Patterson PK Land Partnership, LTD.
Frequently Asked Questions

1) What title companies can we use?

If you are financing your purchase, your lender may require a particular title company. Check with your lender for their requirements.

2) What if we want to pay cash for our lot and don’t want to buy a title policy?

HB3031 provides and requires (emphasis PPKLP):

            HB3031, Page 9, Line 19

(B)  Leaseholder and Purchaser will enter into a purchase and sale agreement in substantially the form as agreed to between the Authority and Purchaser, which form will be attached to the Contract……; the purchase and sale agreement shall contain, at a minimum, the following terms and conditions:

(ii)  earnest money in the amount of $1,000 to be delivered to the title companyagreed to by Leaseholder and Purchaser and approved by the Authority along with the executed purchase and sale agreement;

(iii)  the Leaseholder's obligation to provide …….a title commitment from the agreed upon title company;

 (ix)  Leaseholder shall be responsible for …….any title policy (including endorsements) obtained by Leaseholder;

Summary: You are required to close and purchase an owner’s title policy from a title company.

3) How will current boundary line encroachments effect our sale?

Leaseholder must provide evidence that any such encroachments across boundary lines or into the FERC Project Area or Buffer Zone have been cured by the Leaseholder (either by removal of such encroachment or by written agreement between the affected parties permitting such encroachment to continue).

4) What if my neighbor and I want to readjust our common boundary lines?

If you anticipate a dispute/discrepancy with your interior lot lines the you should confer with your applicable adjoining neighbor and enter into a "Boundary Line Agreement". A sample Boundary Line Agreement form is on the website. A licensed surveyor should prepare the addendum describing the common agreed to and adjusted common boundary line. This adjustment must be done before either of the applicable effected properties is transferred by Patterson PK Land Partnership, Ltd. The "Boundary Line Agreement" must be signed by all required parties and returned to the BRA and Patterson PK Land Partnership, Ltd. prior to any of the effected properties being transferred by Patterson PK Land Partnership, Ltd.

5) How will current FERC encroachments effect our sale?

HB3031, Page 36, Line 9

(32)  Structures in place within the FERC Project Area shall be subject to the FERC License, as the same may be amended and/or renewed from time to time. Any structures erected in the FERC Project Area after May 15, 1980 (the date of the amendment to the previous FERC License) may be required to be removed at the expense of the owner of the improvement, unless such improvements are approved in writing by the Authority in accordance with the FERC License.  In no event shall this subdivision grant any authorization for a violation of any rules or regulations of the Authority, the FERC License, or any state, federal, or local law.

6) What is "HB 3031"?

House Bill 3031 or HB3031 – is "an act relating to the sale by the Brazos River Authority of certain residential and commercial leased lots and other real property in the immediate vicinity of Possum Kingdom Lake."

In short, HB3031 is a bill during the 81st Regular Session of the Texas Legislature. HB3031 passed both the House and Senate with unanimous approval.

A link to the entire text of the bill is included on our website.

7) I have heard the PPKLP is giving some property to charity, what are the details of that?

Assuming PPKLP closes its deal with the BRA, approximately one year after the purchase from the BRA we will gift by deed the following 9 properties having a 2008 total tax assessed value of $690,750 to the applicable lessee’s designate. We will deed restrict and condition each gift for so long as the owners continue their current non-profit use of the applicable property:

8) How do I access the site and make changes?

Please note the password needed to access your site was mailed out last Friday (07/10/2009), please wait until Monday, July 20 before contacting us if you have not received your password.
In order to access the website and update your records, follow these steps:

1. Under LESSEE PROFILE AND LESSEE SPECIFIC DOCUMENTS, Click on “Browse” and find your name/record.

2. Click on your name/record. Your name may be on a different screen. Use the index at the top of the screen to navigate to a different screen.

3. It will then ask for your Password – which is the “Password” listed at the bottom of the letter mailed to you on July 9, 2009. Make sure and insert the “Password” EXACTLY as it is written. A lot of mistakes have been confusing the letter “I” and the number “1”

4. Once that step is completed you will be able to see and modify your information. To change your information, click on “Update Record” at the bottom of the page.

9) What sort of deed restrictions will there be in regard to the resale?

