Asset Management Newsletter: Agricultural Concerns Involving Title
Author: Peter J. Gravina
Over the years I have run into three areas where agricultural property owners do not always pay sufficient attention to real estate title matters which affect their property. Typically, the shortcomings are: documented legal access from a public road, drainage rights, and oil, gas and mineral rights. I will address each in order but would emphasize that each is an important consideration not only for current operations but in preparation for sale, estate planning and the requirements of government entities for conservation and greenbelt easements which are becoming a popular way to limit future development and preserve pastoral views while maintaining operational agricultural facilities to produce food for Florida’s growing population.
Florida has come a long way over the last fifty years while experiencing exponential growth, particularly along the coast. Farm access issues in areas that have become urban have often been solved simply by the overlay of developments creating new roads for local and regional transportation, as well as developers establishing internal roadways in a project connecting to a public road as part of the development process. It is not clear nor is it necessarily desirable that the lands currently in agricultural production in the interior of the state will experience the same kind of growth pattern in the future. Many factors will come into play including Florida’s excellent resources for agricultural production.
Many agricultural operations are accessed by miles of dirt roads adjacent to many different property owners’ tracts before meeting their final junction at some property owner’s agricultural operation. These roadways may have been established decades ago by mutual understanding amongst various property owners as to mutual need and purpose, and may even have been the subject of some government activity that was not adequately documented. As an example of this latter circumstance, in the early part of the 20th Century, local governments in Florida established Citizens Committees that determined the need or desirability of roadways in a particular area and reported back to the governing body. These “Viewers Roads” often were approved by the County Commissions and reflected in their meeting minutes which in some cases have been poorly archived over the course of the past hundred years. Consider the history of Southwest Florida which has gone through the process of evolving from being part of the original counties of Monroe and Hillsborough at the time of statehood, to the creation of the several counties that presently make up Southwest Florida. Manatee County was split off of Hillsborough County in 1855. Lee County was created in 1887 by the division of Monroe County. The original Lee County included Collier and Hendry County which were created in 1923. Charlotte and Glades County were created in 1921 and were formerly part of Desoto County which originally included Charlotte, Glades, Hardee and Highlands County. Desoto County itself was created from Manatee County, so in some cases multiple County archives may need to be checked for documentation on these ancient viewers’ roads.
Issues involving access comes up not only in the sale of property but also in the context of financing supported by collateral interest in the property. Over the years, lenders have become more restrictive on what documentation is acceptable with regard to the right to make use these roadways, as well as ancillary issues involving their improvement and maintenance. On occasion, through the generations a client has maintained archives including records that can be most helpful to determine the existence of grants that have either not been properly preserved by local government or which were never put in the Official Records but establish rights in roadway areas. As ownership moves from generation to generation and from larger to smaller parcels of land, these records may become harder to unearth and the additional and divergent interests of new owners along a roadway may bring friction regarding the use and enjoyment of a corridor that has been in existence for a long time. If sufficient records cannot be established, or if the local government does not agree that it has the right to maintain a roadway, often a land owner will have no choice but to file litigation to reestablish these rights to the satisfaction of a potential buyer or lender, or to the recipient of a conservation easement.
The issues involving drainage are similar to those regarding access. The basic law of drainage is that a parcel of property should receive water from its neighbors as historical flow patterns dictate. This is fine for land that remains in a pristine state. Agricultural and, of course, potential future development may both require alterations of these patterns; in the case of agricultural improvements, to channel the water so that productive land is not inundated during the rainy season, to maintain reservoirs of water during the dry season and to allow drainage should there be an extraordinary water event creating flooding. The waters all eventually flow to a major body of water which historically received the water but the water may now, because of channelization and agricultural activities, contain nutrients and contaminants that affect downstream ecosystems.
Drainage may have been established in a particular rural area by a group of large land owners getting together to establish canals along boundaries of their property or internal to their property as corridors that make sense for connectivity to adjacent owners’ property to channel, impound, draw upon and discharge flowing waters. The owners may have even established a Drainage District for this purpose under legislation that existed in the 1940’s, 1950’s and 1960’s before the State legislature established the State’s five water management districts which now oversee drainage and water quality issues, as well as agricultural water use and discharge. Rights in these drainage corridors, permits authorizing these drainage facilities, and the consumptive use of water from beneath the surface of the ground for agricultural uses are all legal rights that are key to the ongoing agricultural operation on a given piece of property and may need to be documented at the time of sale in order to substitute the new owner as the approved permittee or as a benefited land owner in the case of private easements. Therefore, an owner should take care to preserve these records and not simply rely on the water management district or local government to have them in its archives in case questions should arise in the future.
Oil, Gas and Mineral (OGM) Rights:
Oil exploration has been going on in Florida since the early 20th Century. Booms in other areas of the country have led to speculation that oil deposits in economically sufficient quantity to warrant drilling may exist in various locations in Florida. This resulted in both the retention of oil, gas and mineral (OGM) rights by prior owners who conveyed surface rights in the 1930’s, 1940’s and 1950’s, as well as the leasing of tracts of land to major oil companies over those same decades and beyond. The law dictates that the OGM estate as an attribute of that ownership includes the right of access across the surface for the exploration and extraction of the OGM’s previously reserved. While activities in Southwest Florida have been modest, with some oil production in Collier, Lee and Hendry County, on properties over which a conservation or greenway easement is sought, the possibility of OGM access and pumping operations is viewed as unacceptable. Therefore in order to qualify for these government programs at least a release of the “right of entry” will be required. Southwest Florida is a bit of an anomaly in this respect because in the more urban areas of the state title would be viewed as unacceptable if it shows outstanding OGM rights. Historically in Southwest Florida, perhaps simply because of the numerous OGM rights reservations, properties with those outstanding rights have changed hands with little concern.
Going forward, in addition to satisfying government agencies, the land owner needs to be aware of these issues as they might impact the willingness of a future buyer who is anticipating development of the property. As well, as the lending process has become more national in scope, lenders often refuse to lend money with these rights outstanding. An owner should give thoughts to these issues, maintain records and consult with legal counsel about these issues and how to document current ownership and rights involving oil, gas and minerals.
The foregoing would be equally applicable to tracts of land in more urban areas which may or may not have an agricultural use as a temporary economic offset. All owners of large tracts should consider the three foregoing issues and ask whether they are better off dealing with these issues now rather than in the future or leaving the problem for the next generation to handle? With the passage of time, records may become harder to locate and memories dim. These are important matters that should be addressed in the present because of their impact on the future value of your holdings.