EscrowCh15 by philchen

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									      Chapter 15

Non-Residential Specialties
                 Chapter Outline
   Subdivisions
   Office Buildings
   Commercial Properties
   Industrial Properties
   Agricultural Property
   Undeveloped Land
   Bulk Sale
   Liquor License
   Personal Property Plus Real Property
   Internal Revenue Code 1031 Exchanges and
                    Chapter 15
 At the conclusion of this chapter, you will be able to:
1. Understand the difference between the previously residential
   sale escrow and the sale escrow instructions used to transfer
   property ownership from a developer/builder to a home
2. Give a definition for what type of transaction requires an
3. List the types of documents used for a subdivider/builder
   home sale to a buyer.
4. Differentiate between real and personal property.
5. Explain the requirements for an escrow involving a
   commercial, retail property.
   The process involves the conversion of
    land into a completed project.
   Involves special title insurance policy
    coverage due to mechanic’s liens
       Priorities
       Off-site work
       On-site work
   Notice of Non-Responsibility
           Office Buildings
   Generate income
   Commerical tenant
   Common area
       Office Building Escrow
   Lease agreement
   Profit & Loss statement
   Sign restrictions
   Non-Competitive covenant clause
   Tenant association documents
   Maintenance reports
   Employee records
   Vendor contracts and contacts
   Parking assignments and information
What is commercial real estate ?

    Industrial or agricultural
    Non-owner occupied
    Retail usage
    Multi tenants
             Commercial Escrow
   Legal parties and property description
   Loan information (new and existing)
   Insurance information
   Lease agreements and deposits
             Industrial Property
   Raw land
   Long-term lease of land with tenant who
    constructed the improvement
   Land and improvements
    Industrial Property Escrow
   Environmental issues
   Zoning laws and regulations
   IRC 1031 tax exchange
   Franchise requirements
   Fire department clearance
   City inspection clearance
         Agricultural Property
    Farms
    Vineyards
    Groves
    With buildings
    Without buildings

    Agricultural Property Escrow
   Farmer’s Home Administration (FmHA)
   Forest Service
   Park Service
   Bureau of Land Management
   Department of Agricultural
   Army Corps of Engineers
          Undeveloped Land
   Geological survey
   Flood Zone
   Seismic zones
   Mineral, gas, and oil rights
   Easements
            Bulk Sales Transfer
   Change of Ownership
   Covenant Not to Compete Provision
   Personal Property
   Real Property
   Financing Documents
                  Bulk Sales Escrow
   Uniform Commercial Code (UCC)
       Notice to Creditors of Bulk Sale
   County search for name:
       Fictitious Business Name
       Doing Business As (DBA)
   Release from
       California Franchise Tax Board
       State Board of Equalization
       Use Tax Certificate of payment
        Employment Development Department (EDD)
             Liquor License
   Alcohol Beverage Control (ABC)
   On-Sale general liquor license
   Off-Sale general liquor license
   Licenses issued specific for each county
   Transfer requires government approval
     Personal vs. Real Property
   Personal Property:
       Bill of Sale
       Subject to sales tax
       Shorter depreciation
   Real Property:
       Grant Deed
       Affixed, annexed, appurtenant
       No movable, by law
        IRC 1031 Exchange Escrow
   Allows investor to sell one property and obtain
    another property without paying income tax on
    the profit at the time of the sale
   Defers the tax due. Not “tax FREE”.
   Exchangor
   Relinquished property
   Replacement property
   Intermediary: Accommodator
   Constructive receipt
                    Think About It!
The owner of 80 acres in the unincorporated county area near Golf Cart
  City bought the lot as an investment for $50,000 with a barely livable,
  very old wooden house. After 10 years of living on the property it is
  now inside the city limits and the owner is approached by a
  developer with an offer for $1 million cash plus the “model”
  condominium unit free-and-clear to live in after all units are sold,
  including the unit upgrades, furnishings and attached fixtures. The
  seller accepts the offer.
 Escrow opens and the preliminary title report is received by the
  buyer. The city council has zoned the area that includes the
  undeveloped land for one single-family detached home per acre. The
  developer calls escrow to cancel since the offer was contingent upon
  securing financing for the development of the condominium project.
 Another developer opens escrow with the same seller on the same
  property with the same escrow company for $300,000.
 What are the rights of the seller to sue the city for the loss of value?
        Think About It! (Answer)
A zoning ordinance is a legitimate exercise of a government’s
  right to police power. The restriction on population density
  of an area is to reasonably protect the public health,
  welfare and safety for sanitation, police and fire protection
  and prevention, adequate schools, libraries, etc, and other
  infrastructure needs. The ordinance is non-discriminatory
  since it applies to ALL property owners in the area. If the
  value is lowered too much the property owner might sue
  the city for confiscation, but in this case even though the
  decrease in value is substantial, the seller is realizing a

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