several factors are built into these numbers. Some states offer sizeable monetary incentives through grants and other programs that assist farmers with their agribusiness operations. In the Southeast, for example, tobacco settlement monies have helped fund numerous farms as they branched out into agritourism. Farm size is one issue when deciding on opening an agritourism operation. As the knowledge about and interest in farm visits increases among city and country dwellers alike, farmers have to engage in sound business practices just like the local grocery store owner, dry cleaner, or gas station owner. They must provide a product that consumers want - or didn’t know that they wanted before - at a price they are willing to pay. That’s where the diversification of agritourism activities comes into play. Have you ever participated in an agritourism activity? Going by the basic definition, if you’ve ever stopped by a farm to buy fresh produce, honey, or baked goods, you have. However, it doesn’t stop there! Pumpkin patches, crop mazes, u-pick produce and flowers, farm animal petting zoos, and u-cut Christmas trees are all examples of agritourism. The rules vary dramatically by state, so having activities and venues like zip lining, bounce pillows/pads, weddings, concerts, fishing, skeet shooting, and others all combine into the types of

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products and services offered on farms. Knowing the state and local regulations that govern agritourism where you work will help in providing advice and opportunities to your clients. Here’s an example: A young couple has been growing hydroponic vegetables on a few acres. She grew up on a farm where her family raised pastured pork and grass-fed beef, and he was born into a horticulture family. They have done calculations and realize that they could expand into a diversified operation that provides u-pick hydroponic vegetables and flowers, while also providing meats in a farm store on the property. While the initial stage of expansion may not incorporate everything in their business plan, they need the acreage to be available when they need to expand. They turn to their REALTOR® for help in finding the perfect piece of land. It involves much more than acreage; it means that they need to know the terrain and how it will be an asset to their farm rather than a hindrance. Some counties are far more friendly to agritourism than others, so finding out in advance what is involved in local permitting, licensing, and zoning would be a reason that the clients choose that particular REALTOR®. County A may require that customer parking areas be paved, while the adjacent County B may not have that requirement. This is one of the factors that will go into not only where the couple should buy the land, but how much they can afford in future sales projections. By keeping up with agritourism activity trends, the REALTOR® is a very real resource; knowing the approximate space needs for different activities can help the clients determine the property size they need today and in the future. In another example, hops are “hopping” in the adult beverage world, and say some clients want to grow them and have a microbrewery. They want to allow visitors to the farm to see how hops are grown and how beer is made. If any nearby counties are dry or if some have more stringent ordinances than in other local counties, this will figure in to the purchase decision. Farmers are savvy and technological advances in farming are fascinating, (transponders on cows? What?!) so your clients will likely know the challenges and opportunities they are facing. However, being able to partner with them through research not only on the real estate front, but in agritourism, too, will round out the service you provide to them.


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So what trends are emerging in the field of agritourism? •

• •

• •

Rather than just corn mazes, farmers are turning to crop mazes. This could allow for year-round or multi-seasonal mazes. (There are companies that will design and cut a maze for a farmer; they’ve caught on to this seemingly niche market.) Bounce pillows are a huge hit - picture an open air bounce house without walls. Hay rides/cow trains and other means of transporting consumers from one part of a farm to another with the purpose of participating in an activity at the end or just viewing the farm are simple ways to educate large numbers of people at one time while showing off a farm. Farm to table dinners are also becoming both more popular and more accessible to consumers. U-pick/pick-your-own fruit and vegetable farms are popping up in various forms, from hydroponic towers to in-ground and container gardens to aquaponic tanks.

Additionally, regional, historic, and cultural agricultural activities create a colorful, interesting tableau across the United States. While all of these activities may not seem like they partner with land acquisition, they would not be possible without the right venue. By exploring the fun world of agritourism, you will play a prominent role in the success of your clients’ businesses. For more detailed information on the Census of Agriculture, check out https://www.agcensus.usda.gov/Publications/2012/Full_ Report/Volume_1,_Chapter_1_US/usv1.pdf. About the author: Melissa Hunt is a Marketing Representative for Industry Relations at the Florida Department of Agriculture and Consumer Services, where her duties include agritourism policy research. She most recently served as Chairman of the National Agritourism Professionals Association.

