FSH 5409.13 - LAND ACQUISITION HANDBOOK WO AMENDMENT 5409.13-91-1 EFFECTIVE 9/3/91 CHAPTER 10 - LAND PURCHASE 11 - GENERAL GUIDELINES. The following guidelines apply to land purchases under all authorities. Exhibit 01 illustrates general purchase procedures. All negotiations must be guided by Public Law 91-646 (84 Stat. 1894) and 7 CFR 21. 11 - Exhibit 01 11.1 - Preliminary Negotiations. Negotiate only with the actual landowners or their legally authorized representatives. Do not accept proposals from option holders who maybe anticipating sales to the Government at an advance in price. Do not accept proposals from mortgage or lien holders who anticipate foreclosure of such liens; they do not have title and may not obtain title. Consider such proposals only after these prospective vendors have perfected their titles. Properties under option by conservation groups for resale to the Government may be considered (FSM 5420.14i). Obtain information necessary for ordering title evidence and scheduling appraisals during preliminary negotiations. A written offer is not required; however, a written proposal is a convenient means of documenting facts and obtaining permission to enter the property for examination and appraisal. To facilitate case processing, obtain the following information from landowners: 1. Parties Owning Interests in the Tract. Secure the correct name, address, marital status, and authority to sell from every party having any interest in the title in the form that will appear in the option or deed of conveyance. a. For married individuals include spouses. b. For partnerships include all partners and spouses. c. For heirs include all heirs and spouses (and assurance of their consent and approval). d. For administrator, executor, court commissioner, or trustee court order evidence of authority to sell. e. For corporations include minutes of directors' or stockholders' meeting authorizing the sale of real property, and an abstract of the charter or articles of incorporation showing the company may legally acquire and dispose of real estate. Retain this information in the acquisition case folder. f. As of January 1, 1985, anyone who purchases real property located in the United States from a foreign individual or entity must now withhold 10 percent of the purchase price as per the Foreign Investment in Real Property Tax Act of 1980 (P.L. 96-499, 94 Stat. 2682-2690), as amended by the Deficit Reduction Act of l984 (P.L. 98-369, 98 Stat. 494). This involves fee purchases, partial interests, rights-of-way, and land exchanges where consideration is paid by the United States for cash equalization. The burden of proof in determining the nonforeign status ofthe seller rests with the purchaser. To relieve the Government from liability, obtain a certificate or a statement signed by the seller stating the nonforeign status of the landowner. 2. Acreage and Description of Tract. State clearly the acreage and description of the tract. If a reliable metes and bounds description is not available, reference the general location of the tract to well-defined cultural or topographic features and names of adjoining landowners. A deed reference may help identify the offered property when describing metes and bounds tracts using a description other than a survey. Obtain copies of appropriate maps or plats. If the landowner does not accompany the appraiser, try to obtain the assistance of a local resident familiar with the property lines and corners. 3. Character of Property. Obtain information about the general character of the property, including the nature of any improvements, the amount and kind of merchantable timber, the types of land classes (for example, cropland or pasture land), and other elements of value for evaluating the proposal and scheduling an appraisal. Identify the potential liability to the Forest Service for hazardous waste disposal under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, "CERCLA" (42 U.S.C. 9601) particularly old mines and mine tailing sites. If there is an indication of hazardous substances on the property you should: a. Check with the U.S. Environmental Protection Agency, state and local agencies responsible for water pollution control, solid waste disposal, and mined land reclamation to determine whether there are any permits or proceedings involving the land in question; b. Have tests conducted by Forest Service hydrologists, other specialist, or contract personnel to determine whether there are any release of hazardous substances on or from the land which is to be conveyed to the United States; c. Consider including an exception to the exchange or option agreement which would allow the United States to reject the land if hazardous substances are found prior to closing; and d. Consider including a provision in the agreement andany deed to the United States which would warrant that there are no deposits of hazardous substances on the land and that the proponent or donor will indemnify the United States against any expenses, claims, proceedings, or judgments arising out of any such deposits of hazardous substances or releases from such deposits. 4. Conditions of Offer. Define the terms of any outstanding rights and proposed reservations. Retain copies of the instruments creating the outstanding rights in the case file. Evaluate outstanding rights and reservations to ensure that they do not make acquisition undesirable (FSM 5470). In some cases, it may take several discussions to resolve questions about proposed reservations. Landowners may try to impose conditions that could adversely influence the market value of the offered property. If such conditions are administratively and legally acceptable, inform the landowner that the appraiser must consider the effects of the proposed conditions in the appraisal and that these reservations may reduce the market value of the offered property. Make every effort to take options free of reservations. Review with the landowner any imposed conditions that include the reservation of rights to which the Secretary's rules and regulations apply (FSM 5470) to avoid later misunderstandings and to determine if the application of the regulations will influence the purchase price. Certain proposed conditions may be legally or administratively unacceptable. Reject offers containing legally unacceptable conditions. Consider offers subject to administratively undesirable conditions, only if overriding public advantages may be gained. Reject proposals containing administratively unacceptable conditions. Examples of legally or administratively unacceptable conditions are those that (1) obligate future appropriations, (2) require payment by specific dates, (3) require preferential treatment of applications for permits to use National Forest land, to purchase resources, or for employment, or (4) reserve rights that might unduly interfere with property land management or seriously impair values. Determine whether there are any mortgages, tax liens, or other liabilities against the title. Make this information part of the case file. Discuss the proposed sale with the mortgagee or lien holder to resolve any potential problems and to facilitate closing arrangements. Liens must be released before the property can be acquired. 