2013 acquisition 102 training manual part b

7/30/2019 2013 Acquisition 102 Training Manual Part B

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ACQUISITION 102

PART B


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TABLE OF CONTENTS

5200 BASIC ACQUISITION/NEGOTIATION PROCEDURESPAGE

5202 MISCELLANEOUS NEGOTIATION PROCEDURES .......................................... 52-1

5202.01 The RE 95 Process ................................................................................. 52-1

5202.02 Plan Changes ........................................................................................ 52-3

5202.03 Purchase of Improvements ..................................................................... 52-3

5202.04 Recognizing Tenants .............................................................................. 52-5

5202.05 Release of Liens and Encumbrances ...................................................... 52-6

5202.06 Mortgage Releases ................................................................................. 52-6

5202.07 Taxes ...................................................................................... 52-10

5202.08 Real Estate Acquisitions and Utility Connections ............................... 52-10

5202.09 Negotiating with a Party Representing the Owner ............................... 52-11

5202.10 Minors and Incompetents ..................................................................... 52-12

5202.11 Conflict of Interest ............................................................................... 52-12

5202.12 Estates ...................................................................................... 52-13


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5202 MISCELLANEOUS NEGOTIATION PROCEDURES

5202.01 The RE 95ProcessA. The form RE 95 is completed whenever there is man-made improvement in the take

area. Common examples to be included on the RE 95 are: (1) Signs and/or inserts; (2)

buildings/sheds/garages/pole barns/barns; (3) spas/pools/above-ground pools; and (4)

fencing, light poles.

1. Natural things are not included on the RE 95 as they are a part of the earth. Thesethings include: (1) trees; (2) shrubs; (3) grass; and (4) ponds.

2. Also, things which are so obviously a part of the site that it is abundantly clearthat they are owned by the fee owner and are considered to be real property are not

included on the RE 95. These things include: (1) driveways; (2) septic systems;(3) leach fields; and (4) curbing and asphalt. However, on occasion, these items

may be owned by a third party. When these items are owned by a third party, they

are to be listed on the RE 95.

3. The purpose and function of the RE 95 is to assist with project managementdecisions for appraisal, negotiation and relocation. This is accomplished by:

a. Identify man-made improvements in the take areaThis information allows managers to determine the complexity of the

appraisal and negotiation function, if the agency is dealing with a

relocation parcel and the amount of time needed to perform theacquisition, appraisal and relocation functions. This information will also

alert project managers to any plan problems that must be addressed.

b. Identify the ownership of the improvements takenAn improvement may be owned by the fee owner, a tenant or another third

party interest. Offers of compensation must be made to the correct owner.

The Districts staff should not be making the decision about ownership.

The RE 95 is to document agreement between the various owners as to

who owns each improvement acquired for the project. Tenant owners of

real property need to be identified as early as possible as a separate

negotiation is required per 49 CFR 24.106. Appraisers also need scoped toaddress this issue in the valuation report.

c. Classify the improvements taken as real property or personal property.The RE 95 is to document agreement with the owner as to the

classification of the property taken. Improvements classified as real


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property are valued in the appraisal and the District Office will acquire the

property. Improvements classified as personal property are not valued or

acquired, but are removed from the project area by the relocation process.

d.

Identify disputed improvementsThe RE 95 documents if there is a dispute about the ownership of an

improvement being taken for the project. Disputes that cannot be resolved

may require the appropriation of the property.

4. The sooner an RE 95 is prepared and signed by all parties the easier it is forproject managers to manage their projects. Therefore, if possible, project

managers should have the RE 95 process completed early in the acquisition phase

of the project and prior to engaging the appraiser for the appraisal assignment.

(See section 4100.02 (F) (6) of the manual for guidance on the RE 95 and the

FMVE delivery process).

5. If the parcel is a relocation parcel, the relocation agent is to prepare the RE 95during the pre-acquisition survey.

6. Because an RE 95 is prepared in the presence of the owner, it is one of the fewforms where it is acceptable to have hand-written information. Care must be taken

so that the form is legible. The name of each person signing an RE 95 should be

printed legibly below his/her signature.

E. Information Required on the RE 951. Original signatures from the ODOT agent, the fee owner and the tenant-owner, or

other third party interest owner, of the improvement taken.

