Humber Real Estate - Course 4, Module 14 Transactions Involving Development Land and Farms |65 questions and answers

- Zoning - the highest and best use should conform with the zoning, unless there is a probable and imminent prospect that the zoning will change or be amended to accommodate the highest or best use estimate not currently legal - Physical possibility of the proposed use in relation to factors such as the size or shape of the lot, soil condition, water drainage, etc. - The demand for the proposed use along with its economic and financial feasibility What are 3 key factors that an appraiser considers when estimating the highest and best use of an undeveloped vacant site? - Either conform to the zoning or be legal non-conforming - Conform to the other buildings in the area - Add value to the land To estimate highest and best use for an improved site, the improvements must: Plottage Land assembly is more commonly known as what? A process that involves acquiring multiple parcels of property and combining them, thereby increasing the total land's overall value (vs. their worth separately). A larger parcel of land may have greater utility and potential for development. A land developer may find one larger parcel of land more appealing than several small ones. What is Land Assembly? - Raw land (in its natural state), with no services - Vacant land with services - Unoccupied property up to 5 acres with improvements - Large tracts of land (5 acres or more) ready for a change in use - Farmland (operational or not) - Smaller properties available for assemblage - Brownfield sites because these sites are frequently located in desirable urban locations and have the advantage of in-place infrastructure, such as roads, utilities, water/sewer services, schools and transit facilities What types of properties appeal to land developers? External, internal. Generally risk is assessed as either ____________ or ____________. Beyond the control of the investor. External risks are often what? Created by the management decisions of an organization. Internal risks are what? - Financial issues - Market issues - Business issues - Building issues Most risk analysts divide risk into what 4 broad segments? A legislation that provides for growth plans that establish long-term strategies for identified growth areas. It also requires that all decisions under the Planning Act or Condominium Act conform to a growth plan as soon as the growth plan is effective. What is the Places To Grow Act? - Designation of any geographic region of the province as a growth area with a specific focus - Development of a growth plan in consultation with local officials, stakeholders, public groups and members of the public and indigenous communities for a particular region - Decisions about growth to be made in ways that promotes greater housing and transportation options; investments in regional public service facilities in downtown areas; and maximizes infrastructure investments in communities while balancing regional needs for farmland and natural areas The Places To Grow Act enables what? - Physical requirements: Specific needs such as site characteristics & transportation - Investor/user objectives: General goals of the buyer, including type of property being sought, investment return (if applicable), lease vs. own & type of ownership - Financial requirements: Amount of capital, other financial resources, credit standing & financial history Buyer needs generally fall into 3 categories: - Key documentation such as existing zoning verification - Restrictive covenants or title restrictions that apply to the property - Favourable or unfavourable environmental conditions - Transportation services - Other available services - List of expenses to plan for the effort involved in extending these services - Current economic climate for this type of investment - Physical features of the development land - Tax incentives - Easements What key information should a salesperson gather and verify regarding a development land? - Any indication of underground buried materials (e.g. surface vents and metal cover plates) - Old landfill sites - Vacant land filled with debris or abandoned structures - Property that has a lower grade than an adjacent potential source of contamination - Buildings that have been altered and uses changed since original construction - Past uses of the development land (e.g. refinery, rail yard, gas station, automobile maintenance garage) What are some potential sources of land contamination? A Land Development Agreement What type of agreement is normally required as a condition for rezoning the property and subsequent development? To prove to the municipality that the landowner agrees to the land development terms before zoning approval. This agreement defines all obligations and duties of the landowner, with the main focus on the provision of: - Required new servicing - Maintenance of municipal standards - Land dedications for municipal walkways and new public roads - Transit rights-of-way - Easements - Garbage storage facilities - Parkland, greenbelt and buffer area contributions What is the purpose of a Land Development Agreement? To confirm the sewage capacity in service areas and servicing options for communal or private septic systems. What is the job of a Hydrogeological Engineer? To create a preliminary stormwater management plan, followed by a formal plan at point of redevelopment. Proper stormwater management is a key component to ensure that lands are protected from flooding and adequate treatment of runoff is accomplished prior to discharge into the environment. What is the job of a Stormwater Management Expert? To assess the impact of proposed activities on the environment and sets out guidelines relating to the amending application. What is the job of an Environmental Site Assesor? To conduct a technical analysis of existing municipal infrastructure and the impact of the land development project. Studies may be required concerning roads (local, arterial, regional and provincial) and servicing (sewer extensions, water mains and pump stations). What is the job of a Municipal Engineer? To conduct noise studies related to roads, railways and airports depending on location and use and how to reduce these noise levels. What is the job of an Acoustics Expert? To develop an effective streetscape that includes entry features, fencing, cul-de-sacs, turning circles, parkland and trails. What is the job of an Urban Designer? To conduct a detailed study to remedy former environmental problems, protect and improve wetlands, strengthen natural habitat, minimize future erosion and re-channel streams and watercourses. What is the job of a Remediation Expert? - Completing an agreement if it is complex - Reviewing an agreement completed by a salesperson - Retaining closing funds or non-registrable documents - Holding the closing funds or non-registrable documents in trust and releasing them only in accordance to the terms of the document registration agreement established between the buyer lawyer and the seller lawyer - Assisting in situations where further time is needed to complete any specific conditions in the agreement - Retaining a final copy of the agreement of purchase and sale, which is further acknowledged by the seller and buyer in the agreement What responsibilities do lawyers have in completing an agreement of purchase and sale during a land development trade? Agri-business The agricultural industry has evolved into larger industrial operations known as what? To create and maintain economically stable operations by leveraging economies of scale. This trend has occurred because of rising labour costs and increasingly larger investments in equipment. Why have larger farms become the trend in Ontario? Quota, production contract Farm value can be affected by whether a ___________ or a ____________________, can be assigned at point of sale. For example, a dairy farm without a milk quota is of little value, even if it has excellent milk production facilities. The condition providing for successful transfer or assignment from seller to buyer of any quota, entitlement or contract that a buyer needs to market products for which the farm is being purchased. Specific marketing boards have their own transfer or assignment procedures and should be contacted directly for guidance. In an agreement of purchase and sale of a farm, what specific condition regarding quotas / contracts should a salesperson include? - Crop share lease (i.e. 1/3 share of all crop sales goes to the landlord and 2/3 to the tenant. Income is often divided as the crop is sold.) - Cash rent lease (i.e. Tenant receives the income from the crop sales, but pays the landlord a fixed amount each year as rent. Rent is normally paid in advance or by 1/2 payment in spring before seeing and balance in the fall after harvesting.) - Flexible cash lease (i.e. Tenant receives all income from crop sales but dollar amount paid to landlord varies with either the price of the commodity, the yield of the crop, or both.) Note: In all 3 types of farm land leasing arrangements, the landlord normally supplies the land and structures used to store the crops. The tenant pays the operating expenses and supplies the labour & machinery to farm the land. What are 3 common land leasing arrangements that apply to crop land? - The production of field-grown crops, cultivated and uncultivated, and horticultural crops - The raising of livestock, poultry and fur-bearing animals - The production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from wood lots and fodder crops - The production or raising of any other prescribed thing or animal What is the definition of farming in accordance with the Farm Debt Mediation Act?