Register Real Estate Advisors

Gas Pipeline Easement Negotiations Giving You a Headache? Help is Available
By Bryan Pope, Associate Editor, Real Estate Center
March 19, 2012/Release No. 18

COLLEGE STATION, Tex. (Real Estate Center) — Natural gas drilling in Texas’ shale regions may be lucrative for mineral rights owners, but it can be a headache for landowners with surface rights who are unprepared to negotiate with pipeline companies.

“Most landowners are unfamiliar with how to deal with companies that are acquiring pipeline easements to move gas,” said Judon Fambrough, an attorney with the Real Estate Center at Texas A&M University. “If the landowner and the company can’t reach a deal, the easement will be condemned.”

The condemnation process can be complex, but Fambrough walks landowners through all three stages in Understanding the Condemnation Process in Texas.

The publication has been revised to include changes implemented Sept. 1, 2011, by SB 18. It covers a wide range of facts surface owners need to know.

For example, the condemnor has the right to enter a property to conduct preliminary surveys even before any documents are signed.

“The landowner cannot stop them legally, but the condemnor will be liable for any damages to the land incurred during the survey,” Fambrough said.

Also, the proposed Pipeline Easement Agreement that the condemnor offers to landowners is negotiable. This is important since the condemnor can legally attempt to purchase (acquire) in that document property and property rights not needed for the project.

“For example, the company needs a 30-foot easement for one 20-inch pipeline to transport natural gas,” Fambrough said. “However, according to the high court, they can attempt to purchase in the proposal — without telling the landowners — a 50-foot easement for multiple lines to carry multiple products. It’s up to the landowners to limit them to what is reasonably needed during negotiations.”

Fambrough said the pipeline company does not have to offer the landowner fair market value for the easement, but they must make a bona fide attempt to purchase it as outlined in SB 18.

Finally, landowners should be compensated for two items: the fair market value of the easement and the resulting damages to the remaining uncondemned property caused by the presence of the pipeline.

“Generally, condemnors recognize the need to pay the landowner for the easement, but they take the position that there is no resulting damage to the remaining property,” Fambrough said. “This is where the battles generally lie.”

SAN ANTONIO (San Antonio Business Journal) – Only two U.S. metro areas have had increases in home values since the peak of the housing market in 2007, and they’re both in Texas: Houston and San Antonio.

According to Oxford, Miss.-based FNC Inc., Houston reported a 4.8 percent rise in home values, while San Antonio reported a 2.7 percent increase.

Nationally, home prices were down 3.5 percent at the end of 2011 compared with prices reported in December 2010.

HOUSTON (Houston Business Journal) – Wood Partners LLC has begun construction on Alta Woodlake Square, a $32.4 million luxury apartment community in Houston’s Westchase District.  The 256-unit complex at 2630 Tanglewilde St. will have studio, one- and two-bedroom apartments. The property will also feature a pool, outdoor kitchen, gym, and club room.  Preleasing is expected to begin in March 2013, with move-ins beginning by June.

HOUSTON (Houston Business Journal) – A new report from Marcus & Millichap projects that Houston will add 91,000 jobs this year, a surge that could stimulate demand for commercial real estate development.

The California-based real estate investment services firm predicts an increase in consumer demand, fueling development in commercial and retail properties, particularly in regional hubs like Houston’s Energy Corridor.

Marcus & Millichap anticipates 2.1 million sf of new retail space in the area this year, a 1 percent increase in inventory. Vacancy rates are expected to drop to 9.8 percent, and rents are expected to rise by 1.6 percent.

WASHINGTON (U.S. Department of Housing and Urban Development) – The U.S. Department of Housing and Urban Development (HUD) has issued new regulations ensuring that eligible persons, regardless of sexual orientation or gender identity, have access to important housing programs. The final rule includes several provisions for the two groups, including equal access to HUD-assisted housing and FHA mortgage programs. Regulations also prohibit owners of HUD-assisted housing to ask about applicants’ sexual orientation and gender identity in determining program eligibility. The new published rule goes into effect March 5, according to the Texas Association of Realtors.

