Short Line Investment?

[Anonymous]

jodom, that article was in the july 1982 trains mag. old alcos never die in georgia. i just got a copy sent from their stock of back issues . swapped emails with the editor about
his visit to the CIRR years ago. thanks for the reply.

[SALfan]

QUOTE: Originally posted by jonahranch

jodom, what's your connection to the Chattahoochee Industrial Railroad? I retired
from this railroad after 30 yrs. one of my mentors there was oodom.

Don't really have any connection, other than reading, enjoying and remembering an article in TRAINS years ago. The description at the beginning of the thread sounded a lot like the CIRR, other than the coal. Don't know the gentleman whom you mentioned, but you'll find Odoms all over - I met two brothers from Oklahoma when I worked in Arkansas.

[Anonymous]

jodom, what's your connection to the Chattahoochee Industrial Railroad? I retired
from this railroad after 30 yrs. one of my mentors there was oodom.

[Anonymous]

QUOTE: Originally posted by tormadel

QUOTE: Originally posted by tormadel

As I understand it in an easement you are buying the right to build and operate a railline through, or over if you will, someones property and you actually don't own a thing on it but you're railways gear (ballast, subballast, ties rails signaling equip etc.) But for an easement do you pay someone a one time fee for the right, or do you have to like pay rent on it? And years down the road when the origional owners grandchild is the one you're dealing with, can they be a pain in the***and try and throw you off?

I have read alot about government (both US and Canada) land grants to build the early railroads. How many of these were actual gifts of property and how many just easements?

Quit Claim deed sounds something like "Ok I give up here it's yours"
Whereas Warrenty Deed sounds to be "Really I swear this land is mine to sell, you can spank me later if I'm lying"

But, I do see how splitting up parcels of land would be more difficult then signing over the title to you're car.

This was the bunch of questions I was referring to, sorry about the confusion. I would always like to learn more, but at this moment I don't know what questions to ask.

You are generally on the right track, but these are legal matters where nuances count. My best suggestion for you, short of going back to law school (been there, done that) is to do a bit of reading in real estate law or attend some basic real estate investing classes. Pretty much everybody should have a basic knowledge of real estate even if only to keep from getting into trouble when buying or selling a home or business.

LC

[tormadel]

QUOTE: Originally posted by tormadel

As I understand it in an easement you are buying the right to build and operate a railline through, or over if you will, someones property and you actually don't own a thing on it but you're railways gear (ballast, subballast, ties rails signaling equip etc.) But for an easement do you pay someone a one time fee for the right, or do you have to like pay rent on it? And years down the road when the origional owners grandchild is the one you're dealing with, can they be a pain in the***and try and throw you off?

I have read alot about government (both US and Canada) land grants to build the early railroads. How many of these were actual gifts of property and how many just easements?

Quit Claim deed sounds something like "Ok I give up here it's yours"
Whereas Warrenty Deed sounds to be "Really I swear this land is mine to sell, you can spank me later if I'm lying"

But, I do see how splitting up parcels of land would be more difficult then signing over the title to you're car.

This was the bunch of questions I was referring to, sorry about the confusion. I would always like to learn more, but at this moment I don't know what questions to ask.

[Anonymous]

QUOTE: Originally posted by mudchicken

LC - If I took your thread off on a bad tangent, my apologies.

tormadel: I second LC's "And they are"?

Mud

No problem MC. I started this thread to learn a few things and see where it goes...

I may learn more than I thought, nothing wrong with that...

LC

[mudchicken]

LC - If I took your thread off on a bad tangent, my apologies.

tormadel: I second LC's "And they are"?

Mud

[Anonymous]

QUOTE: Originally posted by tormadel

Well the real estate talk had inspired new questions in me [:)]

And they are?

LC

[tormadel]

Well the real estate talk had inspired new questions in me [:)]

[mudchicken]

If you are the railroad, you grant license agreements/contracts/permits and try to avoid the easement route to keep the user accountable. (S. I . Hayakawa Principle [:D])

[Anonymous]

QUOTE: Originally posted by tormadel

As I understand it in an easement you are buying the right to build and operate a railline through, or over if you will, someones property and you actually don't own a thing on it but you're railways gear (ballast, subballast, ties rails signaling equip etc.) But for an easement do you pay someone a one time fee for the right, or do you have to like pay rent on it? And years down the road when the origional owners grandchild is the one you're dealing with, can they be a pain in the***and try and throw you off?

