Call Our Firm:   605.385.0330   |   701.355.6885

Commercial Transactions & Litigation, Environmental Law, Natural Resources Law, & Energy Law

The problem with wind energy ordinances

Posted by David Ganje - April 12th, 2018

 

This opinion piece discusses wind turbine ordinances in South Dakota. I focus on local (county) ordinance writing and its hazards. I will not discuss other important related issues such as wind energy tax credits, the intricacy of wind easement agreements, state wind development policy or community and environmental risks. Those are left for another conversation. Like all natural resources wind energy is a viable source of energy, and of income. The development of this energy source has ebbed and flowed over the prior twenty years. Yet looking at it in 2018, the state is quickly becoming a preferred site for wind farms.

Why examine ordinance writing? Because counties should abandon their seeming indifference and treat wind energy development with as much serious attention as that given to writing oil and gas production rules or water law. The wind energy economy is here to stay. Under South Dakota law counties have a significant say-so in wind turbine law. The advantage of this? Local leaders get to make local law. The disadvantage? While a good amount of state legislation is done without the benefit of clergy, even less clerical advice can be found in certain existing county ordinances. “Local lawmaking” does not get the attention the public and media give to a state legislative session.

Ordinances governing wind energy systems, which are to be developed within a county, have a wide ranging effect on the local geography and economy. Local participation in ordinance drafting is a great advantage of county lawmaking. This leaves an opportunity for county commissioners to make the public, its local residents, “partners” in this lawmaking. There should be little uncertainty in ordinance language, it should be transparent, and the end product should favor open public participation in wind farm applications.

In reviewing the hazards of ordinance drafting I will put on the table relevant Walworth County ordinance language governing wind energy systems. The problems discussed here are not unique to Walworth County and are found in several of the ordinances of other counties.

The relatively new Walworth ordinance declares that a decision to grant a wind energy systems permit is an administrative matter. It is not. The state supreme court in 2009 held that a conditional use permit application is quasi-judicial and is subject to due process of the law. The county must be palpably fair to all parties affected in any decision to grant an operating permit. Conditional use permits are exceptional as such permits might approve operations in areas where the regular zoning rules would not allow it.

South Dakota’s constitution prohibits the legislature from writing private or special laws affecting only one party. In effect, granting a single wind farm developer approval of a particular project is akin to the county writing a private or special law. Because of this unique power courts have said that applications for such a permit must be subject to due process of the law with all its safeguards.

Due process requires a.) reasonable notice and b.) an opportunity to be heard at a meaningful time and in a meaningful manner. The Walworth ordinance fails on both counts. This ordinance should be rewritten.

a.) Reasonable notice. A public hearing is required on a Walworth County wind energy permit application. But inadequate public notice is provided under the current ordinance. The ordinance states that notice of a hearing shall be published once ten days prior to a hearing on the application in a newspaper in circulation in the affected area. Wind projects are often large in scope and are always important to a community. Is 10 days advance notice by newspaper sufficient for such an undertaking? The state supreme court recently ruled that a ten day advance notice would be sufficient on the facts of the case. But the court stated that the record in the case showed that the complaining party had not raised any concerns about the notice at the application hearing, and did not object to the notice process. The complaining party, according to the court, had not produced any evidence supporting its argument. It would be a fool’s errand to think this case was firm grounds for keeping a ‘ten day notice’ in a county’s ordinance language. Such one-time short notice by publication is an unreliable method of giving notice to the public. The U S Supreme Court has said, “The notice must be of such nature as reasonably to convey the required information, and it must afford a reasonable time for those interested to make their appearance.”

b.) The hearing. The process should provide an opportunity to be heard at a meaningful time and in a meaningful manner. The Walworth ordinance does not furnish sufficient advance notice nor does it require sufficient information for an interested party to prepare for such a hearing. The ordinance requires the applicant to advise adjacent property owners in writing of the “conditional use permit request.” The ordinance gives the applicant no guidance or directives as to ‘what’ information the applicant should give to the adjacent property owners. The ordinance does not require a description of the location of the project, nor does it require that the applicant provide property owners with a copy of the written application. At a minimum an ordinance should require that a notice to adjacent property owners refer them to a filed written application available at the county auditor’s office, include a copy of the application for the review by the affected property owners or cite to a link on the county website where the application is uploaded in full. Each of these is rather simple to do and not expensive for an applicant. This would allow interested parties to be meaningfully informed before the permit application hearing occurs.