2. Clarification from the fee owner and tenant-owner, or other third party interestowner, regarding which of them owns the improvement.

3. Classification of the improvement into real property or personal property.4. When the owner or occupant of the property refuses to sign the RE 95:

a. The Districts agent shall complete the RE 95 to the best of his/her abilityand must insert sufficiently detailed comments on the second page of theRE 95 form to enable other readers of the RE 95 to understand fully the

reasons why the owner or occupant refused to sign the RE 95.

b. The District agent must sign the RE 95 and insert the date on which theagent physically inspected the property.


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F. Updating the RE 951. If the RE 95 needs to be updated, a new RE 95 is to be created with new

signatures and dates. If there is only a minor change, the change can be added tothe original RE 95 and all parties are then required to place their initials and the

date of their initialing adjacent to the change.

5202.02 Plan Changes

A. When the owner requests the highway plan to be changed:

1. The District will consider the request and make a decision regarding the change.

2. Should the District decide to amend the plan based on the owners request, the

change is made on behalf of the owner for the benefit of the owner and theDistrict is not obligated to compensate the owner due to issues arising from the

plan change.

3. When the owner requests a plan change during the negotiation process, the

negotiator shall use form RE 76 (Agreement For Construction Not In Accordance

With Plan) to document the change.

B. When the District makes a change due to a required correction:

1. The District Office must review the plan change and determine if the change

affects compensation.

2. Negotiations with an owner are to continue when it is absolutely obvious the

change does not affect compensation. Depending on the extent of the plan

change, the negotiator may need to advise the property owner of the plan change

and that the amount offered has not changed.

3. When a plan change requires FMVE to be reestablished, the District must make

another offer, subsequent to the original offer, to the owner. See Section 5201.04

of this Real Estate Manual for more information about the subsequent offers.

a. A subsequent offer to an owner due to a plan change shall be made on theUpdated Good Faith Offer form.

5202.03Purchase of Improvements

A. The District must determine if an improvement within the area to be acquired for the


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4. When the District agrees that an owner may retain an improvement located in a

take area, standard procedure requires the negotiator to document how the

improvement was first purchased by ODOT before allowing the owner to buyback

the improvement at its salvage value. See Owner Retention in the 5300 section

of this Manual for more detail.

5202.04 Recognizing Tenants

A. The District Office must recognize any tenant having an interest in the property to be

acquired and must determine whether the tenant is entitled to receive any portion of the

FMVE. This is based on an Ohio Supreme Court decision that a leasehold interest is an

owner as defined in Section 163.01(E) of the Ohio Revised Code:

Owner includes an individual, partnership, association, or corporation having

any estate, title or interest in any real property sought to be appropriated.

1. A tenant may own an improvement that is taken. If the improvement isdetermined to be real property, it is known as a tenant-owned improvement and

there will be a separate negotiation with the tenant in these circumstances as

required under 49 CFR 24.105.

2. A tenant may not own any improvement, but by virtue of the lease may have a

contractual right to share in the compensation. In this instance, a copy of the

lease/rental contract should be obtained from the owner during either the appraisal

process or the negotiation process. The negotiator must review the lease carefully

to determine if the lease contains an eminent domain clause or other terms dealing

with eminent domain or condemnation issues. The eminent domain clause orother provisions may specify the tenants right to receive part of the compensation

if the property is acquired/ appropriated.

a. A tenant with a long term lease may have a reasonable right to share in theoffer of just compensation.

b. A tenant having a contract rent that is significantly below market rent andhaving a long duration remaining on the lease agreement may have a

reasonable right to share in the offer of just compensation.

3. If the tenant does not own any of the improvements located on the leased realestate that is to be acquired/taken, and the District Office has determined the

tenant is to share in compensation, as a general rule there will be only one offer

made for the entire FMVE amount. That offer will identify the owner of the

property to be acquired as fee owner and the tenant. If the fee and tenant owners

cannot agree on the price or terms, then the entire property is to be appropriated.


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4. When valuation issues are simplistic, compensation is low and it is clear there are

no damages to the property; the District Office has the discretion to negotiate with

only the fee owner.

