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When considering the acquisition of woodland, the buyer must first arrive at agreement with the seller on value of the woodland. There are basically three approaches to assigning a value to woodland:
  1. Fair Market Value
    This approach involves a comparison of a woodland tract with recent sales of similar property in the same area. Woodland value tends to remain constant more than value of agricultural land which fluctuates with prices of agricultural products. Over the last ten years in Kentucky, average rural land values have increased about 11% per year. Woodland which could be purchased recently for $50-$100 per acre has now increased in value to $100-$200 in most cases. With high quality timber, values are much higher. (See Appendix, "Land Value Increase").
  2. Income Approach
    This approach involves calculating the expected income from ownership of the land and comparing the interest on investment thus obtained with alternative investments available. (For example of this approach, see the Appendix, "Value of Woodland").
  3. Expense Method
    This approach involves assigning a value to woodland based on the original cost of the woodland plus the cost of improvements plus interest on these investments calculated at an acceptable compound rate over the period of ownership.

When land is sold, the buyer needs time to examine the seller's title and both parties need time to adjust details such as financing. Hence many commercial transfers of land consist of a two-step process. These are:
  1. a contract for the sale of the land is signed by the parties.
  2. some time later, the purchase price is paid to the seller and a deed is handed to the buyer.
The second step of the process is known as the closing, and it is this step which actually transfers title to the real property. In fact, in many transactions, there is no contract of the sale of land. It is important to remember that all actions involving land, such as the contract for the sale of land, and the deed for the transfer of title to land must be in writing to be enforceable. The writing must contain all essential terms such as identification of the parties, description of the property, and other material terms such as price and manner of payment in agreed upon. Below are certain real estate terms which may be important in a typical real estate transaction.

Contract for the sale of land
This is a written agreement between the owner of land and a perspective buyer of the land that the owner will sell the land and the perspective buyer will buy the land at a specified price and on a specified date.
This is a written instrument that transfers the title and ownership of real property. Note that all parties to the transaction must sign the contract for the sale of land, whereas, only the seller need sign the deed.
Three main types of deeds
General warranty deed, special warranty deed, and quit claim deed. In a general warranty deed, the grantor (or seller) warrants that he will defend against any defects in the title to the land not only while he owned the land, but also before he acquired it; whereas, in a special warranty deed, the grantor warrants that he will defend against any defects in the title only while he himself has owned the land and not before he acquired it. In a quit claim deed, the grantor warrants nothing.
Tenant in common-VS-joint tenants
A tenancy in common means that both parties listed on the deed as the grantees (or the buyers) each own an undivided interest in the whole property, whereas, when two parties own a piece of property as joint tenants, the one who survives takes the whole property outright. Most deeds, to husband and wife, list the parties as joint tenants with right of survirorship. This simply means that whichever one lives the longest owns it all.
An easement is a non-possessory interest in land. It only entitles the owner of the easement to a limited use of the land which is a right to go onto the land for limited use. A lease, however, is an agreement between the owner of the land and the lessee (the one holding the lease) that the lessee have exclusive possession of the land for a specific period of time usually for a specific purpose.
Trespass-VS-adverse possession
In its usual sense, trespass involves the unlawful entry onto the land of another; whereas, adverse possession might be thought of as a continuing trespass. Adverse possession is actually a means of acquiring title to land. Under this doctrine, a person who is not the true owner of property, but who maintains the property adversely for a period of years in Kentucky, will become the owner of the property. The possession must be actual and continuous, hostile and notorious and the adverse possessor must hold out to the world that he owns the land. If all of these elements are establised for 15 years, the true owner's claim to possession is barred and a new title is created in the adverse possessor.
Recording Acts
All states today have recording acts which are designed to protect bona fide purchasers of land from secret unrecorded claims. A bona fide purchaser is one who in good faith purchases property; takes without notice of the prior instrument and pays a valuable consideration. Kentucky has a recording statute which says that a subsequent (later) bona fide purchaser will prevail over a grantee (buyer) who has failed to record. This situation would most likely arise where a person has sold his land (the same land) to two different people.
Mortgages and title searches
A mortgage is simply a lien or an encumbrance upon certain property to secure the payment of a debt or some other obligation. The usual procedure is for someone to borrow money from a lending institution as security for the loan. Before a lending institution will accept a mortgage on the property and loan money based on the mortgage, it will require that a title search be made to see if a prior unreleased mortgage has been placed on the property, or if the previous owner has retained a lien in his deed. The lending institution may loan the money anyway, (this would be based on its own business judgement) but it wants to know what, if any, incumbrances are against the property, knowing this will assist it in making its decision. The title search is conducted by some lawyer who certifies (or signs) it, and he provides the lending institution with a written opinion detailing his findings.
To protect his land against encroachments and adverse possession, the landowner should determine where his boundaries are, establish permanent corner markers, and maintain marked boundary lines. Services of a competent surveyor may be necessary to establish boundary locations. Long established boundary locations and the acreage they enclose take precedence over deed descriptions. Periodic inspection and renewal of boundary markings is necessary to maintain boundaries in an acceptable condition.

Kentucky uses a metes and bounds type descriptions. This simply means that measurements of directions and distances are used to describe the property. It is also to be noted that the surface ownership and the mineral ownership of land may be owned by separate parties.

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Last revised August 14, 1995.

Please send comments to: Duane Bristow (72711.1414@compuserve.com)