David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law.


Be wary of future manure pipeline legislation

Posted by David Ganje - April 4th, 2018

In this opinion piece I discuss the legislature’s animal waste pipeline bill.  The bill as written was untouched by human thought.  During my short-lived career as a juvenile delinquent in Aberdeen my father had more than one occasion to tell me, “David we are seriously disappointed in you.”  My dad was not familiar, one should assume, with the work of the South Dakota legislature.  Otherwise he might have correctly used this reprimand to describe the legislature’s best law-drafting work.

When in high school I did not do my homework.  The excuse was that I was not writing the laws of the state.  The legislature (or the various special interests that influence them) write the laws of the state.  With HB 1184 we have a case of no one doing his or her homework. The bill was about as substantive as a cheap 3.2 beer one might purchase at one of the old bars in Aberdeen.

HB 1184 was fortunately killed in committee.  Be assured however another animal waste pipeline bill will return in the next legislative session dressed in different garb.  One legislator has publically stated he will craft another bill with the same goal.  If history is a guide, I suggest the promised new animal waste pipeline bill will have a good number of the same failings as the killed bill.

Label me naïve.  But I shall never cease to be amazed how quickly property rights are cast into the dust bin of irrelevance when the American dollar makes its appearance.  South Dakota’s economy needs livestock production.  It is not the nature of CAFOS that is discussed in this piece.  It is rather the extent to which legislators and others will go to tip the scales in favor of CAFO operations while disregarding both private property rights and the environmental impact of waste pipelines.

In the bill pipelines would be allowed on or under a road right-of-way which property is often private property.  A property owner’s land may be taken, under proper circumstances, by the government for county or township purposes to make a road.  When these rights-of-way are created other supplemental public rights may arise such as the right to hunt or fish on the right of way, but the property itself is still owned by the property owner.  Creating a right-of-way does not take away the abutting owner’s title to the land.  He pays taxes on that land, can hay it and so forth.  This continued ownership is significant enough to be secured by the state constitution which provides that title to land taken for highways remains with the landowner. SD Const Art VI, § 13.  Yet the bill would have a neighbor’s property available as a ‘public highway’ for another neighbor’s private business purposes all without compensation.  Confined animal feedlot operations are not a public utility.  A legislature should not convert a private business without any public benefit into a pseudo public utility.

What should interested parties look for in a future iteration of the animal waste pipeline bill?  Let me further elaborate by looking at the bill that was not approved.

1.    The language of the bill is short and incorporates itself by reference to another set of South Dakota laws.  This is what I call a piggybacking law.  The bill piggybacks onto the “UTILITY LINES ALONG AND ACROSS HIGHWAYS” law.  This utility lines law is intended to apply to public utilities – not to apply to for-profit, private CAFOs.  The bill would have allowed for condemnation proceedings without following the condemnation rules.

2.    The “UTILITY LINES ALONG AND ACROSS HIGHWAYS” law does not provide by any stretch of the imagination a legal roadmap for overseeing aboveground or underground animal waste pipelines.  This utility law is intended for use by electric utilities, telephone companies and the like.  By way of illustration the law requires that any rule passed per its terms must comply with ‘applicable National Electrical Safety Code standards.’  What in the world does that have to do with overseeing animal waste pipelines?  It should further be noted that any violation of this existing utility law is nothing more than a ‘petty offense.’

3.    How can a private for-profit CAFO meet the definition of a public utility as described by the South Dakota Supreme Court?:  A public utility is, “Any agency, instrumentality, business industry or service which is used or conducted in such manner as to affect the community at large, that is which is not limited or restricted to any particular class of the community.”

