Leonardo Da Vinci is quoted as famously saying “Water is the driving force in nature.” The modern world of real estate is no exception. Real estate use will most always require that there is some access to water. Whether the property be a residential home or a cow pasture, the need for water is present. Part I of this post will focus where you obtain your tap and drinking water.
In residential real estate, there are three main sources of drinking water in this region of the country: Municipally supplied water utility, Rural Water District or owner owned and maintained well.
Municipally supplied water is just that. The City supplies water to its residents and charges a fee for the service. This is how a majority of homes are supplied with drinking water. However, where does the City obtain the water supplied? Typically, a City will own and maintain wells or obtain water from a reservoir or river and treat and supply the water. The water is then provided to residents through a City owned water system. Often, the water obtained from wells is pure enough that the City will not be required to treat the water. Reservoirs or rivers almost always require some form of treatment to the water before providing it to residents. Furthermore, to ensure the safety of the water supplied, the State of Kansas and the Federal government require periodic testing of public drinking water.
Rural Water Districts are “member-owned” cooperatives that are most often established to provide water to areas not served by a City. The “members” are basically the individuals that purchase water from the water district. The members maintain a board that oversees the water system and its sources of water. Water districts are also required to periodically test its water to maintain that it is pure and uncontaminated. In order to purchase water from a water district, one must first become a “member.” This usually involves a small transfer fee from the previous owner of the real estate. If you are establishing a new residence or other new water service, the fee requirement can be substantial. It is important to investigate this issue when planning a home building project.
The final, most common source of water is the private well. The owner has a water well that pumps water and provides it to the residence or farm. In Kansas, water windmills were once a part of most farm yards. Today, the work is done by electric pumps and pressure tanks in order to provide constant, consistent water to the owner. Owning your water source may sound liberating, but a private well comes with its own headaches. The owner of the well is wholly responsible for checking the quality of the water. Additionally, wells can go dry; especially in drought years. Lastly, the equipment required to pump and pressurize and possibly treat the water requires maintenance. It is important in a real estate transaction to investigate these issues prior to closing.
When purchasing or selling real estate, it is important to understand how water is obtained at the real estate. This will prevent unwanted surprises down the road.
If the property you own or plan to own is located near a waterway, creek, river bottom or other low-lying area, it may be in a flood zone. These zones are areas that may have a likelihood of flooding. Did you know that your homeowner’s insurance policy probably won’t cover flood damage? What can you do to protect your property? What will a Lender require if you purchase real estate in a flood zone? Flood zones are also not covered by title insurance. Since there are several flood zones in Riley, Pottawatomie and Wabaunsee Counties, we at Tallgrass Title would like to provide some basic information about them.
Who determines where a flood zone is located?
The agency who oversees flood zones is FEMA (Federal Emergency Management Agency). This agency works with a floodplain administrator and community officials to produce maps showing where the risk areas are. Over time, flood zones may change, and new maps are drawn. According to FEMA, a flood zone is a “Special Flood Hazard Area” and is commonly referred to as a 100-year floodplain. This does not mean you can expect a flood once every 100 years. It means that a Special Flood Hazard Area has a one-percent chance of flooding each year.
Is the real estate in a flood zone?
If you are purchasing real estate near a waterway or other low-lying area, it is a good idea to check whether the property is in a flood zone. Your realtor can usually assist with this question, but you can also check for yourself at the following link: https://msc.fema.gov/portal.
If your real estate is in a flood zone, what will be required?
If you have a lender, they will require flood insurance if the house or structures are in a flood zone. This is a requirement that banks are forced to follow by bank regulations. It is wise to check the coverage of the policy to determine what is actually covered by the insurance. In most conventional residential loans, you will see a “flood zone determination” sheet. Usually, this simply notifies you that the lender checked to see if the real estate is in a flood zone. If the real estate is in a flood zone, there will be some additional paperwork. If you have questions, speak with your lender or real estate agent. The following link will answer a great deal of questions: https://www.fema.gov/national-flood-insurance-program
Can my real estate be removed from a flood zone?
In some cases, it is possible to have the structure on your real estate reassessed and removed from the flood zone. There are certain procedures to follow to make that happen. The document that grants the amendment is called a LOMA (Letter of Map Amendment). The application for this document can be downloaded from the FEMA website. Most of the time, a licensed surveyor or other engineer will be required to provide elevations and a site map. FEMA will review the elevation and other data to make the determination. However, this process can take several months to complete. Also, there are no guarantees as to whether the LOMA will be granted.
As you can see, there are questions that often arise with flood zones in real estate transactions. Our closing agents are trained to understand these concerns and answer questions you may have.
A common issue that comes up with the sale of agricultural real estate in Kansas is whether the real estate is currently leased to a farmer or rancher and when that tenancy ends. Simply put, if you purchase real estate that is currently leased to another person, you take the property subject to that lease. This could mean that even though you purchased the real estate and received a deed, you may not have possession of that real estate until many months in the future! If you know this fact in advance, it may be addressed in the contract to protect the interests of the buyers.
The information in this post is meant to educate the buyer of rural real estate so that there are no unexpected surprises following closing. In Kansas, absent a written agreement to the contrary, leases are governed by the Kansas Landlord Tenant Act. This is basically a series of statutes (laws) that dictate the arrangement between land owners and tenants. Again, written agreements may change this arrangement so long as they do not violate the Landlord Tenant Act.
Basically, all farm tenancies are year-to-year beginning and ending on March 1 of each year. If the owner of the real estate does not properly terminate the lease, it will automatically renew for another year. One section that causes continuous issues, is the termination of farm tenancy statute. If the owner of the real estate wishes to terminate a farm tenancy, written notice must be given to the tenant at least 30 days prior to March 1 and set the termination date for March 1. Now, there are typically 28 days in February, which sets the typical termination date at January 29. In a leap year, the termination date would be January 30. As there are 31 days in January, this is counterintuitive as the termination dates do not fall on the last day of the month. However, if there are already fall planted crops (typically wheat) on the real estate at the time of termination, the termination does not take place until the harvest of the crops or August 1, whichever is sooner.
Often, agricultural real estate is sold in February-April. A contract for sale could foreseeably close after the tenancy termination deadline has expired and the Buyer would be subject to the existing lease. An easy solution before entering into a contract during this time of year would be to request that the contract would be contingent upon adequate proof of termination of the tenancy. Lastly, if there is a written contract, they often run on the calendar year and not the March 1-March 1 statutory term. In order to avoid issues with written agreements, one needs to simply ask to review the contract, and any termination notice, prior to entering into an agreement to purchase.
Kansas agricultural leases can be a complicated subject. Should you have any questions regarding your rural real estate transaction, feel free to call and ask to discuss the issue.