5. Purchase Procedure. Inform the landowner that: a. Neither acknowledgment of the landowner's offer or proposal for consideration nor a recommendation for further consideration obligates the Government to purchase at the stated price or make an examination or counteroffer. b. Option acceptance does not commit the Government topay within a specific time; the option period is merely the time in which the Government decides to accept or reject the option. However, prompt payment and closure areimportant. c. If the tract is purchased, the Government can make payment only after the title is approved and the deed accepted. d. Title evidence and surveys are the responsibility of the Government. e. There are several procedural steps through which the case must pass (sec. 11, ex. 01). Estimate the time required before title approval and payment can reasonably be expected. f. Describe those actions for which the landowner is responsible. g. Promptness in meeting the landowner's requirements and cooperation in clearing title difficulties greatly reduces the time required to close a case. h. Joint property inspections must be made in accordance with Public Law 91-646, whenever possible. i. When eligible, the landowner or tenants should apply for benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, P.L. 91-646 (FSM 5420.14b). j. Tenants are not required to move until housing is available (PL 91-646, 84 Stat. 1894). 6. Other Considerations. The landowner may volunteer an asking price. If so, use this price to evaluate the offer and include it in the case file. If the Forest Service has done a recent appraisal in the area, discuss the range of prices for the types of properties to avoid unnecessary expenses and wasting time on proposals priced above a reasonable range of market values. However, do not discuss any price estimates for the offered property until an appraisal is approved (FSM 5404). Inform the landowner of the tentative schedule for examining the property and making an offer. Keep the landowner informed of any changes. Inform the landowner about negotiation policies and relocation benefits under Public Law 91-646, and of the approval and oversight requirements and how they affect case processing. Obtain the landowner's permission for Forest Service representatives to enter the property to examine and appraise it. If possible, obtain this permission from the landowner in writing. If written permission is not obtained, place a statement in the case file documenting when verbal permission was granted and who authorized the inspection. A letter to the landowner confirming verbal arrangements helps document permission. The landowner, whenever possible, should accompany the appraiser examining the property. Determine whether the offered tract includes cultivated land. If so, notify the local office of the Agricultural Stabilization and Conservation Service to determine the effect of the sale on the landowner's allotment for price-supported crops. Determine the source of the landowner's title and the length of time the landowner or tenant has occupied the property. Ensure that the landowner's deed is recorded. 11.2 - Evaluation of Offers. To avoid lost time, guard against considering offers on tracts with bad titles. When feasible, Forest Supervisors should obtain a preliminary title binder for all tracts considered for purchase before investing time and money in examinations and appraisals. If the workload or other factors do not permit obtaining a preliminary title binder of all tracts before examination, give special attention to cases appearing to have title questions. Compare proposals with land management and landownership plans. If the proposed purchase is not within the guidelines of an approved plan, the Regional Forester mustapprove the purchase before beginning acquisition procedures. Acknowledge offers promptly. Inform the landowners whether their proposals are accepted for further consideration, rejected, or whether more information is needed. Reject proposals if: 1. The proponent is not the actual landowner or the landowner's authorized representative. 2. The land is outside of the area within which purchases are authorized. 3. The price is unreasonable. 4. The conditions of purchase would unduly interfere with management of the land or impair its value. 5. The tract is so isolated from other acquired or acquirable land as to prevent early consolidation. 6. The title is too defective for direct purchase, and circumstances do not warrant condemnation to clear the title. If funds are insufficient for early acquisition, or if acquisition seems questionable for other reasons, refer the offer to the Regional Forester recommending acceptance or rejection. If a case is acceptable, assign a tract number and schedule the acquisition in the forest work plan. 11.3 - Title Evidence. Title evidence for Forest Service land purchases normally consists of a title insurance policy issued by a title insurance company on the Attorney General's approved list (FSM 5424). A certificate of title also is acceptable. Usually title evidence is obtained in two stages. The Regional Attorney first issues a preliminary title opinion based on an interim title binder or commitment to insure from the title insurance company. After the deed is recorded, the title insurance company issues a final title insurance policy and the Regional Attorney