4.    The law to which the bill piggybacks has never been challenged in court.  It should be.  It is unconstitutional. The South Dakota Supreme Court has previously ruled that a road, irrigation pipeline and electric cable laid across private property is a trespass because the operator failed to follow statutory procedures to acquire its easement. The Court said the action by the operator constituted a taking of private property without due process of law or just compensation.  U.S. Const. amend. XIV, § 1; S.D. Const. art. VI, §§ 2, and 13.

5.    Will new animal waste pipeline legislation address the environmental impacts of an operating pipeline?  The bill did not.  Why should environmental impacts be considered?  For starters, a neighbor’s private property includes the land, the air above it and the earth below.  Consider the fact that CAFOs often carry a commercial general liability policy.  But since 1970 such policies do not include pollution or environmental spill coverage.  For a discussion on the failures to properly insure for pollution events see:   http://www.lexenergy.net/landfill-liability-re-contamination/    Without question an operator whose waste pipeline leaked damaging material onto another property owner’s land could be liable under the law of trespass or the law of nuisance. I submit nevertheless that if a county commission is going to grant by law a special business easement over another’s private property there should be environmental safeguards.  Should not the statute require the maintenance of environmental pollution insurance? While there will be some unhappy clients to learn this — almost all CAFOs are uninsured for pollution losses.


Dispelling the myth that South Dakota is a private property state

Posted by David Ganje - March 1st, 2018

The legislature is considering a pending animal waste pipeline bill which gives business interests the right to apply under existing statutes to create private animal waste pipelines over other landowner’s private property along rights of way. Concerning property rights the SD Supreme Court has held, “It is universally recognized that an owner of land abutting on a conventional street or highway has certain private rights in the street or highway distinct from that of the general public. . . Right of access is one of these private property rights which cannot be taken for public use or materially impaired without compensation. . . This has long been the settled law of this state.” This new 2018 bill (HB 1184) allows for animal waste pipelines by piggy-backing animal waste pipeline authorization into existing law. These existing statutes give county commissions the authority to take private property for use by telephone companies as well as electrical power companies or municipalities in the course of using and distributing electrical power and telephone services. These statutes have a “public use” basis to their existence. The pending bill specifically allows for the, “laying and construction of force mains to dispose of animal waste.”

The bill is an advocacy piece granting for-profit businesses the use of public rights-of-way for the purpose of transporting waste over another landowner’s property. In the world of business such transportation expenses are accepted as the costs of doing business, and are usually included in an operation’s business plan and cost projections.

The legislature’s problem with this new bill is that public rights-of-way are often on private property. By way of illustration, a property owner’s land may be taken by the government for highway and road purposes. When these rights-of-way are created other supplemental rights may arise such as the right to hunt or fish on the right of way, but the property itself is still owned by the property owner.

Creating a right-of-way does not however take away the owner’s title to the land. This continued ownership is significant enough to be secured by the state constitution which provides that title to land taken for highways remains with the landowner. (SD Const Art VI, § 13.) Yet this bill would have a neighbor’s property available as a ‘public highway’ for another neighbor’s business purposes all without compensation. How the can this bill be considered a property rights law? It cannot. Confined animal feedlot operations are not a public utility. A legislature should not by fiat convert a private business or enterprise into a pseudo public utility.

In 2006 the South Dakota legislature became so concerned about misuse by government agencies on the issue of taking property for private use that it created a new law which holds that no county, municipality, or housing and redevelopment commission may acquire private property by use of eminent domain for transfer to any private person, nongovernmental entity, or other public-private business entity. The legislature in passing its general condemnation and eminent domain laws also restricts it to the taking or damaging of private property for public use.

For such a disposal of animal waste bill to be constitutional it should either provide for compensation to a landowner for the use of private property, or the legislature should require a finding that a private landowner’s property rights may be infringed in order to preserve the general public welfare (not private welfare.) The bill provides for no compensation and provides for no direction that the process make a finding that property rights may be imposed upon to preserve the general public welfare.