HOUSTON (Houston Association of Realtors) – January marked the eighth consecutive month of increased existing home sales for H-Town, according to the Houston Association of Realtors (HAR). The year also opened with a continued decline in active property listings and growth in pending sales, which the association said signals a healthy market with a balanced supply of housing inventory. January sales of single-family homes were up 9.2 percent over January 2011, the association found. All segments of the housing market grew except the luxury segment (homes starting at $500,000). “The January report shows continued strength in the Houston housing market that we began seeing in the latter part of 2011, and it gives us cause for optimism as we look ahead to the typically active spring and summer buying months,” said Wayne A. Stroman, HAR chairman and CEO of Stroman Realty. “We have also seen more jobs being filled locally, and you generally don’t experience a strong real estate market without healthy employment.” January’s single-family home median price rose 0.9 percent year-over-year to $139,900. The average price of $194,765 was statistically unchanged from January 2011. Foreclosure property sales reported in the MLS increased 22 percent year-over-year in January. Foreclosures made up 27.8 percent of all property sales, which is higher than the 2011 average of 21 percent. The median price of foreclosures in January was flat at $82,550. January sales of all property types in Houston totaled 3,632, up 4.8 percent compared with January 2011. Total dollar volume for properties sold during the month rose 5.9 percent to $683 million versus $645 million a year earlier.

WASHINGTON (U.S. Department of Housing and Urban Development) – Citimortgage Inc., a subsidiary of Citibank N.A., has agreed to pay $158.3 million in damages to the U.S. Department of Housing and Urban Development (HUD) under the False Claims Act after charges of mortgage misconduct. The government’s complaint of over six years of wrongdoing in connection with Citimortgage’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program ended in a settlement approved by U.S. District Judge Victor Marrero. Citimortgage admitted responsibility for failing to comply with HUD-FHA loan requirements and to falsifying FHA mortgage insurance eligibility documents. The case against Citimortgage is just one in a series filed against lenders who ignored HUD requirements for approving government-backed loans.

WASHINGTON (Federal Housing Finance Agency) – The Federal Housing Finance Agency (FHFA) has set new objectives for the conservatorships of Fannie Mae and Freddie Mac. The three strategic goals for the government-sponsored enterprises include building new infrastructure for the secondary mortgage market, simplifying and shrinking their marketplace presence, and continuing foreclosure prevention activities as well as mortgage credit availability.
Fannie Mae and Freddie Mac have received more than $180 billion in taxpayer support since being placed in conservatorship in September 2008.
According to the Appraisal Institute, the FHFA is doubtful the money will be repaid in full.

WASHINGTON (Center for Housing Policy) – Most working Americans probably expect housing costs to take a substantial chunk out of their paychecks. But that chunk seems to be getting bigger.
According to a new report from the Center for Housing Policy, nearly one in four working U.S. households spends more than half of their total income on housing. One reason for this is that incomes are shrinking.
Between 2008 and 2010, incomes for working homeowners slid more than twice as much as housing costs. In fact, incomes for working homeowners fell even more sharply than they did for working renters.
“The data show that homeowners have been hit hard by the housing crisis in more ways than just lost equity,” said Jeffrey Lubell, executive director of the Washington-based center. “Many working homeowners have been laid off or had their hours cut.”
Lubell also said most homeowners bought their homes at a time when housing prices were much higher than they are today.
“As a result, their housing costs have not declined nearly as much as you would expect from looking at the broader market declines in home sale prices,” he said.
Meanwhile, renters have seen rents go up thanks to increased demand for apartment living.
“More and more people are interested in renting,” said Laura Williams, who authored the report. “Some prefer it because it allows them to be more mobile in a tough job market. Others are postponing purchasing a home or facing difficulties obtaining a mortgage. Given the long lead times involved in responding to increased demand with increased supply, the rental market has tightened somewhat and rents increased.”