The Story of the Atlanta Pipelines & The Developer

THE STORY OF THE ATLANTA PIPELINES & THE DEVELOPER

By Mary Anne Walser, Realtor & Attorney, 404-277-3527, maryannesellshomes@gmail.com

What if you bought the perfect home for your family in an idyllic neighborhood – playgrounds, pools, tennis courts, paid top dollar, settled in… and then found out that the land had suffered an immense petroleum spill several decades ago that contaminated the groundwater?  Most of us would agree that knowledge of the previous spill would have affected your view of the property and the price you were willing to pay. You might have purchased the home anyway – after all, Atlantic Station is the site of an old steel mill and many people live, work, and play there every day.  But previous environmental contamination is something a homeowner would definitely like to know about. So have a seat for the tale of the developer, the pipeline, and the title company.

A developer purchased 151 acres of property in Gwinnett County with an eye towards building a huge community of homes. Luckily no construction had started when the developer found out about a previous petroleum spill on the property. To understand the spill, you need to know about Colonial Pipeline and its large pipelines that run through Atlanta.

Perhaps you have seen the vacant land swaths with warning posts. Colonial Pipeline, the company who owns the pipeline, is based in Alpharetta. The pipeline itself consists of more than 5,500 miles of two pipelines (one 40 inches, the other 36 inches in diameter), originating in Houston, Texas, and going through many states, including Georgia, before it ends at the Port of New York and New Jersey. One of the pipelines is primarily devoted to gasoline and the other carries other petroleum products such as jet fuel, diesel fuel, and home heating oil.

And so these massive pipelines run through Atlanta – they run through this 151 acre property in Gwinnett, they run through a lot of Buckhead, and in fact run just past the house to one side of my own.  So what is it like to live near the pipelines?

In our neighborhood, no one thinks much about the pipelines – they are just “there” and have been there for as long as most of us remember.  Homeowners on either side of the pipeline property are allowed to use the property for certain uses – for walking trails, for play, for shallow gardens – but you can’t dig too deep, and no permanent structures are allowed. Periodically we get a notice from Colonial Pipeline notifying us that we live near the pipeline and outlining what we should do in case of an emergency, such as a leak. But unless and until something happens, it’s just a swath of property, much like property underneath the high voltage powerlines. Some consider it a plus to live by the pipeline – basically you get some extra land for recreational use and Colonial Pipeline maintains it for you.

But the pipeline under this property in Gwinnett developed a leak years prior (in the early 1990s). Colonial reported the leak to the Georgia Environmental Protection Division (EPD), which conducted an assessment and developed a corrective action plan.  By 2005, it was determined that the property was clear and was suitable for sale and development, and Colonial Pipeline, which also owned the land, sold it. An exhibit to the deed of sale notified the purchaser and successors that the petroleum contamination had occurred, and placed limitations on the property: (1) the groundwater could not be used for any purpose whatsoever (the land was serviced by public water from the county, so no groundwater would be used); (2) creating an easement so Colonial could maintain a monitoring well on the property to prevent future spills; (3) giving Colonial a right of first refusal to reacquire the property should it be sold; and (4) reservation of a 25 foot buffer for a creek and a river on the property.

In a subsequent sale of the property, the exhibit with this notification was left off of the deed. So that’s how the problem began. When the land was sold, the subsequent purchaser (a developer), therefore, did not know that there had ever been a spill and paid top dollar for the land. When the developer discovered the omission, they decided not to build and to try to recover some of that “top dollar” that they paid.  A Georgia court determined that the reduction in value of the property due to the fact that there had been a previous spill was worth millions of dollars. The case is still on appeal.  The land still sits empty; no houses, no one but the developer, the lender, the closing attorney and the title company paying much attention to it.

But what if houses HAD been built and you had purchased one unknowingly? How do you protect yourself from such unknowns? There are several things you can and should do when buying property. First, get a survey showing all easements of record. Then get a thorough title search (this is what your closing attorney does to be sure you are getting clear title). And then, GET TITLE INSURANCE. Title insurance helps to protect from adverse claims and notices affecting your deed that may or may not be in the chain of title – like the disappearing exhibit in the Gwinnett County case.

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email:  maryannesellshomes@gmail.com.

The Wonderful World of Atlanta Mortgage Lending

The Wonderful World of Atlanta Mortgage Lending

Mary Anne Walser, Realtor & Attorney, 404-277-3527, maryannesellshomes@gmail.com

Tony was a first time homebuyer. He balked at my requirement that buyers be prequalified by a lender before we go out looking at property. “I don’t want to share my personal financial information,” he said. “Well,” I laughed, “welcome to the world of mortgage lending.” Not only your personal financial information, but lots of information that you think would not even be relevant to the purchase of property must be shared with strangers (the mortgage banker and staff).