5. If the acquisition/taking can negatively impact the property, then all leases must

be identified and dealt with, whether or not the lease is recorded. With due

consideration of all such leases, the District shall determine whether the offer will

be made to the fee owner or to the fee owner and the tenant(s).

6. Issues involving the rights of fee owner(s) and tenant(s) may be complicated. The

District should not hesitate to seek guidance from AGO, especially when dealing

with multiple tenants or occupants (e.g. apartment complexes, condominium

complexes and shopping centers).

5202.05 Release of Liens and Encumbrances

A. When the District Office acquires real property from an owner, it purchases the property

free and clear of all liens and encumbrances.

1. The Title Report describes all liens and encumbrances of record against theproperty to be acquired for the highway project.

2. During the initial negotiation visit with the owner, the negotiator shall verify theaccuracy of the information on the Title Report and if there are any liens or other

encumbrances not mentioned in the Title Report. The negotiator shall obtain

assurances from the owner that the owner is willing to secure releases of liens/mortgages/ leases/ encumbrances.

3. When a release of a lien/ mortgage/lease/encumbrance that affects the validity of

the owners title to the property cannot be obtained, an appropriation may need to

be filed. The District Office shall seek direction from AGO regarding the validity

of the title acquired for the project and if the property should be purchased subject

to the lien or if the property should be appropriated.

5202.06 Mortgage Releases

A. Except in those instances where mortgage releases are not required pursuant to Section Bof these procedures, mortgage releases are required for any property right acquired by

ODOT that is encumbered by any mortgage.


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1. A mortgage holder (mortgagee) is a part of the ownership of the property to be

acquired / appropriated and must provide a release of the mortgage lien as part of

the process of ODOT taking title to the property.

2. Most mortgages, conventional or private contain an eminentdomain/condemnation clause and/or an acceleration clause requiring the proceeds

of the acquisition/appropriation to be applied to the unpaid balance of the

mortgage. If the proceeds are not applied to the unpaid balance, the mortgage

holder may be able to declare the entire unpaid balance asdue and payable. In

exchange for providing a mortgage release, a mortgage holder, at its election, may

require all or some portion of the compensation to be paid by ODOT to be applied

against the unpaid balance of the mortgage.

3. A complete and general release (satisfaction) of a mortgage is required anytime

the parcel to be acquired is a total take of the owners property (i.e., no residue)

that is encumbered by the mortgage. When only a part of the property is acquired,a partial release of mortgage shall be obtained from the mortgagee.

4. When a mortgage release is needed and cannot be secured, the parcel is to be

appropriated.

B. Exceptions to the procedure of requiring a mortgage release

1. At the discretion of the District Office or an official from the LPA for local

projects, a mortgage release is not required when FMVE has been established at

an amount that is $5,000 or less.

However, this exception cannot be used when the real property is mortgaged and

there is an improvement or fixture in the acquired area (see Section 5301.61 of the

Ohio Revised Code that controls the removal of fixtures or improvements from

mortgaged property). For the purposes of these procedures, improvement of

fixture shall mean building or structure.

When a District Office elects to not secure a mortgage release, the negotiator must

inform the property owner to review their loan and mortgage documents

concerning possible requirements to apply proceeds from a public acquisition to

the outstanding loan balance, or to contact their lender about their responsibilities

and obligations when part of the property is acquired for public use. TheNIAGFO references this procedure and the negotiator shall explain this

information during presentation of the offer to the owner.


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2. There is an exception for temporary construction easements, but only when the

temporary easement does not create permanent, negative affect on the residue (e.g.

removal of a structure).

C.

Every mortgage release must be recorded and, the recorded release shall be a part of theacquisition file documenting the acquisition.

D. General steps to secure a mortgage release

1. The process to secure a mortgage release can be time consuming requiring muchpersistence from those managing the acquisition phase of the project. Therefore,

the process to secure a release needs to start as soon as possible. To ensure

adequate time to obtain releases from lenders and to record these releases, it may

be prudent to start the process to secure mortgage releases immediately after the

initial offer of compensation.

a. The negotiator should verify the existence of any mortgage with theowner, should explain to the owner the need to secure a release and

should obtain contact information about the lender from the owner. The

negotiator (or the owner) may then contact the lender explaining the

property is being acquired for a transportation project and determine the

lenders process for providing a release of mortgage.