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THE EMERGENCE OF PORE SPACE AS A PROPERTY RIGHT Pore space, although rarely thought about, should be viewed as just another private property right. Pore space is generally thought of as a subsurface property right. Although it can be defined in a number of different ways, pore space, by its simplest definition, is the empty space between grains of rock, fractures, and voids. Until very recently, pore space was hardly considered a property right at all. However, the surge of interest in carbon capture and sequestration (CCS), as well as the need to store salt water produced by the oil and gas industry—as a waste product arising from oil and gas production and from hydraulic fracturing—has made pore space ownership an increasingly popular, yet extremely underdeveloped area of the law. Like most property rights, pore space ownership has evolved out of common law property rights, which are traceable to the old common law maxim known as the “ad coelum doctrine.” The ad coelum doctrine states “cujus est solum, ejus est usque ad coelum et ad inferos,” meaning “to whomever the soil belongs, he owns also to the sky and to the depths.” Taken literally, the owner of the surface holds title to the entire tract from the heavens to the depths of the earth. This form of ownership, although no longer as broad as it was originally, is the simplest and broadest property interest allowed by law, which is known as a fee simple interest. Determining ownership of pore space is very straightforward when a fee simple interest is involved because the fee owner holds title to both the surface estate and the mineral estate. However, once the fee simple interest is severed into differing estates and burdened with a variety of other property interests, determining pore space ownership can become a confusing and complicated issue. There are two common ownership structures once the mineral estate has been severed from the surface estate:

(1) the non-ownership theory, known as the “English Rule”; and (2) the ownership in place theory, known as the “American Rule.” Application of the English Rule vests pore space ownership with the mineral estate—which is clearly the current minority rule within the United States. The American Rule, on the other hand, “involves the severance of a mineral right from the interest in the whole geological formation.” When applying the American Rule, the mineral estate owns the minerals beneath the land, but the geological formation, is owned by the surface estate. The American Rule is currently the majority rule in the United States. In addition, although the American Rule vests pore space ownership with surface estate, the mineral estate still has the right to explore and remove minerals from the land, which allows a mineral estate the right of reasonable use of pore space for mineral exploration. As a result, in states applying the American Rule, it cannot simply be said that pore space belongs solely to the surface estate. It must also be determined if the reservoir has been depleted of minerals because until depletion occurs, the mineral estate still has a right to use the pore space. We researched pore space law in Arkansas, Colorado, Kansas, Kentucky, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, Wyoming, Michigan, Louisiana, New York, and West Virginia to determine if there is a trend towards vesting ownership of pore space with the surface or mineral estate. Six of the states were undecided, four states have a clear statute vesting ownership with the surface estate, four other states have case law supporting surface estate ownership, and one state had a case arguing pore space could be owned by the mineral estate. As such, landowners should be mindful of the following legal and practical considerations associated with their pore space rights. Landowners, and those representing them, must be cognizant of how title to pore space can


Winter 2017


be modified through various contracts, easements, litigation, releases, and other agreements landowners routinely enter into.

LEGAL AND PRACTICAL CONSIDERATIONS OF PORE SPACE RIGHTS Valuation of Pore Space As surface owners become more educated about pore space ownership and as technology advances, it is highly likely that operators will need to acquire rights to the pore space in order to engage in directional drilling or inject wastewater in areas outside of the drilling units. Yet, placing a monetary value on pore space can be just as complicated as determining ownership. For instance, valuation of pore space will likely be difficult to determine as it will depend on the particular use and what the user is willing to pay as opposed to the actual value of occupation.

CO2 Sequestration As previously mentioned, pore space can be used for carbon capture and sequestration (CCS). CCS can potentially remove eighty to ninety-five percent of the CO2 emitted from power plants. Studies have also indicated that global sequestration capacity in depleted oil and gas fields is substantial, with the capacity to store 125 years of current worldwide CO2 emissions from fossil fuel fired power plants. Although CO2 is routinely injected into subsurface pore space in an effort to aid in the recovery of oil and gas, and though large-scale sequestration sites have been identified within the United States, there are currently no largescale, commercial sequestration projects underway in the United States. Still, pore space owners should be mindful of the opportunity and their right to use depleted oil and gas reservoirs for CO2 sequestration.