I have read alot about government (both US and Canada) land grants to build the early railroads. How many of these were actual gifts of property and how many just easements?

Quit Claim deed sounds something like "Ok I give up here it's yours"
Whereas Warrenty Deed sounds to be "Really I swear this land is mine to sell, you can spank me later if I'm lying"

But, I do see how splitting up parcels of land would be more difficult then signing over the title to you're car.

Payment fo an easement can be in installments or all at once.

If you are a common carrier railroad the law prohibits a property owner from throwing you off, unless you abandon the track.

LC

[tormadel]

As I understand it in an easement you are buying the right to build and operate a railline through, or over if you will, someones property and you actually don't own a thing on it but you're railways gear (ballast, subballast, ties rails signaling equip etc.) But for an easement do you pay someone a one time fee for the right, or do you have to like pay rent on it? And years down the road when the origional owners grandchild is the one you're dealing with, can they be a pain in the***and try and throw you off?

I have read alot about government (both US and Canada) land grants to build the early railroads. How many of these were actual gifts of property and how many just easements?

Quit Claim deed sounds something like "Ok I give up here it's yours"
Whereas Warrenty Deed sounds to be "Really I swear this land is mine to sell, you can spank me later if I'm lying"

But, I do see how splitting up parcels of land would be more difficult then signing over the title to you're car.

[Anonymous]

QUOTE: Originally posted by tormadel

I understand the gist of what they're saying if not every term. Suffice it to say real estate is a big pain in the ***. It's just not as easy as going to Walmart and picking up a 6 pack of property to put you're business on heh.

Real property is an old and arcane part of the law. What's worse, railroads weren't around when it was invented, so it had to be cobbled in later and got less than the best seat in the house.

LC

[tormadel]

I understand the gist of what they're saying if not every term. Suffice it to say real estate is a big pain in the ***. It's just not as easy as going to Walmart and picking up a 6 pack of property to put you're business on heh.

[MP173]

Boy, this thread just took off over my head. I understand about every third word now.

ed

[MichaelSol]

QUOTE: Originally posted by mudchicken

You can quitclaim just about anything. The question is whether you had legitimate title to anything in the first place.

Same with a warranty deed; how good's the warranty?

Best regards, Michael Sol

[mudchicken]

You can quitclaim just about anything. The question is whether you had legitimate title to anything in the first place.

(And then there is the abuse by most of the term easement)...and going back to the original point of the thread, you ought to be getting the bulk of the records from the seller, especially if it's a Class 1 [who would be in violation of 49CFR1201 if they cannot produce the data - Quite another issues for Cls. 2 & Cls. 3's since Staggers, especially when the rules changed in the Federal Register in 1983.] The due dilligence is not a walk in the park (as LC knows well) and I wonder how much income the shortline loses and how much etra liability are the shortlines taking on?

[tormadel]

Yeah it becaue obvious to me reading about the hurricanes on the east coast that the railroads don't have the kind of insurance alot of companies have. For example if my Domino's pizza burned down it would probably help my franchies owner. The insurance would pay for the loss and fund rebuilding (or moving to a better location). He might have to eat the loss of revenue during the reconstruction, but wouldn't have utility bills either. The hurricanes caused millions (probably more) of $ worth of damages and the railroads seem to have had to eat the whole loss to fix it. Hurricane damage was basically portrayed as the last nail in Erie Lackawanna's coffin.

But, I could see how property damage and acts of god insurance on every mile of track would be a nightmare. [:D]

[MichaelSol]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by Limitedclear
It is impossible to get a loan from a bank based upon a quitclaim, unfortunately.

????
It's what the Title Insurance Policy looks like, not the form of the property deed [warranty deed v quitclaim deed], that is important. That is, due diligence goes to the examination of title, not the name of the deed used for conveyance.

A quitclaim deed only grants that interest which the transferor held in the property. Accordingly, if there is a defect in the transferor's title it passes to the transferee without any of the warranties (including the warranty of title) contained in a warranty deed. Accordingly, the type of deed does indeed matter where the property is being evaluated by a lender.

That's the classic definition of a warranty deed. However, under the doctrine of merger, that "warranty" goes hand in hand with any other documents, including language frequently used "subject to exceptions contained in the title insurance policy" in Buy-Sell agreements and the like.