prepares a final title opinion authorizing payment to the landowner for the property. When feasible, obtain the preliminary title evidence in theappropriate form before the property is appraised to ensure that negotiations are with the owner of record and to define the estate to be appraised. Develop procedures to ensure rapid processing of requests for preliminary title opinions. The Forest Service bears the cost of obtaining the necessary title evidence. If the landowner has title evidence and makes it available to the Forest Service, Office of the General Counsel (OGC), or title insurance company, accept the evidence. The OGC determines whether the title evidence meets the requirements of the Attorney General. Cooperate with OGC in procuring title evidence and curative material; obtain signatures on deeds, secure addresses, and provide affidavits when Forest Service personnel can perform such functions more economically. The objective is to obtain necessary title evidence in the shortest time and at the lowest cost. Correlate needed land surveys with procurement of title evidence. 11.4 - Appraisals and Subsequent Negotiations. Public Law 91-646 requires the acquiring agency to offer landowners just compensation, which can be no less than the agency's approved appraisal of fair market value. Therefore, if the preliminary title work affirms the owner's title, the next step is to obtain an appraisal (FSM 5410). Negotiations formally begin on the date the Forest Service furnishes the landowner or representative a written offer to purchase the real property (P.L. 91-646). Try to reach a mutually satisfactory agreement on all matters that influence the transaction, within the limits of law and policy. Employ such techniques as deferred payment procedures and the assistance of interested conservation agencies (The Nature Conservancy, Trust for Public Lands, Izaak Walton League) to resolve particularly difficult problems. Follow these guidelines when negotiating the acquisition of property: 1. Give the landowner a brief written summary explaining how the value of the property was determined and quoting the approved appraised fair market value. 2. Remind the landowner of the benefits available to owners under Public Law 91-646. 3. Do not volunteer Forest Service appraisals. Any request for disclosure of appraisals must be in accordance with the Freedom of Information Act of February 19, 1975 (88 Stat. 1561) (FSM 6270). 4. Avoid arguments. Concentrate discussions on the facts of the offer. Reappraise the property if the landowner points out items not considered in the appraisal. Also review appraisals the landowner obtains and offers to the Forest Service to ensure that the Forest Service estimate of just compensation accurately reflects all elements of value. Allow more time if the landowner does not immediately accept the offer; however, when it becomes evident that the owner is not going to accept the offer, drop the case or recommend it for condemnation. 11.41 - Negotiation Policy for Acquiring Property Under Threat of Condemnation. After the Chief approves acquisition of an individual property or project under the threat of condemnation (sec. 72.1), proceed with the following one-offer negotiation process: 1. Advise each landowner of the acquisition plans and the purposes for which the properties are to be acquired. Do this in person rather then by letter, if possible. Discuss the appropriate provisions of Public Law 91-646. During this initial contact request permission to enter theproperty for survey, appraisal, or other preliminary purposes. If possible obtain permission in writing. If this is not possible, confirm verbal permission in a letter to the landowner. Send a letter to the landowner documenting the contact and summarizing the plans for acquisition and the public purposes requiring the acquisition. Enclose a copy of the Department of Justice booklet on just compensation in the letter. 2. Obtain preliminary title certificates or interim title insurance binders, complete the necessary surveys, and appraise the property. Because the Forest Service may acquire the property by condemnation, select the appraiser in cooperation with the U.S. Attorney through the Regional Attorney. 3. Finally, offer the approved appraised fair market value of the property to the landowner. Make this the only offer of price, unless subsequent negotiations result in changes in the estate to be acquired or errors are found in the appraisal. Furnish an option to the landowner for signature at this time. 4. If the offer is accepted, forward the case for approval. 5. If the offer is not accepted and acquisition is required, recommend the case for condemnation. If the landowner proposes a reasonable counteroffer, forward such offer to the Washington Office Lands Staff for review (FSM 5404.13b). 11.5 - Land Purchase Options. When all parties have agreed upon the terms of the purchase, document the terms in a contractual land purchase agreement that fixes the terms and conditions while preparing for closing. Documenting the terms in a land purchase contract is a common private market practice. It prevents later disagreements over the terms of the sale and ensures that the time and funds spent on closing arrangements (such as case approval, cadastral surveys, title work) result in an acquired property. Except in unusual cases, use Form FS-5400-36, Land, Waters, or Interests in Land or Waters Purchase Option and Contract, for all land purchases. In unusual cases, the appropriate field office of the Office of the General Counsel shall prepare the option or approve proposed formsbefore the landowner executes them. The land purchase option is a continuing offer to sell fora stated period, identifying the property to be sold, showing the price, and defining the terms and conditions governing the transaction. It gives the United States the right to elect to accept the option to buy and states the period during which such election must be exercised. Do not include in the option any payments for relocation costs or any reference to such payments. Exercise care in defining the terms of the option. The Regional Attorney must approve any changes in the wording before the option form is signed by the landowner. The option becomes a binding contract on both parties when accepted by the Secretary of Agriculture or an officer acting on behalf of the Secretary (FSM 5404). No officer of the Government has authority to terminate, amend, or revise the option contract, except in the interest of the United States (22 Comp. Gen. 915; 18 Comp. Gen. 114). Consequently, it is essential that both parties fully understand all the conditions and terms of the transaction, and that these terms and conditions be completely and understandably written into the option. The entire option contract must be in writing. 