See Exhibit D- Deed Restrictions in Useful Information on our website. Note the reference therein to the BRA Shoreline Management Guide, as amended form time to time: see here.

10) Can a survey done last (week, month year) be used as the resale survey?

No, it cannot.

Unfortunately, HB 3031 requires a number of things in a survey (listed below). However, the issue that prevents a recent survey from being used is:

 “To be acceptable to the Authority and Purchaser, the survey must: include the boundary of the Leaseholder's Leased Tract and any Undeveloped Strips being conveyed, which boundaries must be consistent with the master survey prepared on behalf of the Authority in conjunction with the sale of the Leased Tract to the Purchaser;”

PPKLP expects Link Field Services(LFS) to offer a quality product for a reasonable cost.  However, if you are not satisfied with the price listed by LFS you are more than welcome to utilize another surveyor.  (Just remember this could lead to delays in timing.)

The pertinent parts of HB3031, as they relate to surveys are included below:

----

 House Bill 3031 in pertinent part provides:

 (C) Leaseholder shall deliver to Authority and Purchaser no less than forty-five days prior to Closing, at the Leaseholder's expense, an accurate survey of the individual Leased Tract (including any Undeveloped Strips being included in such Leased Tract), which survey is acceptable to the Authority and Purchaser. To be acceptable to the Authority and Purchaser, the survey must:

(i) be acceptable to the title company selected by the Purchaser and Leaseholder and approved by the Authority for purposes of issuing any policy of title insurance on the applicable portion of the Leased Tract;

(ii) be prepared by a licensed state land surveyor or a registered professional land surveyor acceptable to the Authority;

(iii) include the boundary of the Leaseholder's Leased Tract and any Undeveloped Strips being conveyed, which boundaries must be consistent with the master survey prepared on behalf of the Authority in conjunction with the sale of the Leased Tract to the Purchaser;

(iv) include all improvements on the Leased Tract and indicate any encroachments across the applicable boundary lines or into the FERC Project Area or Buffer Zone; Leaseholder must provide evidence that any such encroachments across boundary lines or into the FERC Project Area or Buffer Zone have been cured by the Leaseholder (either by removal of such encroachment or by written agreement between the affected parties permitting such encroachment to continue) prior to the survey being deemed acceptable; and

(v) be reviewed and approved by the Authority and Purchaser; the Authority, Purchaser, and their representatives or agents may perform an inspection of the applicable Leased Tract to verify the accuracy of the Survey and any encroachments thereon;

11) What is the 1,000 foot contour line?

For this question we asked Ken Russell of Linkfield Services, Inc. to answer:

“The 1000’ contour line is best described as the elevation line that was established to determine when the lake is at its fullest capacity.

The dam at Possum Kingdom was constructed to hold and retain a certain volume of water to maintain the beauty, integrity of the lake, its wildlife, water capacity and flow of the Brazos River.

As long as the lake is under the BRA jurisdiction, there can not be any intrusion across that line in order to maintain and control what happens at the lake. It is very important to know where this line is on your property to prevent intrusion into the lake area. Your survey will depict this line and will assist you in making the proper choices as you may want to expand existing facilities or build new dwellings or boat docks.”

12) Do I need to sign all the Exhibits to the contract?

No. Please execute the 1st 12 pages. The exhibits can be left blank, but MUST BE included in the mailing to us.

13) Do I really need to send 3 copies of all 51 pages?

Yes

14) In a lot of contracts between buyers and sellers you are allowed to negotiate the provisions of the contract, can I do that with this contract?

The sheer number of contracts we have to execute, 1,580, prevent us from being able to negotiate with each and every seller. The contract is a result of many hours of work by us and the BRA. The BRA has approved the contract and requires us to use it without amendment.

15) When will the payments be due on the "seller finance" note?

The blank note form provides:

Terms of Payment (principal and interest): The Principal Amount and interest are due and payable in equal annual installments of __________ DOLLARS ($__________), on ________ of each year, beginning ______________ and continuing annually until the Principal Amount and accrued, unpaid interest have been paid in full. Payments will be applied first to accrued interest and the remainder to reduction of the Principal Amount.

