Page 13 - Tree Line - North Carolina Forestry Association - Fourth Quarter 2020

access may be available by another easement or via a cartway pursuant to NCGS §136- 69, the delay, time involvement and costs are potentially avoided if right of access is determined during the due diligence process.
Identifying Required Third-Party Consents or Releases
Rights of others in the land should also be considered when performing due diligence on a transaction related to real estate. One potential instance of liability is the failure to identify and obtain releases for liens on the property. The most common example of a lien on the property is a deed of trust, which is an instrument recorded at the Register of Deeds to secure a debt. A deed of trust must be satisfied or released at the Register of Deeds to secure clear title for a buyer in a purchase transaction. Further, an inquiry should be made with the lender prior to cutting any standing timber on the property to prevent any potential liability. It is possible that a portion of the timber sale proceeds will be required to be paid to the lender in order to obtain a release from the deed of trust.
Other potential third-party issues include rights held by tenants, rights held by life estate interests, and rights reserved to the beneficiaries of certain easements and restrictions. Without review of these recorded documents, it is impossible to determine if the intended use violates any of these parties’ interests.
Verification
of Governing Jurisdiction and Review of Applicable Ordinances
An important step of due diligence for
a transaction involving real estate is to verify the governing municipality for permits and approvals. Complications arise when a property is located within an extraterritorial planning jurisdiction (ETJ). ETJs allow a municipality to enforce its planning and development regulations beyond its city limits without annexing the property for distances up to three miles under certain circumstances (NCGS §160A-360). With North Carolina experiencing such rapid population growth over the last few decades, it
has become a common occurrence for expanding towns to establish an ETJ and to govern the use and development of
“The mistake of acquiring land with the intended use of cutting timber, or indeed cutting timber within such zones or areas, will result
in a trip to a litigator’s office and is avoidable if the appropriate due diligence is performed.”
properties located therein. An unforeseen issue can occur when the assumption is made that the municipality for the address of a property is the same as the governing municipality; this may not be the case if the property is subject to an ETJ.
Upon identifying the correct governing jurisdiction, it is critical to confirm the process of obtaining approvals necessary for the intended use of the property.
In addition, confirmation with the municipality that the intended use of the property is permitted by the municipality’s ordinances is essential due diligence. Unexpected traps specific to the forestry industry occur when municipalities establish environmental buffer zones
or tree conservation areas within their ordinances, which effectively prohibit timbering. The mistake of acquiring land with the intended use of cutting timber, or indeed cutting timber within such zones or areas, will result in a trip to a litigator’s office and is avoidable if the appropriate due diligence is performed.
While the right to perform forestry activities is recognized under NCGS §160D- 921, this statute does not override the authority of local governments to regulate certain activities related to development or to comply with other state or federal law. Thus, it is prudent to inquire with the appropriate municipality as to the regulations affecting the intended use of the real property.
Obtaining a Survey
Obtaining and reviewing a survey is
a critical part of due diligence for an acquisition of real property or prior to cutting timber. There are several types of surveys, which vary in cost and detail. Below are a few examples of surveys that are applicable to the forestry industry:
(a) A boundary survey: These surveys are the most common surveys in North Carolina and are governed by North
Carolina General Statutes (NCGS) Ch. 89C and the North Carolina Administrative Code (21 NCAC 56.1604). This is the most basic survey and shows the boundary lines of the property and all visible or determined encroachments or easements located on the property (21 NCAC 56.1602(b));
(b) A topographical survey: This survey determines the configuration of the earth (ground) and the location of natural
or artificial objects thereon (21 NCAC 56.1606(a)(1));
(c) ALTA/ACSM Land Title Survey:
This type of survey is the most comprehensive and provides a greater amount of information than a boundary survey. The specific information required on an ALTA Survey is governed by the American Land Title Association and the National Society of Professional Land Surveyors and includes a list of optional specifications that can be requested from the surveyor.
A common issue that results in legal liability is when a forester inadvertently cuts standing timber on an adjacent property. NCGS §1-539.1(a) outlines that the damages “shall be double the value of such wood, timber, or trees damaged or destroyed” by such unlawful cutting. Boundary lines that are clearly marked by a surveyor help avoid this issue and a potential trip to the litigator’s office.
In the situation where access to the property is via an access easement, the surveyor should be requested to clearly mark the location of the access easement area to avoid any claims for trespassing or damage to property that was not a part of the access easement area.
The best way to avoid a litigator is to consult a transactional attorney to assist with your due diligence.
Of all the due diligence pitfalls discussed within this article, a title search should eliminate issues related to ownership, authority, access, and third-party consents. A transactional attorney can also guide you through issues with municipality ordinances and review surveys for potential liability issues.
Title issues are so prevalent in real estate transactions that certain litigators make their living off pursuing, defending, and curing title claims. Avoid the litigator’s office by consulting with a transactional attorney to assist with your due diligence on any real estate transaction.
Just keep your shoes on, at least in the lobby!
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