Underground Natural Gas Storage In addition to CO2 sequestration, pore space also has the potential to be used for underground natural gas storage. Natural gas, unlike oil, is more easily stored by re-injection into underground rock pore spaces, which are typically geological formations or common sources of supply whose pore spaces formerly held producible hydrocarbons that are now substantially depleted. In some states, surface owners retain the right to depleted geological formations and; therefore, should request compensation for storage of natural gas in depleted geological formations, and for injection of wastewater produced from out of section wells.


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Terra Firma

Subsurface Trespass In additional to potential uses for pore space, pore space owners should be aware of the high potential of a subsurface trespass.

Traditional Oil and Gas Subsurface Trespass The most obvious example of an actionable trespass in this context is a directional well that bottoms out under neighboring property. This situation gives rise to an actionable trespass due to the well-established principle of property law that prevents the use of the surface to support mineral extraction activities on other lands. However, operators can avoid a trespass situation by seeking an appropriate release from the pore space owner.

Hydraulic Fracturing A subsurface trespass can also occur during hydraulic fracturing. However, courts tend to rule that an injury must occur in connection with the subsurface trespass as hydraulic fracturing prevents underground waste of hydrocarbons by allowing its recovery from tight reservoirs that would not otherwise be productive and thus, meets an important social need. Although this reasoning wisely protects the well-established and necessary practice of hydraulic fracturing, it also gives an inference that courts may be reluctant to find a subsurface trespass of pore space as a result of hydraulic fracturing.

Secondary and Enhanced Recovery Operations Secondary or enhanced recovery operations are used to maintain or increase production of a well once the reservoir’s natural production decreases. Although states often recognize secondary or enhanced recovery as a valid public interest, trespass issues can arise in instances when an operator injects a substance, such as salt water, carbon dioxide, chemicals, or natural gas, into the subsurface of its own property in order to increase production and the injected substance invades the subsurface of the neighboring property. Generally, when secondary recovery is involved, it appears that most courts are unwilling to find the migration of wastewater onto neighboring properties to be a trespass. This is likely because secondary recovery is in the best interest of the public and industry. With that said, there appears to be no clear case law challenging this logic specifically in the realm of pore space.

Wastewater Injection Wells Wastewater injection wells can be associated with subsurface trespasses. In this situation, a subsurface trespass occurs when fluids from a wastewater injection well migrate beyond the legal surface boundaries of

operator’s rights. It is likely that the operation of many wastewater injection wells result in the subsurface trespass of pore space to some extent, as common sense says that when a commercial wastewater disposal operator only owns one acre yet injects hundreds of thousands of barrels of wastewater into a wellbore on that one acre, the wastewater is migrating to an area outside of that one acre. However, that being said, it would be difficult to prove. Nevertheless, pore space owners should always be mindful of wastewater injection wells near their property and the potential for that wastewater to migrate onto their property. As the law on pore space develops, surface owners may seek compensation from these commercial wastewater disposal operators or may even try to prohibit the injection.

College of Law, A 2015 Analysis and Update on U.S. Pore Space Law - The Necessity of Proceeding Cautiously with Respect to the “Stick” Known as Pore Space (2015).

2. John G. Sprankling, Owning the Center of the Earth, 55 UCLA L. Rev. 979, 980 (2008).

3. Id. 4. Mark A.

de Figueiredo, Mass. Inst. of Tech., Property Interests and Liability of Geologic Carbon Dioxide Storage: A Special Report to the MIT Carbon Sequestration Initiative 5 (Sept. 2005), available at http://sequestration.mit.edu/pdf/ deFigueiredo_Property_Interests.pdf.