11.51 - Option Preparation. Prepare the option form FS-5400-36 as follows: 1. Type in the appropriate acquisition authority. 2. Complete the case designation in the upper right-hand corner. 3. Insert the landowner's name (in the form in which record title was acquired, if known) and address, as it is to appear in the deed of conveyance. 4. Under item 1, insert the price per acre or lump-sum price. In lump-sum options, strike out the words "per acre" after amount shown on second line under item 1. (Landowners must initial this change.) 5. Under item 1, insert the county, or counties, and State in which the land is located, and the area by acres. 6. If necessary, use the space between items 1 and 2 to include the name and mailing address of the individual(s) who is to receive notice of option acceptance. 7. Under item 5, include a description of the land asit appears in the deed of conveyance, a reference to an attached description, or other terms and references to adequately describe the specific lands offered by the landowner. 8. Under item 5, complete the second part by including reservations by the vendor, outstanding rights, or other exceptions in title. Complete a preliminary title review to determine outstanding rights before an option is taken. 9. Under item 7, strike out the words "per acre" for lump- sum options. (Landowners must initial this change.) Do not refer to outstanding mortgages on the property because it might be construed that the Government will acquire the property, subject to a mortgage and, thus, assume the property's payment responsibility. For acquisitions under the Weeks Law and related acts amend the form before the landowner executes it by typing the following statement in the space on the lower left-hand corner on the back of the form: Approved by Approved by Chief Secretary or USDA - Forest of Agriculture Service (44 F.R. 57907) Date Date The Secretary of Agriculture approves Weeks Law and related acts cases of $25,000 and larger (7 CFR 2.60). The Chief approves cases under $25,000. Approval must be obtained before option is accepted. 11.52 - Option Execution. The land purchase option calls for a payment of $1, the maximum allowed by law (Act of August 3, 1956; 70 Stat. 1034). In the case of several owners, as in an estate, the dollar would be paid to the individual with power of attorney. If the owners have not designated an attorney-in-fact, the negotiator decides who should receive the $1. Landowners should sign their names on the option in the same form, spelling, and preferably, order as they appear in the first sentence of the option. The landowners must sign and date the original and two copies of the option. Have each signature witnessed by two persons; at least one witness should be someone other than an employee of the Government. Where it is required by State law, or is practical, the landowners and witness should sign the option before a notary public. It is sometimes necessary to prove the authenticity of options; consequently, make sure all witnesses are responsible persons who can be located later, if required. If State law requires only one witness to make the option enforceable, state this fact in the transmittal letter and give the citation for the State act. If two persons witness several signatures, they do not need to sign by each signature. The witnesses may sign once with a notation that they are witness to all signatures. Obtain evidence of authority of individuals to sign in representative capacities; such evidence usually takes the following forms: 1. Attorneys-in-Fact. Original or certified copy of power of attorney executed by each person in interest. 2. Administrators. Certified copy of appointment and of court order authorizing sale. 3. Executors. Certified copy of appointment and will and, where necessary, court order authorizing sale. 4. Guardians. Copy of appointment and court order authorizing sale. 5. Commissioners or other Officers of a Court. Copy of court order of appointment and authorization to sell. 6. Corporate Officers. Corporate seal and attest by secretary of corporation. Also, copy of bylaws or minutes of stock holders' or directors' meeting certified to by the corporate secretary authorizing sale and conveyance of the land by the proper corporate officers. 7. County Clerks or Commissioners. Copy of the resolution or minutes of meeting by the county commissioners authorizing disposal of the land by the proper county official. 8. Trustee. Copy of document creating the trust and appointing the trustee. Options executed by married persons must be signed by both the wife and husband, unless the property is individually owned and the signature of the spouse is not required under State law. Document the authority for a married person to sell the property in the individual's own right in the transmittal letter. 11.53 - Submission Requirements. Submit the following items to the Chief for case approval: 1. A letter from the officer recommending acquisition that: identifies the fiscal year acquisition funding source, discusses unusual features of the purchase, documents compliance with the National Environmental Policy Act, lists enclosures, and recommends the timing for the acceptance of the option or case. 2. The original, one carbon, and one machine copy of the option (Form FS-5400-36, Land, Waters, or Interests in Land or Waters--Purchase Option and Contract). 3. A copy of the notification letter to the appropriate local government officials. 4. Copies of letters to the congressional delegation notifying them of the proposal. 