Real Estate Purchases
The College of Agricultural and Environmental Sciences Strategic Resource Master Plan was developed in 2000 and approved by the Board of Regents in 2001. The Plan provides the college, The University of Georgia and the Board of Regents an objective evaluation process to ensure that all college land holdings support the college mission and programs. All proposed land purchases or acquisitions must be consistent with this Master Plan. The acquisition of real estate requires three procedural phases:
- Action by the requesting department to the dean and director
- Action by the University Finance and Administration office
- Action by the Board of Regents and Attorney General’s office.
Action by the requesting department
The requesting department should prepare a program statement, describing how the property would fit into the overall operational program and land use plan of the college and University. A description of the property should be included indicating the size of any buildings, the number of floors, the general type and condition, and the location of the property in relation to other University property. The acreage or size of the land should be stated. The planned use of the property should be outlined in some detail. If more than one function will take place in the area, land or space, information should be submitted in the form of a sketch, floor plan, or drawing. The requesting unit must prepare an analysis and evaluation of other University-owned property that might be available for its use and satisfy the stated need of the unit.
A letter of request should then be prepared, transmitting the foregoing information to the dean and director. This letter should request approval for the proposed program and include the following information:
- Facilities condition analysis of all physical improvements (one original)
- Six recordable surveys
- Legal description
- Color pictures of property
- Location map
- Narrative (in the following numerical outline order)
- Size in acres
- Description of physical improvements on property
- Statement indicating conformance with institution’s master plan including excerpts from Master Plan indicating conformance
- Any known easements, restrictions or reversions on property
- Any restrictions or reversions attached to the acquisition by Seller
- Specific property use of property
- Current location of proposed uses of property
- Justification for purchase including reason(s) why the activity cannot be conducted on existing property
- Specific source of funds
- If a purpose is proposed from a business or corporation, could the property be acquired for no charge if considered as charitable donation? Items to be reviewed include information regarding
- Any outstanding mortgage on the property
- The property’s assessed value relative to fair market value
- An assessment of the property’s salability
- Issues that could lead the owner to viewing the potential purchase as a gift
- Tax assessment of property value
- Any tax liabilities associated with the property. Will the Board of Regents be responsible for any property taxes as a result of the acquisition?
- Any other potential tax issues
- Operating or capital costs associated with the purchase
- Any unusual operating costs as the result of the property acquisition
- Expenses that are anticipated as the result of the property acquisition
- Will the property produce an income? If so, through what means and what organization and operating unit will gain the benefit from the income? Will unrelated business taxes be an issue? Will there be any significant operating cost resulting from the need to manage the commercial leases? What impacts could occur if the commercial enterprises vacate the premises and the commercial space lies vacant? What percentage of the building is devoted to revenue-producing commercial enterprises?
- Are there any potential liabilities associated with the proposed acquisition, e.g., any unusual potential for accident, loss of revenues, or resultant additional costs?
- Any additional information that a prudent person would consider to be relevant or important to understanding and considering the request
The asking price of the property, if known, should be stated. The name of the owner of the property and description of the extent of the contract the department has made with the owner should be included. (It is not desirable to obtain any price commitment from the owner at this point.) The source of funding for the proposed purchase should be included.
Action by the University Finance and Administration Office
After approval, the vice president will forward the request to the Controller’s Office for processing as follows:
- The proposal, as approved by the program vice president, will be reviewed with a focus on the feasibility of other University property being available to satisfy the stated need of the requesting department. After review and determination that no other University property is available, the Controller’s Office will proceed with the steps outlined below.
- Three appraisals of the property will be obtained from official real estate brokers, with separate figures for land and buildings. (The University will be limited to the average of the three appraisal prices.) It is important that a written understanding be made with the appraiser at the time of his initial employment that, if necessary, he will be expected to sustain his appraisal by testimony in court.
- The Controller’s office, together with the requesting department, will obtain a property survey in accordance with instructions which have been distributed.
- The requesting department will negotiate with the seller for a purchase price not to exceed the average of the three appraisals. If the seller accepts the offer, he/she will be requested to execute a purchase option with a consideration of $1 to $10.
- A Phase I environmental site assessment will be secured from a reputable firm. If this study does not indicate any potential environmental problems with the proposed acquisition, then the proposed purchase can go forward. If the study indicates potential environmental problems, the University has two options. First, the proposed acquisition can be abandoned; or, second, a Phase II environmental site assessment can be conducted to determine the extent of any potential environmental problem. A proposed acquisition cannot be made without a satisfactory resolution of any environmental issues.
- The Controller’s office will prepare a transmittal letter recommending the purchase of the property at a specified price and include copies of the survey, appraisals, and the environmental site assessment. The request will include the due diligence information required by the Board of Regents.
- The University unit requesting the purchase will process a budget amendment to fund the proposed purchase price including related legal and survey costs, environmental assessments, etc.
- After approval of the budget amendment, the transmittal letter will be forward from the University to the Chancellor together with two copies of each of the three appraisals; twelve copies of the plat of survey of the property; three copies of the Surveyor’s report; and three executed copies of the purchase option.
- Should the purchase price exceed the average appraised value and the acquisition of the property is deemed essential, the Senior Vice President for Finance and Administration may recommend the purchase at a higher price and state his reasons, therefore. If the purchase price is deemed excessive, the Senior Vice President for Finance and Administration may recommend that the property be acquired by condemnation.
Action by the Board of Regents and the Attorney General
- If the Board of Regents Facilities Office concurs with the recommendation for the purchase of the property, the matter will be presented to the Regents for approval at the next meeting.
- If the Board approves the purchase, the Attorney General will be requested to secure a title policy and a survey of the property, if for any reason the survey has not been obtained.
- The title company will be requested to issue a title binder on the property and forward it to the Attorney General, with copy to the Regents and the University for review and approval by all parties.
- If, after the review of the title binder, the title is found to be marketable, the Attorney General will be requested to close the sale. The University will be represented at the closing by the Attorney General or the attorney employed by the title company to examine the title. A representative from the University may also attend the closing.
- The seller of the property must pay the real estate commission, if any, as well as any accrued ad valorem taxes which may be due on the property to and including the date of the transfer of title, and any other liens or judgments which may exist against the property.
- The University is authorized to pay the usual closing costs, including cost of survey, attorney fees for title examination, title policy, recording fees, etc.
- After closing, the following closing documents will be forwarded to the Regents:
- Warranty Deed covering the property conveyed.
- Title Policy.
- Closing statement paid by title company or closing attorney.
- Statement of charges for survey, title policy, and other closing costs.
- If the closing documents are in order, the original of the deed, title policy, statement of closing costs, and charges will be forwarded to the President of the University and thence to the Controller’s Office for recording of the deed, filing, and payment of charges. Copies of each of the documents are filed in the Office of the Executive Secretary of the Regents.
The time required to complete the entire transaction from the original request by the department until the sale is closed is seldom less than six months and may be longer, depending on the complexity of the transaction. Three months should be allowed from the date of Board approval to the closing of the purchase.
The recommendation to purchase property should be forwarded by the Senior Vice President for Finance and Administration to the Board of Regents according to the submission schedule for all Board of Regents requests for action.