5. Id. at 5-6. 6. Id. at 6. 7. Elizabeth Lokey Aldrich

et al., Energy Policy Inst., Analysis Possible Regimes for Carbon Capture and Sequestration: A Review for Policymakers 17-20 (Apr. 2011), available at http://epi.boisestate.edu/media/6079/epi%20 ccs%20pore%20space%20regimes.pdf. of

CONCLUSION Evaluating pore space as an underground property right should be considered in every land deal. The development of pore space as a valuable property right is an increasing area of consideration for REALTORS®, title examiners, landmen, policymakers, attorneys, and judges. As such, it will be increasingly important to consider the implications every deal may have on this emerging area of the law. For a more in-depth analysis of pore space, you can download a copy of the 2015 thesis and other writings on the topic by visiting www.LandownerFirm.com. About the author: Trae Gray is a Mediator, Entrepreneur, Lawyer, Speaker, and Expert Witness with specialized expertise in ethics and natural resources. With a nationwide practice he is listed by Super Lawyers and The Top Trial Lawyers in America as a Lifetime Member of the MultiMillion Dollar Advocates Forum – something that is achieved by less than 1% of U.S. lawyers. More can be found online at TraeGray.com. About the author: Ryan Ellis, a partner with LandownerFirm, is a legal research and writing specialist with specialized expertise in Class Action, Environmental, Energy, and Natural Resource legal matters. She graduated with honors from the University of Tulsa College of Law where she completed the Sustainable Energy and Resources Law Program, which offers one of the most advanced energy, environmental, and natural resource legal educations in the nation. More can be found online at LandownerFirm.com.



8. Id. at 18. 9. Id. at 19. 10. Id. 11. Id. 12. de Figueiredo, supra note 4, at 7. 13. Id. 14. Stephanie M. Haggerty, Legal Requirements for Widespread Implementation of CO2 Sequestration in Depleted Oil Reservoirs, 21 Pace Envtl. L. Rev. 197, 197 (2003).

15. Victor B. Flatt, Paving the Legal Path for Carbon Sequestration from Coal, 19 Duke Envtl. L. & Pol’y F. 211, 213 (2009).

16. Eric R. King, The Ownership of Empty Spaces 2 (n.d.) (paper delivered at the Eugene Kuntz Conference on Natural Resources Law & Policy, Nov. 2003).

17. Levi Rodgers, Subsurface Trespass by Hydraulic Fracturing: Escaping Coastal v. Garza’s Disparate Jurisprudence Through Equitable Compromise, 45 Tex. Tech L. Rev. Online Edition 99, 113 (2012-2013).

18. Id. at 326. 19. Id. at 325. 20. Coastal Oil v. Garza, 268 S.W.3d 1 (Tex. 2006). 21. Rodgers, supra note 17, at 116. 22. Id.

1. A significant portion of the research and authority used in this article are taken from: Trae Gray, University of Oklahoma

Terra Firma

Winter 2017


Farm, Ranch & Land Auctions

The Speed of Sold.

The Williams & Williams team approach to selling your farm or ranch is built on generations of proven, practical experience and unparalleled competencies in auction. Our Farm, Ranch & Land Division plans each auction it conducts with thoughtful consideration to the needs of the seller, the unique attributes of the property and our insights into valuating the real estate marketplace. Williams & Williams is squarely focused on delivering the largest pool of bidders to our sellers’ properties and generating maximum value. If you are considering selling your farm, ranch or land, contact me today. I look forward to being your partner through this remarkably fast and effective process.

Drew Ary Drew Ary, director of farm, ranch & land Direct 918.362.7312 / Mobile 918.576.4797 Email drew.ary@williamsauction.com


Winter 2017





AUCTIONS JUST DON’T WORK IN MY AREA By Sam Kain, ALC Farmers National Company Auctions just don’t work in my area! Oh, how many times I have heard that over the years. I always find that statement amazing as our company has completed over 1,200 auctions in just the last five years and, as near as I can figure, in my thirty-five year career I have been involved in somewhere around 2,500 land auctions. Auctions have been around for more than 2,000 years. Records handed down from the ancient Greeks document auctions occurring as far back as 500 B.C. At that time, women were auctioned off as wives. Now, those of us that have been doing this a while know of landowners who might be willing to auction their wives or husbands for a well drained 160 acres of land even today. All joking aside, if you’re trying to enhance your image as a full service real estate professional, auctions should definitely be a part of your business.