5. A map showing the location of the offered property and National Forest lands in the area. Use a letter size portion of a 1/2 inch = 1 mile Forest Service administrative map. 6. A digest sheet (Form FS-5400-9, Proposed Land Purchase). Provide complete, succinct statements about outstanding rights and reservations and the benefits of acquisition. Emphasize the primary public benefits, consistent with the acquisition authority and funding source; however, other public and administrative benefits should also be mentioned. 7. The appraisal review. 8. Certificate of compliance with Public Law 91-646. 9. Land and Water Conservation Fund in holding and composite cases over $150,000 should also include: a. Two copies of the appraisal. b. A statement describing the benefits of the acquisition. 11.54 - Changes or Attachments to Options. To enforce an option, all individuals who have signed the option, including witnesses, must initial all copies of the following: (1) changes in the printed form, (2) erasures, or (3) attachments to the form. If major changes are made after the landowner has signed the form, have a new form executed. 11.55 - Actions on Signed Options. 1. Forest Supervisor. The Forest Supervisor reviews the execution, substance, and form of option and makes appropriate entries on case records maintained in the office. The Forest Supervisor forwards the original and first signed copy of the option to the Regional Office Lands Staff, together with two machine copies and other required case documents. The landowner retains the second copy with an original signature. Keep a record copy in the Superviso's Office. 2. Regional Office Lands Staff. Lands Staff performs the following: a. Checks the option for price and conditions of purchase. b. Ensures that (1) the description agrees with other case information, (2) conditions of the purchase are clearly stated, and (3) the form and content of the conditions of purchase are in accordance with requirements. c. Checks the execution as to date, signatures of parties, and evidence of authority. d. Checks attachments to ensure deeds or contracts define outstanding rights, comply with rules and regulations, and provide evidence of authority of all persons not acting in their own right. e. Ensures the case conforms to State consent acts and any applicable provisions of the current appropriations act. Ask the field office of the Office of the General Counsel to review and approve all options containing other than normal clauses. If the option is not acceptable, return it to the Forest Supervisor for appropriate action. If the option is acceptable, (1) enter case data in Regional Office progress records; (2) prepare a digest of the report on Form FS-5400-9, Proposed Land Purchase, and compare the tract report and option; and (3) recheck the case to eliminate differences between the tract documents, option, and digest. 11.56 - Modification or Cancellation of Options. The Forest Service may modify options before acceptance, when it is in the interest of the Government, and with the consent of the landowner and approval of the Forest Supervisor, Regional Forester, or Chief, within the limits of their respective authorizations (FSM 5404). The landowner and witnesses must initial corrections or changes that do not require reexecution of the option. When it is in the interest of the Government, the Forest Service may cancel options before acceptance, with or without the consent of the landowner. If an option expires before approval and election to purchase, and acquisition of the land is still desirable, seek an extension of time from the landowner. Provide written evidence of the extension in the following format and attach to the option: In consideration of the stipulations and provisions of the option executed by me (us) as the vendor(s) on , and other good and valuable considerations, hereby I(we) extend the same for a months. period of (SEAL) (Witness) (Vendor) Date, sign, and witness or notarize extensions with the same formality as the original option. Where the landowner requests a modification or cancellation of the contract, the Regional Forester shall submit to the Chief for final decision a report that includes the circumstances and facts and recommended action. Do not return option contracts to the landowner without the Chief's approval of the recommended action. 11.57 - Option Contract Adjustments. Inadequate information about tracts, or a long interval between the option date and conveyance, may produce closing obstacles that must be removed. If a condition is found that has not been specifically covered in the authorization to purchase, either remove the condition or modify the authorization. If any occurrence between the approval and consummation of a case reduces the value upon which the price was based, reduce the price accordingly. The most effective way to prevent such complications is to initiate early title investigation to ensure accurate options and to expedite conveyance after the option is accepted. Examine records to identify outstanding rights created in the past that are matters of record but frequently may be unknown to the landowner. Long delays in closing cases also multiply the possibilities for title problems resulting from forfeitures and foreclosures for tax liens, mortgages, or debts that the landowner is unable to meet without selling property rights, such as timber, or part of the tract. The following conditions may require adjustment of the option: 1. Outstanding mineral rights. (FSM 5470). 2. Outstanding timber rights. (FSM 5470). If the outstanding timber rights have not been exercised, the landowner could obtain a release. If the landowner cannot obtain a release, the landowner could agree to a reduction in price or other compensating concession and resubmit the case for approval. Base the change in price on a reappraisal of the property in accordance with appraisal procedures in FSM 5410. 3. Outstanding Rights-of-Way and Easements. (FSM 5470). 