2. The negotiator should work with the owner to secure a mortgage release. The firststep in the process to secure a mortgage release is to telephone the mortgage

holder to determine the mortgage holders requirements for the release.

a. Often, a mortgage holder will not give information to the negotiatorwithout permission from the property owner. It is recommended the

negotiator have the owner sign ODOT form RE 100 (Authorization to

Obtain Partial Mortgage Release). The RE 100 is sent by the negotiator to

the mortgage holder. Once the mortgage holder has received the RE 100,

the mortgage holder may provide to the negotiator the information needed

to obtain a release.

b. The person securing the mortgage release should use ODOTs release

form, either the RE 240 or RE 241. The lender may use their form and

this is acceptable if the District Office reviews the form to ensure it

releases the property described in the Exhibit(s) A from the mortgage.

i. The RE 240 is the Release of Part of Premises From Lien of

Mortgage. This form is used for all types of mortgages, but not

land contracts. The Exhibit A (i.e., the RX form with the legal

description of the take area) is attached to the release form.


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ii. RE 241 is the Release of Part of Premises From Land Contract and

is used for land contracts. The Exhibit A (i.e., the RX form with

the legal description of the take area) is attached to the release

form.

c. Often, a mortgage holder will request ODOT to provide copies of its right

of way plans, appraisal report, instrument and legal description, and to

advise when ODOT anticipates closing the acquisition.

d. Mortgage holders may charge a processing or service fee for a mortgage

release. The service charge for a mortgage release shall be paid by ODOT

as an incidental expense as required by 49 CFR 24.106; however, ODOT

may elect to not pay excessive fees charged by the mortgage holder.

When a mortgagor holder demands an excessive fee for a release of

mortgage:

i. The negotiator should bypass the telephone clerk and negotiate

with a higher level manager having decision-making authority at

the lending institution.

ii. The negotiator shall attempt to negotiate with the mortgage holder,

explaining that ODOT will pay recording fees and will do most of

the work associated with the release.

iii. If the mortgage holder refuses to reduce its fee to a level ODOT

deems reasonable, the negotiator shall inform the District Officewho may need to seek assistance from AGO.

e. If the service fee insisted on by the mortgage holder is excessive, or the

mortgage holder makes other demands ODOT deems to be unreasonable,

or the mortgage holder fails to provide adequate information in a

reasonable period of time, then ODOT may need to appropriate the

property.

f. Once the mortgage holder states the amount of money it wants from the

compensation to be paid for the property, the negotiator shall communicate

this amount to the owner. If the owner and the mortgage holder cannotagree on the amount each is to receive, the property shall be appropriated.

g. Unless the parcel has to be appropriated, it will move forward in the

acquisition process and a closing will be scheduled.


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3. Paying the Mortgage holder

a. If the owner and mortgage holder agree on the allocation of the

compensation to be paid for the property, thenegotiator shall obtain two

warrants and make separate payments to the owner and mortgage holder.

i. The negotiator/closing agent must be aware that no payment can be

made to any mortgage holder unless there is a signed W-9 and

Vendor Information Change form (VIF) on file with ODOT.

b. The process described in the above-referenced paragraph (C)(1)(a)may not

always be possible. Another option is to use a local bank to disburse

funds, especially if the mortgage is held by the local bank. The

negotiator/closing agent may deposit the states warrant for the full

amount of compensation in the bank. The bank may deduct the amount

required for it to execute a release of mortgage and can issue a bank checkto the owner for the amount of the owners share of compensation.

c. If the bank holding the mortgage is not local and a local bank will not act

as an escrow agent, the negotiator/closing agent may use a title company.

The process is the same as discussed in subsection 3.b above.

i. A title company may charge a fee for performing this service. If

the fee is reasonable, ODOT may pay the fee as an Incidental

Expense as permitted in 49 CFR 24.106.

d. Once the mortgage holder is paid, the negotiator/closing agent must ensurethe mortgage release is secured, recorded and a copy of the recorded

mortgage release must be maintained in the acquisition file.

5202.07Taxes

For information pertaining to real estate taxes, reference the 5600 section of the Real Estate

Manual.