It is true that railroads are often "self insurers" on many matters. The standard ALTA policy excludes just about anything to do with railroads for a variety of reasons, including the fact that the standard 50 year search almost never discloses the true title information when it comes to railroads. Further, the policies are written for the amount of purchase of the land, not for the future value of the use of the land.

However, look at what you have written: the seller "warrants" title. Good luck in finding the seller five years down the road unless it happens to be another railroad company. I suppose after that old farmer has spent the money from the sale on gambling and drinking and the Bahamas, and then died, that "warranty" is worth the cost of the sheet of paper it was written on.

As I have trained associates over the years, rule number one if the seller won't sign a warranty deed is "why not?" but rule number two is, the "warranty" in "warranty deed" is not worth gambling anything on. And that's the "due diligence" part of anyone who handles a transaction and relies on a single word at the top of the page to have significance when push comes to shove in litigation.

As I mentioned above, a great deal of property is conveyed outside of the standard warranty deed. The Trustee Deeds referred to above have routinely been pledged in mortgages and trust indentures by First Bank System, Wells Fargo, Norwest, US Bank, National Bank of Commerce and others that I have worked with on those transactions notwithstanding the risk particularly inherent in those deeds (and some mighty sloppy work done back in Chicago).

Best regards, Michael Sol

[Anonymous]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by Limitedclear
It is impossible to get a loan from a bank based upon a quitclaim, unfortunately.

????
It's what the Title Insurance Policy looks like, not the form of the property deed [warranty deed v quitclaim deed], that is important. That is, due diligence goes to the examination of title, not the name of the deed used for conveyance.

Best regards, Michael Sol

A quitclaim deed only grants that interest which the transferor held in the property. Accordingly, if there is a defect in the transferor's title it passes to the transferee without any of the warranties (including the warranty of title) contained in a warranty deed. Accordingly, the type of deed does indeed matter where the property is being evaluated by a lender.

Further, I have yet to see a railroad deal with title insurance, nor have I met a major title insurer that will write railroad title coverage. Most railroad have never been surveyed except to the extent there are internal valmaps kept by the railroad itself which hardly carry the weight of an independent surveyor's license stamp. Localities maintain tax maps, but those can be notoriously unreliable in determining the exact dimensions of the property. Also, many railroads have some portions that are owned in fee and other portions that are easements "for railroad purposes" which indicates an old negotiated easement or an easement that resulted from an eminent domain taking or perhaps cetain state or federal land grants, depending upon the language of the grant (most are over a century old too, so finding the grant can mean extensive legal research all by itself) Taken together this makes banks extremely nervous about lending for RR deals based upon the real property. Some banks will lend for specific projects but most RR loans come from government sources.

LC

[MichaelSol]

QUOTE: Originally posted by mudchicken

MSol:

You just touched a raw nerve around most surveyors/mudchickens.

You apparently don't know how big, dumb and incredibly stupid most title insurance people can be around railroad operating property. It would be a joke if it wasn't so sad a story. They just except everything in their Schedule B's and walk away dazed in their own little warped world. Too many have no clue about railroad color of title or where to begin looking. [and they don't pay out when they screw up, which they do with frightening regularity - scary[:(!][:(!][:(!]

Ha! I agree.

I have handled probably about a thousand "Trustee's Deeds" from Richard Ogilvie [Milwaukee Road Receivership Trustee] to various entities over the past 25 years, plus a few BNSF deeds.

Now, you want to see something interesting, where government easements mixed with private easement grants mixed with outright purchases of ROW, combined with the occaisional "exclusive use" for railroading language written into some -- including in original Warranty Deeds (!!) -- then add on subsequent easement grants by the railway company (to power companies, pipelines, irrigation ditches, roads) -- and subsequent outright sales -- and you have the finest litigation stew concocted at the hands of mortal man.

The Title Company's are usually poorly equipped to analyze those.

I learned long ago to do my own title searches, and compare that to the Title Company's.

Warranty Deeds, Quitclaim Deeds, Trustee's Deeds, Instruments of Distribution, Personal Representative Deeeds, all have their legal quirks, but from the Title Company standpoint its that Title Insurance Policy that I have always been mostly interested in.

Best regards, Michael Sol

[mudchicken]

MSol:

You just touched a raw nerve around most surveyors/mudchickens.