4. Acreage Shortage or Excess. With per acre options, the authorization to purchase a tract of given acreage carries with it the authority to purchase a different acreage if so determined by survey. Per acre options will not be accepted until after the survey is completed and the correct acreage determined. Consider the effect the change in acreage has upon the value of the land upon which the price is based. Unless the quality and value of a tract are uniform, changes in acreage may affect appraised value by eliminating the more valuable portion or including more lower-valued land. Be aware that the appraised value of the tract may be reduced to a point where it no longer supports the optioned price or may be increased to the point that Public Law 91-646 would require a new offer. Whenever the acreage shown in the surveyor's certificate differs materially from the optioned acreage, the Forest Supervisor must determine whether the value of the tract has been significantly changed. If a value changes significantly, submit the case to the Chief with the Regional Forester's recommendation. The Regional Forester or Forest Supervisor submits Form FS-5400- 16, Acquisition Change Slip, to the Director of Fiscal and Public Safety, or equivalent, whenever there is an obligation or acreage change. Prepare sufficient copies of Form FS-5400-16, Acquisition Change Slip, for the various offices. Document changes in the conditions of the purchase on a revised Form FS- 5400-9, Proposed Land Purchase, and submit it to the Chief. See FSM 5404.13a for Weeks Law and Related Acts requirements. 11.58 - Modification of Payment Due to Damages. Clause 6 of the option form, FS-5400-36, states that the vendor agrees not to perform, or suffer others to perform, any act that diminishes or encumbers the value or title to the land. In addition, the landowner must bear any loss or damage to the property resulting from the unauthorized cutting or removal of products, the removal of minerals or other natural resources, fire, or acts of God, that occur before the vesting of satisfactory title in the Government. In the event such loss or damage occurs, the Government may refuse, without liability, to accept conveyance of the land, or it may elect to accept conveyance, if an equitable adjustment is made in the purchase price. Therefore, if an optioned property suffers a loss in value, carefully review the situation and recommend to the Chief whether to proceed with the purchase at the reduced price or to drop the acquisition. If the Chief decides to proceed with the case, obtain a signed letter from the landowner acknowledging the loss and accepting the reduced price. A new or revised option is not needed because clause 6 provides for the reduction in price under these conditions. If the landowner does not agree to a reduced price, the Regional Forester must recommend whether it is in the public interest to enforce the terms of the option in Federal court. Investigate and appraise the damage using the same methods as in trespass cases (FSM 5330). If timber has been cut, as certain through a stump count or other approved method the amount of material, by species, removed or left on the ground. Try to obtain a statement from the person receiving the timber as to the volume and delivered price. Base the evaluation of the damage on market value reduction resulting from the loss as applied to the entire tract. Describe in detail the circumstances of the case, including the name of the agency responsible for the damage. Where timber cutting is involved, ascertain the name or names of the persons actually cutting the timber and whether such persons were employed by the landowner or were acting under a contract or license. Promptly advise the landowner and any other person engaged in timber cutting or acts of damage to immediately terminate these actions. After completing the investigation, the Forest Supervisor submits a report to the Regional Forester, describing the nature, time, and extent of damage. Based on the Supervisor's report, the appraiser shall revise the appraisal to reflect the changed conditions. The Regional Forester determines responsibility for the damage. 11.59 - Recording Land Purchase Option and Contract. Because of uncertainty of the landowner's intentions, it is sometimes desirable to record the option which gives legal notice to all possible buyers of the land that it is covered by an agreement with the United States and that sale of the land is subject to the terms of the agreement. Forest Supervisors are authorized to make payment for recording the option contract. Discuss the need and procedures for recording the option with the Regional Attorney before the document is recorded. If the Forest Supervisor can not record the instrument without acknowledgment, have the landowner execute an acknowledgment, whenever possible, or have an affidavit prepared acknowledging the option contract. In such cases, record the accepted option to show that the option to purchase has been exercised. 11.6 - Surveys and Status Checks. 11.61 - Surveys. If adequate legal descriptions are not available, conduct property line surveys promptly. Ensure purchase plans and budget requests include survey needs. Use qualified contract surveyors if Forest Service crews are not available. Determine the nature, extent, and timing of the contract survey workload in the area to be acquired. Prepare the contract for advertisement when it appears an option may be negotiated. Landline surveys necessary to provide for acquisition of the tract may be paid from the acquisition appropriations that authorize purchase of the land. Have the property line surveyed and staked and the description and plat prepared immediately after the option is accepted. Have the painting, posting, and corner monumentation done after the deed is recorded. 11.62 - Status Checks. The Regional Office Lands Staff handles status checks. Request needed patent records from the appropriate Bureau of Land Management office. 11.7 - Case Approval. Forest Service case approval is at the level of option acceptance authority (FSM 5404); the option acceptance serves as case approval. All cases without options must receive the Chief's approval in writing before a check is issued. Before such approval, a variety of external reviews, approvals, and oversight requirements may be required (sec. 11, ex. 01). 11.71 - Actions Upon Approval. 1. Lands Staff, Washington Office. The Director of Lands, or the designated acting director, accepts options on behalf of the Government when the authority is retained in the Washington Office. The director or designated acting director accepts and returns by certified mail the original and one signed copy to the Regional Forester. 