5202.08Real Estate Acquisition andUtility Connections

A. Real estateacquisition issues may arise if a highway project impacts a utility that isoutside of existing right of way. The acquisition may sever the utility connection to the

dwelling or structure and, the reconnection may not be part of the construction project,

therefore, the FMVE will need to consider reconnection costs.


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Utilities are so varied that no hard and fast procedures can be established. If an unusual

situation arises, the negotiator, appraiser and project manager need to identify issues in

the plans, talk with the District Utility Coordinator as well as the Utilities Section, Office

of Real Estate, Central Office. More information concerning utilities is found in Section

8200 of ODOTs Real Estate Manual.

B. Utilities generally include, but are not limited to, water, electric, gas, telephone/

communications and sewerage. Generally, utilities located within the existing right of

way are not reimbursed for relocation. Conversely, utilities located outside the existing

right of way, but within the take area are reimbursed for relocation as part of the

construction of the project. The construction plans should identify and detail the issues

relevant to utilities located within the existing highway or the proposed right of way.

C. Utility relocation costs associated with the acquisition process are used to determine if the

cost of re-establishing utility service to an impacted owner would an expense of the

owner. ODOTs Utility Section is responsible for paying eligible relocation costs fortransmission and distribution utility facilities. Paying the costs associated with

reconnecting utility service facilities to a property is handled through the acquisition

process. It is important to contact the District Utility Coordinator early in the acquisition

process to assist with making this determination.

D. EXAMPLE:

A water distribution line is located within the take area and the cost to relocate this line is

a project cost. However, the distribution line is attached to old service lines that lead

directly to several residences. The service lines contain lead solder, are located outside

the take area and environmental regulations will not allow reconnection to the distribution

line until the old, lead soldered service lines are replaced. The cost of replacing the oldservice lines is to be addressed in the appraisal report and the owner is compensated as

part of the FMVE.

5202.09Negotiating With a Party Representing the Owner

An owner may nominate another to represent them in negotiations. Before a negotiator deals with

any owner representative, the negotiator must request the owner provide written notice to the

negotiator identifying the owners representative as their nominee in these negotiations.

If the representative is the owners attorney, the negotiator may accept a letter from the attorney

stating the attorney is representing the owner. The negotiator should also verify this information,in writing if possible, with the owner.


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5202.10 Minors and Incompetents

When it is apparent the owner, or one of the owners, is either a minor or incompetent, the AGO

shall be contacted for consultation and guidance in acquiring the property. The costs associatedwith acquiring property from a minor or incompetent, including the cost of having a guardian

appointed and obtaining the courts consent to sell the property is to be paid by the agency. This

procedure complies with 49 CFR 24.106(b). The Transportation Section of the Attorney

Generals Office is to assist in determining what costs are usual, reasonable and actually incurred

for this process.

5202.11 Conflict of Interest

A. The regulations governing conflict of interest when acquiring rights of way are 49 CFR

24.102(n) and Ohio Administrative Code, Section 5501:2-5-06 (B)(14). The requirement

of these regulations is implemented into procedure as follows:

1. Persons functioning as negotiators may not supervise nor formally evaluate theperformance of the appraisal or appraisal review work done by any appraiser or

review appraiser.

2. The appraiser, review appraiser, or preparer of a value analysis who is preparingthe appraisal, appraisal review or Value Analysis for a particular parcel may be

authorized by the agency to act as the negotiator for that particular parcel, but only

if the offer to acquire the property is $10,000 or less.

a. If the person who prepared the appraisal, appraisal review or ValueAnalysis must be authorized or approved by ODOT to perform the

negotiation function.

b. FMVE must be $10,000 or less.c. The $10,000 limit relates to only the established FMVE. It is not a conflict

of interest to acquire a parcel by administrative settlement for more than

$10,000 provided the established FMVE was $10,000 or less.

B. Another form of conflict of interest may exist when a government employee has an

interest in the property to be acquired for the highway project. This category of conflict isregulated by 23 CFR, Part 1, Section 1.33 and Section 2921.42(A)(1) of the Ohio Revised

Code. See Section 5322 of ODOTs Real Estate Manual.


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5202.12 Estates

Estates do not have the authority to warrant title which is contrary to the ODOT instrument

requiring an owner to warrant title. Properties owned by estates are usually acquired byappropriation.

2013 acquisition 102 training manual part b

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