David Ganje practices in the area of natural resources, environmental and commercial law.


Non-meandered Waters – Chapter 2

Posted by David Ganje - January 31st, 2018

The non-meandered waters law of 2017 is about to slide into long-term legal acceptance by the state legislature. A bill is now pending before the 2018 legislature to extend the life of this new set of statutes.  The non-meandered water law passed last year at a special session of the legislature is an error-ladened compromise which, if continued without correction, will indeed slide into an indifferent acceptance by the state. The purpose of the law is to open up temporary bodies of water to public use.  The law has several good points and is an effort to fix a very unique set of challenges presented by Mother Nature.  It also has several clear problems.  Its provisions do not have a proper definition of the owner of land, creates different rules and rights for different landowners, does not allow for setbacks and does not provide for a quiet time for recreational use of the waters.  I outlined these and other problems in my open letter to the legislature:  http://www.capjournal.com/opinions/columnist/a-bill-of-particulars-for-the-legislature/article_ce1b72ee-563e-11e7-93d2-67b295d08c1a.html

This new water law created two sets of laws for non-meandered lakes. The rights, duties and liabilities of landowners under the law’s particularly designated non-meandered lakes are not the same as the rights, duties and liabilities as those of the landowners under all other non-meandered lakes.  Many of the non-meandered waters are over private land.  The management of non-meandered waters has a more significant, direct and personal impact on private landowners than do other public bodies of water in the state.  That is why the special legislative session gave authority in the law to the Game, Fish and Parks Commission to write rules to make everything ‘all right.’  The GFP Commission created new rules.  Those rules tell a certain class of landowner how he might petition the Commission to take his public property off the list of waters over which sportsmen might hunt and fish. The waters in one class are automatically, under the 2017 law, open to hunting and fishing.  The petition process allows for no real due process.  The rules were written poorly. The legislature should correct this. It should discharge its duty and not rush to a muddled consensus on important property rights issues.

In the Fall of 2017 several landowners in Marshall County wanted a 100 yard setback of public activity on the non-meandered water covering their property.  They were caught in a legal trap created by the legislature and enforced by GF&P.  What they sought was not unreasonable.  In fact the new law permits creating a setback for other non-meandered landowners who may do it on their own initiative. Nevertheless the water over the owner’s Marshall County land was a part of those water bodies the legislature declared to be ‘automatically’ open to public use and access.  The owners of other non-meandered waters in the state can put up access restrictive buoys and create a setback.  But these Marshall County landowners had to petition the GFP Commission before they might do this very act because their land fell within the ‘automatically open’ class of lakes.  Additionally these landowners had the legal burden of proof to show that what they wanted was justifiable.  Such a burden of proof is not required of other non-meandered landowners.  In November the Commission denied the request stating that the landowners had not met their burden of proof to show why such a setback should be granted.  Property rights are not an experiment.  This law should not be treated like an experiment in resource management. A system creating a second class of landowners who are required to meet a higher legal benchmark to do something their neighbors can already do, all on non-meandered bodies of water, should not be tolerated in a just system.

 

David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law


How not to transfer real estate and mineral interests

Posted by David Ganje - January 31st, 2018

It’s not your father’s Oldsmobile anymore:  the world of real estate and mineral interests has changed.  Yet, in the law, adherents to customs abound aplenty.  Keeping, transferring and ‘devising’ real estate and mineral interests is not what you were taught.  Following long-standing old usages can result in modern mistakes.  Let me provide but a few examples.