Annual payments will be due on each Jan 1st of each year. The first payment due on Jan 1st 2011 will only be for about 7 months of interest (Aug-Dec of 2010). Thereafter on each Jan 1st a fully amortizing 30 year annual payment will be due. The principal can be prepaid in whole or in part at any time without prepayment penalty. The note form at closing will be amended to provide:

Terms of Payment (principal and interest): An interest only payment shall be due January 1, 2011. Thereafter, the Principal Amount and interest are due and payable in equal annual installments of __________ DOLLARS ($__________), on January 1st of each year, beginning January 1, 2012 and continuing annually until the Principal Amount and accrued, unpaid interest have been paid in full. Payments will be applied first to accrued interest and the remainder to reduction of the Principal Amount.

16) Please explain the boundary line agreement form?

Exhibit A and B of that form are intended to describe the current properties of the 2 parties agreeing to make the adjustment to their common boundary line. Exhibit C is intended to describe the new agreed common boundary line. In the PK scenario I think the best thing would be for both parties to use the same surveyor (suggested not required) and attach as Ex C the 2 new surveys showing the new agreed common boundary line. The form we provided was intended to be used as a starting point. I suggest your lawyer customize an agreement that best suits your situation. I will be very flexible re what the new boundaries will be if the affected parties all agree.

17) Can you provide more information re: Dedicated Right of Ways, Easements and Common Drives?

HB 3031 requires PPKLP to sell the leaseholds to the existing leaseholders without reserving any specific easements (new or existing) to benefit any 3rd parties…adjacent leaseholders or otherwise. However, the deed restrictions in HB3031 do among other things affirmatively provide for the following (emphasis):

(2)  Each Owner, Purchaser, and Leaseholder shall agree to not block, restrict, or otherwise prohibit access over, through, or across any Road and further agrees that such Roads or portion thereof shall remain open for use by the Authority, other Owners or Purchasers, lessees of any portion of the Property (including Leaseholders) and the general public. Except for (i) those portions of the Property that are accessible by water only as of the effective date of the Restrictions, and/or (ii) restrictions of access existing as of the effective date of the Restrictions (e.g., access to and from public roads that requires traversing real property not owned by the Authority, Owners, or Purchasers hereunder), and/or (iii) the covenants and restrictions of the Ranch Declarations (to the extent applicable to the Roads) or other restrictive covenants existing prior to the date the Restrictions are recorded of record, no Owner, Purchaser, or Leaseholder shall be permitted to block, restrict, or otherwise prohibit access on, over, or across the Roads.

(3)  The Driveways are not part of the Roads and shall be maintained by the Owner, Purchaser, or Leaseholder of the applicable Driveways. No Owner, Purchaser, or Leaseholder shall obstruct, prevent, or otherwise restrict access on, over or across any portion of a common Driveway by any such other Owner, Purchaser, or Leaseholder, or their guests or invitees, whose portion of the Property is served by such common Driveway. Owners, Purchasers, and/or Leaseholders whose portion of the Property is served by a common Driveway shall at all times have a nonexclusive right of ingress and egress over and across such common Driveway to access their portion of the Property.

(4)  All grants and dedications of easements, rights-of-way, restrictions, and related rights affecting the Leased Tract, made prior to the Leased Tract becoming subject to the Restrictions that are of record, or visible or apparent, shall be incorporated into such Restrictions by reference and made a part of the Restrictions for all purposes as if fully set forth therein and shall be construed as being adopted in each and every contract, deed, or conveyance executed or to be executed by or on behalf of the Authority conveying any part of the Leased Tract.  The foregoing adoption of such easements includes, without limitation, any and all written easements or agreements, whether or not recorded, between the Authority and any other party for the installation, maintenance, repair, or replacement of utility lines located on, above, over, under, or beneath the Property.

            Link: http://www.capitol.state.tx.us/tlodocs/81R/billtext/doc/HB03031F.doc

The above Deed Restrictions will be imposed on all the properties sold to me by the BRA in this HB3031 transaction. You should confer with your attorney that this will meet your needs. If it doesn't then you and your neighbors should consider memorializing and further defining the existing easement, right of way and/or common drive by a written agreement filed in the county real property records. A sample common drive agreement (http://www.pklandpartnership.com/downloads/comdriv2.doc) and sample Ingress and Egress Easement and Maintenance  Agreement (http://www.pklandpartnership.com/downloads/Easement.doc) are on the PKLLP website. These are sample documents only. Your lawyer should customize these or other documents to fit your particular situation.

