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March 13, 2007
Reading the Obituaries = Profit
Heading into the third part of this lesson, our instructor told us about a property which he had wanted to buy, but had failed in his attempts to convince the owner to sell it. In his research on the property, he had found that much of the backyard was actually partitioned off by a narrow sliver of land owned by a large university here in Utah. Assuming that he would eventually succeed in purchasing the home, he decided to contact the University and see if they wouldn’t sell him the sliver of land.
Upon contacting the lands administration department of the School, he was delighted to find that the University had recently decided to liquidate some of its land holdings which it deemed to be of little or no value. This sliver of land was considered to be one such holding.
The man in charge of selling off these excess lands asked our instructor to make a fair offer. He thought for a moment, considered that the going price for 30,000 square feet of land at the time was 4 or 5 thousand, and decided to lowball with $500. “Done” came the quick reply, and our instructor stated that in retrospect he wished he had offered $200.
Some time passed, and he still found himself unable to persuade the home owner to sell the property. He moved on to other investments, until he noticed some months later while reading the obituaries (”I read the obituaries because…well I read them” he confessed) that the owner had passed away.
Excited, he called the home and spoke with the daughter who had inherited the property. He offered $30,000 which she laughed at and refused. Some days passed, and he received a phone call from the daughter’s attorney angrily demanding that the parcel of land which our instructor had bought from the University be turned over to the daughter immediately. He threatened to sue, claiming adverse possession. Our instructor explained that he was greatly amused by this, as they hadn’t paid the taxes on the property for all these years, he had.
After some time, he was again contacted by the attorney who had evidently done some more research, and in a calmer tone asked what the property could be purchased for. Our instructor was quick in his reply that he would sell it for the same as he had offered to buy the other property for. “The price is $30,000″. This evidently did not go over too well, and the attorney finally called and claimed that he would be seizing the land under prescriptive easement. This means, that if a piece of land is used by someone else for 20 years, then it reverts to that person’s ownership.
This claim got our instructor worried and he called his attorney to find out what his legal standing was. The lawyer chuckled, and as they discussed it, they found that the home had been owned by the daughter and her family for 19 years and 2 months. The attorney recommended that to avoid a court battle, he just sell it for a fair price, but if not, to at least do something with the land.
And so the instructor told the story to his real estate class, and got some volunteers to help him set up a rudimentary garden on the property. Before doing so, he decided to try and be diplomatic, and called the daughter’s attorney and offered to sell for $12,000. They accepted, and our instructor netted a healthy profit from his brief purchase.
He went on to warn us again that being a landlord can get dirty, telling us how he once had to call the police to have a woman removed from his offices because of a vicious argument they had over a $25 fee. Many in the class appeared appalled that arguments can occur between the landowner and renter. Again, this may explain why most agents have no intention of ever owning more than one property.
The lesson concluded with the definitions of freehold estates:
Fee simple
absolute: Highest form of ownership, no limitations
defeasible: two limitations (special with revertership [sp?]) and (conditions subsequent to with right to reentry)
And:
These definitions were long, and I’d recommend reading wikipedia to get a feel for what they mean.
The lesson concluded with this final bit of advice:
In a community property state like California, you share everything obtained in marriage, but gifts from relatives can be separate. Utah doesn’t do that. That means you may have no claim if your spouse dies with property in their name. Time for me to make that will…
read comments (1)
March 15th, 2007 at 5:53 pm
So, what happens if your wife dies? You get kicked out of the house because it’s in her name???