FOREST MANAGEMENT WORKSHOP MANUAL
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:
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:
- 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").
- 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
- 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.
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
- a contract for the sale of the land is signed by the
- some time later, the purchase price is paid to the
seller and a deed is handed to the buyer.
- 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
- 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
- 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
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 (email@example.com)