EASEMENTS

Also included in your preliminary title reports are deed restrictions. These are any legally binding documents that became attached to your property at some point. Many are easements for utilities or roads. In Alaska, blanket easements for utilities are common.

An easement grants use of your land to another party for a specific purpose. For instance, utility easements allow utility companies to access your property to put up lines and bury cable. The property is still yours; you're just granting a long term right to use.

Blanket easements are typically vacated in favor of specified easements when property is subdivided. With specified easements, the area which can be accessed is limited to, say, a certain distance from the property line. Generally, permanent improvements should not be build on top of specific easements. An exception would be driveways, which logically will cross road easements to provide access. Permanent improvements don't usually include sheds or even decks.

If there's a need to remove an easement from your property, you can use a process called "vacation" of the easement. An attorney draws up a document to be signed by all those who benefit from the easement - for instance, all utility companies if it's a utility easement - saying they are vacating their interest in the easement. The document is then recorded, where it runs with the land, meaning it's attached for perpetuity.

COVENANTS

One of the goodies in your title prelim - hopefully something that comes as no surprise - are any covenants attached to your property. Covenants are restrictions "agreed upon" by homeowners in a particular subdivision or association. Generally they are put in place by developers who want to maintain certain standards that will help maintain values within the subdivision.

Covenants in Alaska tend to be not as restrictive as in the Lower 48. Typical provisions include minimum lot size, structure size, setback requirements (how far structures must be from the property line), and number or type of animals on the property (to exclude dog teams or commercial livestock). You may find some quirks hidden within the covenants. In Fairbanks, the late Joe Vogler, the eccentric and sometimes crotchety head of the Alaska Independence Party, hated cottonwood trees. When he subdivided several parcels, he banished cottonwoods by means of the covenants. Easier said than done, as cottonwoods grow naturally and profusely in the Fairbanks hillside.

Independent guys like Joe shun government restrictions, but that's the thing about covenants - they're private restrictions, unenforceable except if the other covenant holders take civil action in a court of law. Similarly, the covenants may be amended by unanimous consent of the property owners, which is how a lot of old Joe's "no cottonwood" restrictions fell off the books.

PRELIMINARY TITLE REPORTS

Prior to closing, both Realtors involved in a transaction receive preliminary title reports, also called "prelims." At closing, the buyers receive a copy as well. Within these reports are the relevant documents uncovered by the title company's search of the the recorded documents related to the property, including warranty deeds, deeds of trust and other liens, covenants, private agreements and easements that "run with the land." Any of these documents that "survive" the transaction (most everything besides the warranty deeds, liens, deeds of trust, and promissory notes that are transferred or paid off at closing) should have been provided to the buyers as a courtesy through the Realtors before the offer was made.

If you're purchasing without a Realtor, you might want to either try to search these documents yourself through the state recorder's office before making an offer, or include a clause in your offers requiring the seller to provide a preliminary title commitment within a few days of accepting the offer, with an escape clause if your review of the documents proves unsatisfactory. The title company will charge a fee, usually born by the seller, for preparing the preliminary title report.

Alaska, like many Western states, uses title insurance rather than a title search. But part of the insurance process involves a preliminary search to make sure the property is insurable. In older states, usually in the Midwest and the East, attorneys perform title searches. But there's no insurance to protect the seller or the buyer.

HANG ONTO YOUR DOCS!

Did you know that closing documents are among the few sets of papers that should be kept for a lifetime? Though virtually everything in the file can be replaced by the title agency or other sources, you'll want to have all of it in one handy place so you don't have to go begging when you need it.

The settlement statement is especially helpful when prepping your income tax return. Sometimes called a HUD1, this standardized form is either two or three pages, depending on how it's printed. It reconciles the financial accounting of the sale, with credits and debits to the seller on one side and credits and debits to the buyer on the other. Purchase price, loan amount, tax adjustments, - that's all on page one. On page two are the closing costs.

You'll reference your settlement statement not only when prepping your tax return for the year in which you purchased the property but also potentially in the year in which you sell it, when the HUD1 from the sale of your home can be compared with the HUD1 from the purchase to determine what capital gains might be due - for instance, if the property was not your primary residence or if the sale falls outside the exclusion limits on the sale of a primary residence.