  1. Old practices die hard. The old practice of a current deed simply cutting and pasting some prior deed language is risky business. A prior deed holder’s assertion in a deed that he owned something does not make it so.  In a case this year the SD Supreme Court ruled that current property owner’s reliance on their deed and on prior recorded deeds which asserted that an easement existed was wrong.  The reason?  Historically no party had ever properly created or declared the so-called easement.  That’s a big problem for the current owners.  Do not blindly rely upon the historical chain of title.  Just because your father told you Oldsmobiles are the best cars made, you had better check.  Oldsmobiles aren’t made anymore.
  2. Christmas gifts and girlfriends.  In South Dakota you cannot convey to a purchaser but still reserve back as a Christmas gift an interest in the property in favor of your current or future girlfriend.  Yes, this has happened.  Reservations in a deed in favor of a third party do not work.  Nevertheless there are modern statutes authorizing the use of a deed outside of probate by which you can designate recipients to the property upon the expiration of your ‘credit card.’   When done correctly it is an alternative to formal estate planning.  This procedure is not used enough although it is less expensive than other estate planning tools.
  3. Caveat Emptor is for fools. All buyers require special attention.  I insist that my commercial and ag sellers comply, at a minimum, with similar a disclosure report following the disclosures required for residential sales.  I also require that a buyer of property which includes mineral interests make a representation that he has himself researched the value of the interests.  When selling real estate do not allow for a small item to become a deal breaker.  Over-disclose.  I know of a transaction where the seller did not disclose that an end-of-life event had occurred in the cistern of a property.  This could have canceled the deal.  On the obnoxiously humorous side, in a large transaction involving land and buildings, the buyers at the closing table were petty and complained about holes in the wall of the residence.  The small holes were caused by the removal of the seller’s hanging pictures.  At the closing table I volunteered that the holes came with the sale.  This comment could have canceled the deal.  Disclose. Disclose.  A transaction is not the same as a first date when one suggests to the date that he is a professional baseball player.  Disclose and be truthful.
  4. Getting title insurance is daredevil business. The use of title insurance is common today.  Advising a land or commercial client to only obtain standard title insurance is to invite a malpractice claim.  Under South Dakota law standard title insurance insures against “loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.”  Standard title insurance has significant limitations.  Generally speaking, title insurance covers only whether the owner has good ‘legal title’ to the land. Title insurance will not cover the physical state or condition of the land.  Mineral interests and mineral ownership are not covered by title insurance.  The existence of environmental contamination is not an insured event.  The existence of zoning laws or related covenants which restrict the use of property are not an insured condition.  One court has held that, “zoning or environmental laws of general application, which are not recorded against specific parcels of property, are generally excluded from standard form ALTA title insurance policies . . .”  There is an important difference between having good legal title —  and the physical condition of the land itself.  One can obtain perfectly good insured legal title to valueless property.  That’s why you hire a lawyer.

 

David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law.


South Dakota Underground Trespass

Posted by David Ganje - January 1st, 2018

South Dakota courts have not to the date of this opinion piece adopted a definition, nor have the courts ruled on the civil wrong called ‘underground trespass.’  Yet going back to 1877 South Dakota territorial real estate law holds, “The owner of land . . . has the right to the surface and to everything permanently situated beneath or above it.”  Beyond this definition of land ownership the legislature has not acted on the issue of underground trespass.  Even though South Dakota has no case law on the subject, the state supreme court has a known preference for following a particular legal treatise when deciding legal cases.  This treatise clearly defines civil trespass as a wrongful intrusion on one’s property committed on, beneath, or above the surface of the earth with an exception that relates to airspace intrusions.

I leave for another discussion whether the upstanding property-owning residents of Lead and the reputable denizens of Deadwood might, under modern law, be the victims of underground trespass because of the honeycombed labyrinth of old mining tunnels running every which way under the surface of these fine cities.  In point of fact most incidents of underground trespass occur out on the plains.

How does underground trespass occur on the plains?  Without belaboring a lot of examples, this might occur from underground pipeline leaks, leaking or corroded underground storage tanks, overzealous oil operators infringing a bit too far under unleased property, a so-called disposal well’s ‘waste fluids’ migrating beyond its permissible subsurface boundaries, and so forth.