I always prepare buyers for the fact that they will be asked for a LOT of information. I joke that the lender will even ask them for their third grade report card (being particularly interested in their math scores). A recent buyer – Mia – called me up laughing one day. “You remember when you said they’d ask for my third grade report card? Well, you were almost right. The lender wants my college transcripts!” Now, Mia was well out of college and fully ensconced in her current job for at least two years. But this is just an illustration that there is no telling what the lender is going to ask to see. The best I can do for you is prepare you so you aren’t surprised. Get together everything that the lender will likely need (see the list below), but then be ready that they may ask for much much more. Like your third grade report card.

Here are some of the documents you should have ready for your lender:

• W-2 forms from the previous two years, if you collect a paycheck.
• Profit and loss statements or 1099 forms, if you own a business or are an independent  contractor.
• Recent paycheck stubs.
• Most recent federal tax return, and possibly the last two tax returns.
•  A complete list of your debts, such as credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances.
• List of assets, including bank statements, mutual fund statements, real estate and automobile titles, brokerage statements and records of other investments or assets.
• Canceled checks for your rent or mortgage payments.

This is by no means an exhaustive list. If you have had credit problems or a complicated work history, be prepared to produce even more documents. And the requests just keep coming, sometimes right up to and on the day of closing. The lender may also pull your credit report again right before closing. That’s why we tell you not to make major purchases between loan application and close. WAIT to buy your new furniture and a new car. Big purchases on credit might disqualify you for the loan because they disrupt your income/debt ratio.

So why the need for all this information, borrower laid bare before the mortgage altar? Remember that the lender is giving you a great deal of money to purchase a home. Back in 2006-2008, they were giving money much much too freely. Back then there were even what were called “stated income loans,” where the bank would pull your credit score, ask you what your income was (without any verification requirement) and give you a loan based solely on your credit and what you claimed that you made. You can see where lots of borrowers got into trouble with this. I personally saw real estate agents who I knew did not make a lot of money purchasing huge houses, thinking that they’d be able to resell them at a profit. When the homes didn’t resell, they defaulted. This happened with borrowers of all professions on a national scale – hence the mortgage meltdown.

So now things have tightened up quite a bit, and the documentation requirements are once again onerous. There’s a person called the “underwriter” who you may label the “undertaker” before all is said and done. Your loan officer gathers the preliminary information from you, then hands the file over to the underwriter, whose job it is to “underwrite” the loan. This means that they make sure it conforms with the relevant guidelines and that it is a loan that is likely to be repaid. They require any and all relevant documentation (and some that certainly seems irrelevant) to satisfy the lender that you have the ability to and will repay the loan.

So call a lender and be prepared for the onslaught of requests. Now, let’s talk about the types of lenders. You can call a direct mortgage lender or a mortgage broker – the difference is that a direct lender is lending you money they control. A mortgage broker is shopping around for a loan and is lending you someone else’s money. So a direct lender will usually have more control over the process (through the underwriter, in particular) and the mortgage broker can shop around, but will not have a lot of control over the loan once they choose one for you. I have favorite direct mortgage lenders AND favorite mortgage brokers (call me if you want a referral!) It is just a matter of finding someone experienced and fair.

Most of my buyer/borrowers these days do a 30-year conventional loan, twenty percent down. Interest rates are still so low – I definitely do NOT recommend doing an ARM (“Adjustable Rate Mortgage”). With an ARM, you have a fixed rate for some period of years – three, five or seven – and then when the ARM expires the interest rate resets to a formula based upon the prevailing rates at the time. Since interest rates are SO low now and likely to rise, you would be better off just signing up for one continuous interest rate over years. What if you think you will move before the ARM expires? The ARM rate is generally lower than the conventional loan rate, so that is tempting. But consider that you may change your mind about moving OR about selling. When I purchased my first home, I used a seven-year ARM, convinced that I would move before the seven years were up. I didn’t! But rates were lower at the seven year mark and I refinanced to a 15 year loan instead. And I still own that property (now as a rental). If rates had gone UP, I would have been quite sorry that I had chosen an ARM instead of a fixed rate mortgage.

Find a lender you know and trust, and sit down with them and talk through the wonderful world of mortgage lending and what is best for you. Then let’s go find your home!

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email:  maryannesellshomes@gmail.com.