If a property you cross to get to your property is retained by the BRA for FERC or other reasons these deed restrictions would not apply, but BRA policy, regulations and the existing lease documents would control.

If a property you cross to get to your property is owned by someone other than the BRA your continued access over that property will depend upon whatever agreement you have with that property owner.

18) Should I send evidence of FERC encroachment to BRA immediately?

YES!

19) What effect will the fact that until Palo Pinto County accepts all the roads in Palo Pinto County those roads will be "private roads" have on lender appraisals and financing for our lake properties?

The Fannie Mae Single Family 2010 Selling Guide (B4-1.4-08) provides that for an originating/selling lender to avoid Fannie Mae indemnification the secured property must adjoin roads that are either publicly owned, "community-owned" (i.e. a Property Owner Association) or an agreement or covenant is filed that provides for the perpetual maintenance of the roads. [Fannie Mae Single Family 2010 Selling Guide (B4-1.4-08)] Before the resale closings PPKLP will be filing in Palo Pinto, Young and Stephens Counties a Road and Trash Covenant for Possum Kingdom Lake.

20) What is the overall resale survey process?

Once you engage your surveyor he will go out to your property and conduct the fieldwork. After plotting and drawing the lot the surveyor will submit the survey to Link Field Services (as Resale Survey review authorized agent of PPKLP) for initial review (the "Draft Survey"). During this phase Link Field will confirm that the correct coordinates and GPS points were used. Link Field will then approve or deny the Draft Survey.

If approved, your surveyor will finalize/finish the Draft Survey and then re-send the completed survey (the "Final Survey") to Link Field Services (as Resale Survey review authorized agent of PPKLP) for submission to the BRA. The Final Survey needs to be delivered to Link Field no later than August 2, 2010 at 5:00 p.m.

If denied, your surveyor will modify the Draft Survey to meet the approved requirements.

Once the Final Survey is submitted to the BRA, the BRA will review your survey for approval. If BRA has corrections or changes, those will be submitted to Link Field and Link Field will notify your surveyor.

After BRA approval you have an "Approved Resale Survey". However, you may still have a FERC encroachment or boundary line encroachment that must be dealt with.

21) Will the timing of FERC encroachment notification adversely affect my ability to close contemporaneously?

It doesn't have to. In order to close contemporaneously and receive the 85% pricing, the leaseholder must: 1)have an executed contract in the title company by 5pm on 8/2/10, and, 2)have an "Approved Resale Survey" in the title company and/or Link Field Services (as Resale Survey review authorized agent of PPKLP) by 5pm 8/2/10. FERC and boundary line encroachments can be dealt with prior to closing.

Also, please be aware that surveys are being uploaded and sent in all the time. If you check your website and see that it is not submitted, but have talked to your surveyor and know it has been sent, please wait a day or two prior to calling again. It does take time to physically update the system and it is being done as fast as possible. The most important thing is to make sure your surveyor is aware of your desire to close contemporaneously and they are aware of the timeline.

22) How do I set up the escrow account for removal of FERC encroachments, if my encroachments are not approved?

1. Pick a company to do the FERC removal. We have a list of contractors that have offered to help with these matters. You may use anyone of them or anyone else you choose. The choice is yours.
2. Get a written bid from the company.
3. Attach the bid to the FERC Encroachment-Removal Escrow Agreement and make 4 copies.
4. Sign all 4 as originals.
5. Send all 4 signed originals to PPKLP
6. PPKLP will review and if acceptable sign all 4 originals and forward to BRA for their review, approval and signature.
7. When PPKLP receives the 4 signed originals from BRA, PPKLP will return all 4 to you.
8. You must take all 4 to the title company with your check for 150% of the FERC curative contract.
9. Title company must sign all 4 and keep one fully executed original for their file.
10. You keep 1 fully executed original and send 2 fully executed originals back to PPKLP
11. PPKLP will send 1 of the 2 fully executed originals to BRA and keep one for our records.

23) Who at the BRA do I contact about FERC and where do I mail my information?