Is a man’s subsurface his castle?  Maybe.  A Nebraska Court addressed the issue of subterranean trespass.  The court held that the operator of an injection well could be liable if the damaged party could show that fluid migration harmed the damaged party’s ability to produce oil.  The North Dakota Supreme Court has ruled that a claim in underground trespass may be trumped by a properly obtained force-pooling order from the state authority which oversees gas and oil operations.  In the North Dakota case it must be noted that the claimant property owner did not allege any actual damage to his interests. That claimant was about as smart as the guy who takes a lady out on a date without enough pocket money to buy the coffee. A West Virginia court, in a case that was finally settled and dismissed, ruled that subsurface horizontal fracturing for minerals very close to a Plaintiff’s property line was to be considered underground trespass.  The lesson is that modern society and the laws that follow it will consider the issue of trespass on more than just the surface of property.

In addition to underground trespass claims other types of legal claims based on subterranean intrusion are nuisance, negligence, or strict liability.  The question then is:  What could the actual damage be to subsurface property from such an intrusion?  Answers to this include contamination of existing water rights, wrongful taking of a property owner’s mineral rights, contamination of surface soil productivity and degradation of an owner’s foreseeable rights to mineral extraction.  I submit that these subsurface intrusions will – if they have not already – occur in the state.  There will be much work for the courts to do.

David Ganje. David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law. The website is Lexenergy.net

 

 


Wind turbine ordinances revisited

Posted by David Ganje - November 15th, 2017

Walworth County passed a new wind turbine Zoning Ordinance this past spring.   It is a comprehensive planning and zoning ordinance which holds the ominous name of Ordinance #2017-1. What is the most controversial provision of the ordinance?  Wind turbines must meet the following minimum spacing requirements:  A distance at 10,560 feet or 2 miles from existing off-site residence, business and churches.  The distance from other existing buildings or structures shall be at least 1,000 feet with distance from on-site or lessor’s residence shall be a least 500 feet.  Is it reasonable? Yes. These terms require a greater setback than several other wind project ordinances in North and South Dakota. It is also contrary to the South Dakota Public Utility Commission’s ridiculously inadequate recommendation of a 1000 foot setback.  The ordinance was challenged; first by petitions for a special election by county residents, and then by a court challenge which invalidated the petitions. Welcome to America.  I would prefer that a special election of Walworth County residents go forward, but that is not the subject of today’s sermon.

This opinion piece discusses the terms of the ordinance not the pending legal procedures.  I am not involved in the legal challenge to the ordinance.   Let us remember that all politics is local. Indeed, all planning and zoning politics should be local. One cannot compare the wind tower setback of ‘two miles’ for Walworth County with ordinances written for Lincoln County or other South and North Dakota counties. Why the difference? Population densities are different. Topography is different. Traffic patterns for road and highway use are different.  Local economies and local communities are always unique: What percentage of an affected wind farm area is ag?   What percentage of effected land is industrial or commercial?  What are the preferences of the local community and its political leaders?  All this is very relevant and sui generis to the county.

A nationally recognized expert in property valuations and land use evaluations, Michael S. McCann, has used a recommended two-mile minimum as a benchmark for turbine setbacks in his advocacy. He uses a ‘use and enjoyment’ argument regarding surrounding properties. His arguments regarding setback terms merit consideration.

Is the proposed Walworth Ordinance perfect? No. It contains certain errors and general provisions that do not necessarily fit the locale. It is part template and part editing from other ordinances. Is it better than the prior ordinance? Yes. Is it workable? Yes. Could it use improvement? Please don’t ask my ex-girlfriend about making improvements.

Does wind power have a place in the region’s economy?  Indeed it should and it does. Consider the local economic effects of a wind farm.  I will leave for a separate discussion significant and relevant environmental impact and risk issues which matters should also be properly and concisely addressed in any proposed project plans. What are the local economic benefits of a wind project? 1. Landowner rental payments. 2. Initial construction jobs. 3. Some additional regional long term employment. 4. Limited albeit local redistribution of tax collections. 5. Wind projects put minimal strain on local government on matters of law enforcement, or on increased costs to maintain local school districts. Brookings County has 140 wind turbines. I know of no farmer or politician in Brookings County who complains of the many turbines in the county. 6. I have not experienced one case of an actual reduction in agricultural or livestock production caused by a nearby wind farm in either state.  And I know of no evidence that the value of agricultural or ranch land is reduced by operating wind turbines which are properly maintained.  Nevertheless it is my opinion (notwithstanding a 2009 US Department of Energy study to the contrary) that residential property values located close to wind turbines are negatively affected by the presence of nearby turbines.