MARKET PSYCHOLOGY

So much of what happens in the market is about psychology, both at the micro level, when you're buying or selling real estate, and at the macro level, when you look at the big factors that influence the market. As we're hearing on the news these days, we can't afford to ignore the psychology of the market. Economics is a social science. Markets are, in the end, about people - about how they react, and why.

Which is why I'm taking a day away from my plan to say more about closing docs, covenants, zoning, and private agreements to talk about something I heard on the radio last night that I found not just irritating and irresponsible but also - to use an adjective I try to avoid - unpatriotic.

"You think the mortgage market is bad now? Just wait," the right-wing rabblerouser admonished. "If you've got a mortgage, you better stay right where you are, because under Obama's plan, you won't be able to get another one."

Wrong. False. And while I understand that even right-wing rabblerousers have a right to speak and line their pockets by distorting truth over the airwaves, it's important for all of us to understand that this is a guy trying to make a living by stirring things up.

Somewhere in the last decade, people began to equate fear with patriotism. Let's be frank. Fear is bad for our country. It's bad for our economy. It's bad for you as a home owner. So, please file this encouragement to sit on your mortgage in fear you'll never get another in the same basket where you tossed other predictions that have come from the far right - that riots would follow Obama's election, that the President is the Antichrist or the reincarnation of Hitler.

Free speech. I understand. But don't buy into it.

Off my soapbox. Tomorrow I'll get back to the nuts and bolts of your closing docs. Unless I hear something equally stupid that potentially affects your real estate values, and mine.

ON COVENANTS, ZONING, AND WELLS

The following question brings up several issues for homeowners. My response follows. In future posts, I'll cover the details of covenants, zoning, and private agreements.

Question: I just noticed that our neighbors have built the framing for a cabin on their lot right next to the house. Are there any zoning
restrictions on subdividing on these lots? If it's not dry (which I
assume it is), what are the regulations for governing water dispersion
through the well. Since the pump is being paid for by us, I am
reluctant to water three houses. We did get pretty dry last year when
they were running water for a long time.


Answer:Without looking again at the paperwork for your property, I can't say for sure. But the covenants and private well agreement should be included in your closing documents, as part of the preliminary title report. The original MLS listing has a slot for the zoning code. Once you know the code (I suspect it's RR for this property, but again, please check, as I'm going only on memory), you can read the restrictions in the FNSB Code of Ordinaces Code 18 Zoning.

If you can't locate your closing documents, the borough's assessing office and/or community planning division can assist you in reassembling and interpreting these papers.

Off the cuff, my thought is that if the zoning is indeed RR, a guesthouse is permitted. The covenants may more specific restrictions. And do check the language of the well agreement, but I don't think there are restrictions as to the number of dwellings. Usage would have more to do with habits and the number of occupants than anything else. I'm surprised to hear there have been problems with well flow, as at 50 gallons per minute, the well could likely service an entire subdivision. But if the well was drilled long ago, extraneous factors like earthquakes can affect well flow after the fact.

NOT SO SECRET CODES

According to the American Council for an Energy Efficient Economy, Alaska ranks 41st among the 50 states in terms of its commitment to energy efficiency. Perhaps that comes as no surprise, given that 90% of our state income is from oil revenue. But perhaps you've heard that oil is a non-renewable resource, and Alaska's supply is dwindling.

That's why the co-chairs of the Alaska Senate Resources Committee are introducing legislation to ramp up our efficiency efforts. Drill, baby, drill does not an energy policy make, no matter how chipper it sounds on the campaign trail.

Among the proposed action would be Statewide Building Energy Codes for both residential and commercial construction. A new concept for Alaskans, but one that's long overdue. In Alaska's housing industry, quality has been sacrificed under the guise of independence. Shoddy homes constructed in places where there are no building standards are more than just the homeowner's problem when they waste resources that all of us need. Expect a lot of heated discussion about the proposed changes, though. Alaskans are notorious about not wanting to be regulated.