Natalie Kinnaird
Brazos River Authority
PO Box 7555
Waco, TX 76714
pkencroachments@brazos.org
(254)761-3100

24) Do I still need to escrow if only the corner of my house is within the FERC area?

Yes, you need to escrow if any of your house is within FERC and you cannot prove that the house was built prior to May 15^th, 1980.  Contact a 3^rd party contractor or use one from our LIST and escrow 150% of the estimate with your title company.

ALL FERC encroachments that cannot be proved to have been built prior to May 15^th 1980 nor are they BRA permitted structures, and assuming you don’t want to tear down the encroachment, must be escrowed with your title company.  You need to contact a 3^rd party contractor or use one from our LIST and escrow 150% of the estimate with your title company.

25) I have a walkway that goes down to my dock, is that a FERC encroachment?

If you received a letter from the BRA notifying you that it is a FERC encroachment then you need to complete the "permitted facility" form found on our website under the Useful Forms tab, and send it, along with any documentation you may find in your lease file or personal records regarding the walkway, to the BRA notifying them that the encroachment is a walkway and requesting that it be considered a permitted facility. If the BRA agrees that it is a "Permitted Facility", then it will be removed from the encroachment list and you will not be required to escrow. If BRA does not agree that it is a Permitted Facility, then it will be considered a FERC Encroachment.

26) Where do I send the Encroachment Consent and/or Boundary Line Agreement Document?

Please mail one copy of to our office 2340 West Interstate 20 #218 Arlington, TX 76017 and one copy to your title company.

27) How do I provide evidence that my FERC encroachment has been removed?

Please contact your resale survey provider (not AeCOM) and request an updated/clean survey. Your surveyor will have to go on site and confirm (via updated survey) that the encroachment has been removed. If you intend to continue leasing and thus have not obtained a resale survey, you may notify BRA in writing that you have removed your encroachment; BRA will then inspect your property to verify removal of the encroachment.

28) What is the difference between Permitted Facilities and Property Use Agreements(PUA)?

Permitted Facilities are not actually encroachments at all, but are improvements that the FERC license already allows the BRA to approve in the Project Area.

These are landscape plantings, erosion control structures, and on-water facilities.

However, they have to be properly permitted to be allowed, so if a structure that would otherwise qualify as a permitted facility has not been permitted by BRA, then it is an encroachment until it is permitted. In order to permit after the fact, the lessee needs to obtain a post construction application from the BRA lake office.

Property Use Agreements(PUA) are agreements the BRA began executing with lessees a couple years ago when the lessee was assigning the lease to someone else and the BRA identified an encroachment that needed to be cured (fixed) before the BRA would approve the transfer.

If the encroachment were approved in writing by the BRA to be in the location it was now in (in other words it was what we are now calling a Seller Approved Encroachment) then the BRA allowed it to remain in place, pending approval by FERC, as long as the lessee signed the PUA.

This was extended to lessees with unapproved encroachments when the Board passed the resolution last July regarding encroachments. So there are now two types of Property Use Agreements, one for seller approved encroachments, and one for unapproved encroachments. These are only executed when a lease is assigned.

29) Are there any alternatives to the FERC removal escrow process?

Yes, as of today there is. The BRA has just approved the use of a Performance Deed of Trust in lieu of an FERC Encroachment-Removal Escrow Agreement. Please see this LETTER regarding the Performance Deed of Trust located under Useful Information on this website.

30) When should I apply for a “Post Construction Permit” with the BRA?

If a lessee thinks they have a permitted facility, then they need to fill out the Permitted Facilities Form and submit to BRA. BRA will inspect, and if it is an improvement that would qualify as a Permitted Facility if a construction permit had been obtained, then BRA will notify the lessee and have them complete the Post Construction Permit form.

31) I see a “?” at “Boundary Line Encroachment indicated by Resale Survey", what is that?

That simply indicates we don’t yet know that you do or do not have a boundary line encroachment. Once we see your BRA approved resale survey, we will mark it with a BIG RED X if you do have one or mark it as “N/A” if you do not.

32) Do you know when I will hear back from the BRA regarding my FERC Encroachment information I sent them?

We do not. The BRA is processing them as fast as possible. As soon as we receive a reply we will let you know.