You apparently don't know how big, dumb and incredibly stupid most title insurance outfits can be around railroad operating property. It would be a joke if it wasn't so sad a story. They just except everything in their Schedule B's and walk away dazed in their own little warped world. Title people operate with a set "formula" and the drones carry it out without any understanding of what's in play. Too many have no clue about railroad color of title or where to begin looking. [and they don't pay out when they screw up, which they do with frightening regularity - scary[:(!][:(!][:(!] ...the ones getting burned are the adjoiners, not just the rr's[:O]]

[banghead][banghead][banghead]

[MichaelSol]

QUOTE: Originally posted by Limitedclear
It is impossible to get a loan from a bank based upon a quitclaim, unfortunately.

????
It's what the Title Insurance Policy looks like, not the form of the property deed [warranty deed v quitclaim deed], that is important. That is, due diligence goes to the examination of title, not the name of the deed used for conveyance.

Best regards, Michael Sol

[tormadel]

These things are good to hear from Mudchicken and LC. Not good that they happen, but it is good to see someone aware of the issues. I know if I were to start a venture in this area I would want people like them in my corner.

[Anonymous]

QUOTE: Originally posted by mudchicken

LC- That's mostly just the sales transaction contract for the line. It gets worse for the contractural agreements/licenses/contracts that come with the property during sale. I've also seen swoosh and yellow's corporate legal folks get rid of more than they thought they were with quit claim deeds which should be a signal to get a new set of legal beagles. And yes, those bargain & sale agreement with the conditional/restrictive clauses are a headache. Know of at least two shortlines suing yellow over those conditions tied to questionable AAR embargoes.

Sadly, too true. Many of the easements, licenses and other real estate agreements are beyond the skill sets of many short line operators. Quitclaim Deeds are very common in the industry, but generally not a big problem as when the property transfered is an operating railroad it is nearly impossible for outsiders to affect the property transfer. It is impossible to get a loan from a bank based upon a quitclaim, unfortunately.

LC

[mudchicken]

LC- That's mostly just the sales transaction contract for the line. It gets worse for the contractural agreements/licenses/contracts that come with the property during sale. I've also seen swoosh and yellow's corporate legal folks get rid of more than they thought they were with quit claim deeds which should be a signal to get a new set of legal beagles. And yes, those bargain & sale agreement with the conditional/restrictive clauses are a headache. Know of at least two shortlines suing yellow over those conditions tied to questionable AAR embargoes.

[Anonymous]

MC -

I know what you mean. These days the Class 1s and most of the big short line groups are putting these kind of hold backs in all their sales agreements. Check out this article at one short line oriented law firm website.

http://www.wbsk.com/

Go to "Newsletters" link at top of page and then down the side menu to December 2004 Transportation Newsletter.

LC

[mudchicken]

LC:

Pet Peeve Time

Still waiting to see another issue come up regarding startups & that is the total blundering management of and mishandling of the real property assets. Compound that with the asset managing scam that happens on most of the ex-Rock and ex-Milwaukee properties and you have a big liability and cashflow mess. Very common to see seller still reaping income from lease & contract rental(s) years after sale of the line and the new shortline oblivious to the lost income. Most shortline management is clueless of what is going on and future income is squandered by the shortline management on the ground being oblivious to what goes on around them. [a big part of this I blame on the buyer & seller's clueless lawyers/ advisors, but that income and/or liability risk protection could keep many a shortline afloat in times of poor cashflow] Hope those operating managers and ex ChE are not much more than glorified trainmasters and trackmen....... (things I start looking at HARD while I'm out there "kicking the tires" and which I continually get really sorry answers for from shortline management)

Really fed-up with most of these transactions coming with zero paperwork, ICC maps & records, contracts on the line sale and so on.[:(!][:(!][:(!]

[edblysard]

You know, after a while, they kinda grow on you.
And note the new Green Goat has a very familiar shape to it!
In reality, the big cab windows, short rear hood, and sloped, short "nose" allow the engineer to see all around, and most importantly, he can see me in the front or rear steps giving hand signals!
They are very utilitarian, on purpose...it is easier to replace flat steel sheet than curved shaped steel, and the basics, frame, trucks and controls are all off the shelf EMD parts.
Makes for an easy to repair, and easy to run little beastie!

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by edblysard

The MK1500D, although ugly as sin, works great for our type of switching, and even though they are Cat powered, we have not have a major engine failure in the ten years they have been here.

Ed

Oh come on Ed, utility and reliability are their own forms fo beauty. [:D]