What is a real estate auction? A real estate auction is an intense and accelerated real estate marketing process that involves the public sale of property through competitive bidding. The word auction derives from the Latin word “auctus” which means increasing. A well run successful auction can create momentum for future business for you; increasing your income and enhancing your image as the person that can get things sold. Is every property a good auction prospect? No and not every seller is a good auction prospect. As a real estate professional, it is your job to understand what makes a good auction property and if your seller will be a good auction prospect. I’ll talk more in detail about qualifying the seller and the property a little later in the article but, for now, let’s look at some types of auctions that I have successfully used in my business and their advantages and disadvantages.


Winter 2017


ABSOLUTE AUCTION In an absolute auction there is no minimum bid. The property is sold to the highest bidder, regardless of price. The advantage of an absolute auction is that it attracts more buyers because they know the property is going to sell. The disadvantage is that it provides no safety net for the seller, which makes it difficult to recommend to seller client’s in some situations.

MINIMUM-BID AUCTION Sometimes called a minimum published bid auction. In this type of auction the lowest acceptable price is predetermined by the seller and the auction firm. The minimum price is then stated on all the marketing materials. When the bidding reaches the minimum amount, the property will sell. This is a good type of auction to use when you have a property that might have been on the market for some time and is market weary. The advantages of this auction is that it lets buyers know what the minimum price the seller is willing to take for the property, and it still creates a safety net for the seller; unlike an absolute auction. The disadvantage is that sometimes the inexperienced agent and a demanding seller may set the minimum bid too high and buyers will not be willing to bid.

RESERVE AUCTION In a reserve auction, the seller reserves the right to accept or reject the highest bid. The owner, with the advice of his agent, determines the price at which he would be willing to sell the property. This pre-determined price is not published or disclosed to the public. Sellers are not obligated to accept any other price than the predetermined reserve price or above. The advantage to this type of auction is that it provides a safety net for the seller while still giving the real estate professional the knowledge at what price the seller is willing to let the property be sold. The disadvantage is that many prospective buyers do not want to take the time or go to the expense of investigating the property when there is no guarantee that they will receive the property even if their bid is the high bid. Over the years I have had many buyers tell me that “We don’t come to auctions to bid, we come to buy, and so, until I know that the reserve has been met, I am not going to bid.” This can be a problem with this type of

auction, so, it is very important that the seller and agent establish a very realistic reserve price.

SEALED BID AUCTION All bids are confidential. Usually, they are submitted to the agent and then opened at a predetermined time and place. This type of auction can also be used in conjunction with the three listed above. The advantage is that if you have a buyer with a very strong personality or presence in an area and other buyers don’t want to publicly compete with him they can do so. The disadvantage is that by doing everything confidentially, some buyers may question whether there really were other competing bids. You also lose the excitement created at a public out-cry auction that often times will cause competing bidders to pay more than they thought they would for a property.

MULTI-PAR AUCTION This type of auction works well for large parcels that need to be offered in smaller parcels to attract the most buyers. It allows the bidder to bid on one parcel or any combination of parcels. The advantage is that it allows bidders who want only one parcel and bidders who may want several or the whole thing to compete. The disadvantage is that the buyer who wants to buy the whole parcel does not need to compete until the end. It also requires a very knowledgeable staff to keep track of bids and help potential buyers submit bids that keep them in the winning position. There are other types of auctions that can be used, but these are the ones that work best for me. As technology has advanced, online auctions and online bidding is becoming more common. However, since I often hold auctions in areas that I don’t have even good cell phone service let alone internet connections, this type of bidding has been a problem for me. These auctions are being used very successfully in the selling of livestock and personal property, and I do see them becoming more common in the land business in the future. Now, let’s talk about what makes a seller a good candidate for a real estate auction. Here is what I consider the top five questions you need to ask as the real estate professional: 1. Is there adequate equity in the property? 2. Is the property being sold to settle an estate or divorce? 3. Has the property ever been listed? 4. Does the seller have realistic expectations? 5. Is the seller familiar with the auction process? A “yes” answer to these questions would be positive towards an auction. A “no” answer would lead to the need for additional questions to be asked before deciding on encouraging the use of an auction.