33) I see some new symbols on my leaseholder page, what do the symbols mean?

A QUESTION MARK means we do not yet know if this situation affects you. As soon as we do, we will post it here.
A RED X means this situation does negatively affect you.
A GREEN CHECKMARK means this situation had been sufficiently handled and approved.
A “N/A” means this situation is not applicable to you.

34) When can we expect to hear from the BRA regarding our FERC encroachment documentation that has been submitted?

Many leaseholders will start to see a change in their “on-line FERC status” by Wednesday, September 8, 2010. The BRA is processing the requests as fast as possible.

35) I am awaiting the determination of the BRA on my FERC issue prior to submitting the escrow documentation, is this correct?

No. Please go ahead and submit the FERC Escrow agreement (according to FAQ#46). The documentation takes time and does not require up front money. This way you are ahead of the curve if your FERC outcome is not what you are hoping for.

36) When will I hear from the BRA regarding my FERC encroachments?

Unfortunately, we don’t know. The BRA is moving through them as fast as they can.

37) I heard there were some encroachments below the 1000 ft contour line (in the lake bed) that could stay?

Short answer yes. However, it is very specific and you must receive that documentation from the BRA. Please contact Riley Woods @ 254.761.3100.

Here is some generic information from the BRA website:

ENCROACHMENTS BELOW 1,000 FOOT CONTOUR AT POSSUM KINGDOM LAKE
The Board approved a resolution that, with exceptions, requires removal of encroachments situated below the 1000 foot contour in the lakebed at Possum Kingdom Lake. The policy also set an annual encroachment fee, effective January 1, 2011 of 10 cents per square foot ($50 minimum) for structures allowed to continue to encroach into the lake bed.

ENCROACHMENTS ONTO RETAINED BRAZOS RIVER AUTHORITY LAND AT POSSUM KINGDOM LAKE
The Board approved a resolution that, with exceptions, requires removal of encroachments onto Brazos River Authority retained property at Possum Kingdom Lake. The policy also set an annual encroachment fee, effective January 1, 2011 of 10 cents per square foot

38) Who do I call to schedule my closing?

Your title company.

39) I am all clear to close except that my FERC Encroachment has not yet been ruled on by the BRA, is there anything I can do to close now?

Yes. If you submit an escrow agreement (see FAQ # 29) and it is approved, you can close ASAP.

40) I have removed the encroachments in the FERC and had my updated survey done to provide evidence, how can I get my FERC status cleared?

Please advise the BRA of this removal and updated survey.

Natalie Kinnaird
Brazos River Authority
PO Box 7555
Waco, TX 76714
pkencroachments@brazos.org
(254) 761-3100

41) Why am I receiving a new lease from the BRA even after I have closed?

The PPKLP resale contract and resale closing effectively transfers the fee simple property and a contingent interest in the FERC Buffer. A contingent interest means that the BRA still owns the land under the FERC Buffer, but if and when the FERC is released the ownership will automatically go to the owner of the that adjacent fee simple. Until then the original BRA lease gives the lessee (or resale purchaser) the rights to use the FERC Buffer. PPKLP assigns each lease to the lessee when they purchase their fee simple property. However, if a resale purchaser's lease expires before the FERC is released they need a new lease with the BRA so they can continue to use the FERC Buffer strip until (and if) the FERC is released.

42) Is it true I have to pay my 2011 lease and trash prior to closing on my fee simple purchase?

Yes. The 2011 lease bills were sent on 12/1/2010 and were due by 1/1/2011. They are now past due and must be paid in full before any other action can be taken on your purchase.

43) I have seen in news reports that the Federal Energy Regulatory Commission(FERC) has approved the BRA’s plan to decommission Morris Sheppard Dam. Does that mean I can get my FERC escrow money back?

Once FERC approves the decommissioning and terminates it's license, FERC will cease it's control, title to the buffer will vest in the lot owner, and therefore no longer be any FERC encroachments and escrow funds will be released. We just don't know when that will actually occur but it is in progress.

If you have a specific question that has not been answered in the FAQ’s please email us. We will return phone calls ASAP, but can sometimes answer emails faster. You can reach Jarod Cox at jarod@pattersonequitypartners.com and Tyler Patterson at tyler@pattersonequitypartners.com