2. Regional Foresters. a. Place the original of the option in the case folder or send it to the Forest Supervisor to support the voucher if payment is not made within the required obligation period. b. Send the second executed copy to the landowner by certified mail, return receipt requested, with a letter stating that the option has been accepted by the government, and inform the landowner of future actions necessary to close the purchase. Deliver by hand if the landowner cannot be notified by mail. The landowner must receive notification of option acceptance within the option period in order for the contract to be binding. Should a landowner refuse to accept the executed option, document the refusal in the case file. The Regional Forester may delegate to the Forest Supervisor the responsibility for delivering the accepted copy of the option to the landowner. c. Send a certified machine copy of the accepted option to the Regional Attorney. Make appropriate entries in case records, maps, and atlases. 3. Forest Supervisors. a. Complete needed surveys promptly. Lump-sum options for properties requiring a survey will not be accepted until the survey is completed. b. Make the appropriate entries in the case record and acquisition map, status atlas, and other records. c. If warranted by the circumstances (sec. 11.59), record the option contract. Most States require acknowledgment before they will record a document. 11.72 - Administration Following Acceptance. Option clause 4 provides for entrance onto the tract by Forest Service representatives. Exercise this right only when inspection, surveys, and plan preparation are required before case closing. Avoid disturbing the surface of the land. 11.8 - Obligations. See also FSH 6509.11k, section 13, and 17 Comp. Gen. 664. An obligation against an appropriation is established by any of the following: 1. An option to purchase that is accepted by an authorized Government official. 2. A formal purchase agreement signed by the grantor and an authorized Government official. 3. An approval of the purchase case and acceptance of deed of conveyance from the grantor to the United States. 4. A Declaration of Taking signed by the Secretary of Agriculture or designee to institute condemnation proceedings. 11.81 - Date of Obligation. The point in time at which a land purchase becomes an obligation against funds varies with the procedure by which the acquisition is made. In land acquisition, consider the following in establishing the time of obligation: 1. When an option is accepted within the option period, the obligation date is the date the option is accepted by the authorized representative of the Government. 2. When no option is taken, the obligation date is the date a formal agreement is executed and delivered by the grantor. When there is no formal agreement, the obligation is the date of acknowledgment and delivery of a valid deed of conveyance. 3. When the land is acquired through condemnation proceedings using a Declaration of Taking, the obligation date is the date that the Secretary of Agriculture or designee signs the Declaration of Taking. The only exception is when the condemnation is a continuation of the action started under the option. Under those circumstances, the obligation date is the date the option was accepted. When a complaint in condemnation is used, the obligation date is the date the court awards compensation. 11.82 - Funds To Be Obligated. Funds authorized for land acquisition must be available during the fiscal year in which the obligation is established. In condemnation cases, make sure sufficient funds are available to meet anyreasonable excess costs awarded by the court. In condemnation cases to enforce an option, the amount of the award, in excess of the amount available in the appropriation obligated by the option, may be expended from the funds available at the time the Secretary of Agriculture or designee requests condemnation. Use funds authorized for land purchase in that fiscal year or carryover funds for condemnation cases where the obligation was established by the Declaration of Taking. If the award exceeds the amount set aside, make up the difference from carryover funds or current year appropriations for the project. Funds for deficiencies are occasionally identified as a line item for Land and Water Conservation Fund moneys. Receipts Acts appropriations are annual appropriations and do not carry over. If enough money is not available, a funding request must be sent to Congress. Occasionally, checks may be vouchered in advance of the obligation dates when there are simultaneous (over-the-counter) closings without an option or other special circumstances. This advanced vouchering procedure does not create an obligation and is treated as an advance of funds. Since these funds have not been obligated, the Chief may withdraw them. The Regional Forester must be prepared to provide a daily accounting of advances. Because of the additional recordkeeping and controls required by this procedure and the potential adverse effects on negotiations if funds are withdrawn, use options to obligate funds. Advance funds for closings only in unusual circumstances. This is not to be used as a routine procedure; use only where there is no feasible alternative for acquiring the property. 11.83 - Termination of Obligations. Evaluate each case individually in which the obligation is to be terminated by actions other than payments. However, an obligation remains in effect until: 1. It is paid. 2. The contract on which the obligation is based is terminated without possible liability to the Government. 3. Under condemnation proceedings, action is taken to relieve the Government from any liability under the award or the proceeding is discontinued by order of the court. 11.9 - Closing Acquisition Cases. Three basic procedures are available for making payment and closing acquisition cases: (1) payment based on the final opinion, (2) payment based on the preliminary opinion, and (3) condemnation with the approval of the Secretary (FSM 5480). Coordinate closings with the Office of the General Counsel (OGC). Procedures for the flow of curative data and other instruments between the forest, the Region, and the OGC's field office vary by Region. Regional Foresters shall provide direction for this coordination action by supplement to this handbook and FSM 5420 making sure all Regional instructions conform to the Department of Justice publication "A Procedural Guide for the Acquisition of Real Property by Governmental Agencies." 