Perfect legislation and rule-making are not achievable on this earth. The Walworth Ordinance has imperfections.  I would place other safeguards and standards in the ordinance. It is nevertheless a good step forward, and brings into today’s world the 1983 Walworth County Zoning Ordinance. The proposed ordinance is a modern, good effort toward rule-making oversight for wind farms.

David Ganje practices in the area of natural resources, environmental and commercial law in South Dakota and North Dakota.


How not to transfer real estate and mineral interests

Posted by David Ganje - November 1st, 2017

It’s not your father’s Oldsmobile anymore: the world of real estate and mineral interests has changed. Yet, in the law, adherents to customs abound aplenty. Keeping, transferring and ‘devising’ real estate and mineral interests is not what you were taught. Following long-standing old usages can result in modern mistakes. Let me provide but a few examples.

1. Old practices die hard. The old practice of a current deed simply cutting and pasting some prior deed language is risky business. A prior deed holder’s assertion in a deed that he owned something does not make it so. In a case this year the SD Supreme Court ruled that current property owner’s reliance on their deed and on prior recorded deeds which asserted that an easement existed was wrong. The reason? Historically no party had ever properly created or declared the so-called easement. That’s a big problem for the current owners. Do not blindly rely upon the historical chain of title. Just because your father told you Oldsmobiles are the best cars made, you had better check. Oldsmobiles aren’t made anymore.

2. Christmas gifts and girlfriends. In South Dakota you cannot convey to a purchaser but still reserve back as a Christmas gift an interest in the property in favor of your current or future girlfriend. Yes, this has happened. Reservations in a deed in favor of a third party do not work. Nevertheless there are modern statutes authorizing the use of a deed outside of probate by which you can designate recipients to the property upon the expiration of your ‘credit card.’ When done correctly it is an alternative to
formal estate planning. This procedure is not used enough although it is less expensive than other estate planning tools.

3. Caveat Emptor is for fools. All buyers require special attention. I insist that my commercial and ag sellers comply, at a minimum, with similar a disclosure report following the disclosures required for residential sales. I also require that a buyer of property which includes mineral interests make a representation that he has himself researched the value of the interests. When selling real estate do not allow for a small item to become a deal breaker. Over-disclose. I know of a transaction where the seller did not disclose that an end-of-life event had occurred in the cistern of a property. This could have canceled the deal. On the obnoxiously humorous side, in a large transaction involving land and buildings, the buyers at the closing table were petty and complained about holes in the wall of the residence. The small holes were caused by the removal of the seller’s hanging pictures. At the closing table I volunteered that the holes came with the sale. This comment could have canceled the deal. Disclose. Disclose. Disclose. A transaction is not the same as a first date when one suggests to the date that he is a professional baseball player. Disclose and be truthful.

4. Getting title insurance is daredevil business. The use of title insurance is common today. Advising a land or commercial client to only obtain standard title insurance is to invite a malpractice claim. Under South Dakota law standard title insurance insures against “loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.” Standard title insurance has significant limitations. Generally speaking, title insurance covers only whether the owner has good ‘legal title’ to the land. Title insurance will not cover the physical state or condition of the land. Mineral interests and mineral ownership are not covered by title insurance. The existence of environmental contamination is not an insured event. The existence of zoning laws or related

covenants which restrict the use of property are not an insured condition. One court has held that, “zoning or environmental laws of general application, which are not recorded against specific parcels of property, are generally excluded from standard form ALTA title insurance policies . . .” There is an important difference between having good legal title — and the physical condition of the land itself. One can obtain perfectly good insured legal title to valueless property. That’s why you hire a lawyer.

David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law.