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What makes a good property to auction? As a general rule, a property that is in good condition and in a desirable location will sell successfully at an auction. Am I saying that only good, well located properties should be auctioned? Of course not! The auction method can successfully be used in the marketing of just about any type of property. It is very important though that you analyze the seller, the property and the market to see if there would be positive demand for the property.

Mapping Made Simple MapRight Layers APN: R00054178

Township - Range -Section

Acreage: 160.84

Water Features

Parcel Address: 1145 River Rd Lakeway, TX 78734

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County: Travis


State: TX


Owner: Joe Smith Mailing Address: 4516 Lonesome Trl Austin, TX 78759

Soils Soil Capability

An auction should be a well prepared and carefully planned event. It definitely is not a one man show.


Fed/State Lands Parcels

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Township - Range -Section

If you do not plan to become an auctioneer yourself, it is very important that you choose an auction company wisely. There is a saying, “There are three types of lies used in the marketing material of a lot of companies, lies, damn lies and statistics.” Don’t just rely on the statistics presented to you in their marketing material. It is important that you attend a few of their auctions, and don’t be afraid to ask for references from past clients. The entire auction team needs to be competent and professional in both their dress and their actions. Many times you will have people attend your auctions who are considering an auction on their property in the future. A well conducted auction is a great selling tool, but if the auction is disorganized and poorly ran it will be a reflection on you and you won’t get their future business. Auctions can be a win-win situation for all. The sellers get their property sold at an acceptable price. The buyers purchase the property at fair market value, knowing the price was determined by open, competitive bidding and you as the agent have a happy client and a successful transaction. I can’t possibly tell you all the things you need to know about auctions in this article. If you would like to know more about auctions and the auction method of selling real estate I would encourage you to take “The Real Estate Auctions” course offered by the REALTORS® Land Institute. This course will give you a very good background in auctions and how to use them to market real property.



63B 110B


207B Name: Kremlin loam, 4 to63B 8 percent slopes 63C

Water Features




Capability (non-irrigated): 3e

207B 109B Subclass E: Susceptibility 407B

to erosion. 171B 63B 585 777 that reduce Class 3: Soils have limitations the choice of plants 63B special conservation practices. When used for and/or require cultivated crops the conservation practices are usually more 110B 499D 1585 difficult to apply and maintain. These soils may be used for cultivated crops, pasture, range, woodland, and63B wildlife.

FEMA Floodplain FSA



485 63B

Soil Capability





Fed/State Lands




63C 213B



485 412C 809B

499D 205B




159 159C







63B 207B 205B




391B 485 412C




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I can tell you from experience that auctions do work and that the auction tool is one you, as a real estate professional, need to have in your tool box. About the author: Sam Kain, ALC, is the Assistant Vice President - Real Estate / National Sales Manager for Farmers National Company in Des Moines, IA. Kain served as the 2005 National President of RLI and continues to be active in the organization as the LANDU instructor for the Real Estate Auctions course.

Call now to list your properties!

Winter 2017


412C 391B

Your Destination for Land and Rural Retreats






LAND, RANCH AND RECREATIONAL PROPERTIES. The Wall Street Journal produces special advertising features reporting on the benefits of investing in the various land categories. From ranches, farm, timberland and more, reach your target market by advertising on a local, regional, national or global level. Our audience is primed to purchase–39% of the WSJ audience owns an investment or rental home, and 17% are looking for a farm/ranch home as their next secondary property.

Issue Date: April 21 | Close Date: April 14 Issue Date: June 9 | Close Date: June 2 For more information on advertising opportunities, please contact: sales.realestate@wsj.com | 800.366.3975

Source: WSJ. Insights Mindset of the Luxury Homebuyer Survey

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WINTER 2017 | ISSUE 06


Profile for REALTORS® Land Institute

2017 Terra Firma Winter  

The official publication of the REALTORS® Land Institute, The Voice of Land. Read about the hottest trends in land real estate and gain insi...

2017 Terra Firma Winter  

The official publication of the REALTORS® Land Institute, The Voice of Land. Read about the hottest trends in land real estate and gain insi...