Hi, I’m Beth with TB Properties Buys Land. In the last discussion, we covered legal access, what it is and why it’s important. In this discussion, I am going to share with you an example of a property in which the owner had thought he had legal access, but we found out that it didn’t, in fact have legal access and then what the consequences of not having legal access are.
To begin, we were working with a landowner who had a beautiful 20 acre property in Montana. When we asked him – of course, he had legal access! There’s a road going directly to it and he’d always gotten there easily. Why would he suspect that he didn’t have legal access to his own property? He had a good dirt road that was accessible during warm weather, maybe not a great one during the heavy snows, but it was definitely a good weather property.
In any case, we went through the title process and the title commitment came back and it said that there was lack of access. When looking at the “Exceptions” part in your title commitment it will very clearly state that there is a lack of access but what is important to note is that the title company will not insure access to your property. You will not have title coverage for that and that’s a big issue when you’re trying to get title insurance. What does that mean? That means the value of the property may drop. Even worse, it also makes the property much harder to sell down the road. The next issue you have to think about with a property lacking legal access is that not only is it undesirable to purchase that is lacking legal access, that the value has dropped and that the access is uninsurable, but it’s going to be very difficult for someone to get a loan for that property. If the property is big enough that there is substantial cost to it, very few people are going to have cash to be able to purchase the property outright, let alone want to do so. This is a huge issue.
Regarding your own property, maybe you can get there, maybe that road is open. However, it’s going to be hard to get a bank loan on it, and you’re not going to have title insurance covering the access to that property. Back to the story, it was interesting because the seller initially said, “Oh, I have legal access.” Then he found out from Title he didn’t have legal access. Well, he had a realtor friend and she said, “Oh, don’t worry about that. Even though there’s no legal access, people have been traversing that road forever, it’s not a big deal. They just can still go through.” That may be true today, but the situation is that a landowner anywhere along that road can put up a gate and they can effectively close that road off to all other landowners further down the road.
What do you do at that point? Depending on where you live, there may be laws in place that you can circumvent that, but you now, as the landowner, have to expend the time and the money to deal with a court case, locate and hire an attorney. You may have to bring a lawsuit and that costs money. What I’m saying here is that can to be extremely inconvenient for someone to have to go through that process, if that were to happen and it could be costly.
In sum, not having legal access brings the value of the property down. Your title company cannot insure access. And, somebody who’s trying to buy the property down the road may not be able to get a loan for it. So, when TB Properties Buys Land asks you, “Do you have legal access?” -that’s what we’re asking about. As I mentioned in the first video, that can be found on the deed. If you have the deed to your property, you can look to see whether you’ve got legal access. Do you have ingress and egress across existing roads to your property? Does it call it out? Is there a survey that illustrates the exact location of your legal access to your property?
With regard to the story of the landowner in Montana with 20 acres, that is just one example. We’ve run into many, many examples where properties don’t have legal access, and that creates so many issues. If you have any questions about legal access to your property, if you’ve got vacant land that you’re interested in selling and you want to get a quote to sell, please reach out to us. We’re happy to respond to you via email, phone, or by the filling out the form on our website. We’re happy to help. I look forward to hearing back from you. Thanks again.