11.91 - Payment and Closing on Final Title Opinion. This procedure is the most economical method of closing because it requires only one title approval. Payment may be mailed, eliminating the need for formal closing with all interested parties present. The Office of the General Counsel's (OGC) Bulletin No. 382 of May 29, 1974, delegated title approval to Regional Attorneys and Attorneys in Charge. The use of OGC in this section refers to the Regional Attorneys and Attorneys in Charge. Follow these procedures for closing acquisition cases: 1. The Regional Forester or Forest Supervisor forwards the title binder and other title papers to OGC for preparation of the title assembly as early as possible. The title papers, in duplicate, should include: (1) option, (2) title binder, (3) survey plat or description, (4) Form FS-5400- 37, Certificate of Possession, (5) Form FS-5400-29, Certificate of Use and Consent - For Purchase, Donation, and Land Exchange, and (6) a copy of certificate of compliance (P.L. 91-646). 2. The OGC shall review the title evidence and related papers to determine if the title is acceptable. If not, OGC will take appropriate action to correct the deficiencies, using Forest Service personnel as needed to obtain the necessary curative data. The OGC prepares affidavits, quitclaim deeds, or other legal documents, and describes the facts the documents will establish. The OGC simultaneously may prepare the deed of conveyance to the Government. An appropriate Forest Service officer certifies in the margin of the first page that the description, acreage, consideration, and conditions of purchase agree with the purchase contact. 3. When title is acceptable, OGC authorizes the deed to be executed by the landowner and recorded by the Forest Service. Record the deed to the United States in all counties in which the land being acquired is located. The Government shall pay for recording fees and may make payment by any procedure acceptable to the county clerk and the Regional Director of Fiscal and Public Safety, or equivalent. The Forest Service notifies the taxing officials when the deed is filed for record so the land may be removed from the tax rolls and listed as Federal land. The landowner pays all State and local transfer taxes and all State documentary stamps as required by State law. The Government shall reimburse the landowner for expenses incidental to transfer of title in accordance with Public Law 91-646 (84 Stat. 1894; FSM 5420.14b). Prepare Form FS-5400-38, Supplemental Certificate of Possession, dated on or after the date the deed is recorded and have the title evidence brought up to date to show title in the United States. The Regional Forester recommends administrative approval of the title, subject only to the reservations by the landowner, rights outstanding in the chain of title, and use and occupancy rights. 4. The OGC reviews the evidence of title with related title papers and sends the final title opinion and related title papers to the Regional Forester. Occasionally, a conditional final opinion will cite actions required to satisfy tax liens, mortgages, deeds of trust, judgments, and other encumbrances. These title curative costs may be paid as part of the purchase price. The OGC furnishes the Forest Service with copies of all correspondence pertaining to the land acquisition case. Distribute copies to the District Office, Supervisor's Office, and the Regional Office. Landowners occasionally employ, at their expense, escrow agents to facilitate the closing of a land exchange or purchase case. Escrow closings protect the interests of the Government when a landowner has not executed a land purchase option and provide a means to use purchase funds to pay tax liens, mortgages, and other encumbrances. The OGC must approve all escrow closings and provide the necessary forms and instructions. 5. Upon receipt of the payment-for-land memorandum and title assembly from the OGC, the Regional Forester shall review the title papers and take the following actions: a. Complete a certification that documents the following: case name, tract number, county, National Forest, acres, land cost, and dates for deed recording, deed signed, preliminary and final title opinions, and payment. If a property lies in two or more counties, break out the acreage and land cost by county. Send this certification to the Director of Lands, Washington Office. b. Place the original of the OGC final opinion and deed in the title file. c. Transmit a copy of the title assembly to the Forest Supervisor's Office, together with copies of the final opinion (one certified true copy for use in voucher preparation), and two copies of the OGC memorandum that authorizes payment. d. Review the title papers, including the OGC's transmittal letter, opinion of title, the option-contract, and other relevant information so that all title papers are available for review by the Post Audit Section, General Accounting Office if requested. e. Check all documents and clear the land payment voucher. See FSH 6509.11k, chapter 40, for payment procedures. 6. Follow FSM 5490 and FSH 6209.11 for the disposition of records. 11.92 - Payment and Closing on Preliminary Title Opinion. The procedures described in this section provide a means of (1) obtaining a title opinion in advance of the execution and delivery of the landowner's deed to the Government, (2) paying for land simultaneously with its conveyance to the United States, (3) purchasing land from public agencies and other vendors that cannot legally enter into an option contract or transfer title before payment, and (4) providing vendors with a convenient procedure for paying off mortgages before conveying title to the United States. When using these procedures, initiate action on a preliminary title opinion after the landowner signs the option or other suitable agreement. On receipt of a favorable preliminary title opinion by the Office of the General Counsel (OGC), completion of the title requirements, and acceptance of the option or other agreement for the United States, record the deed and make payment. See "A Procedural Guide for the Acquisition of Real Property by Governmental Agencies" for further explanation of the procedures (pages 15 to 20). 1. The OGC reviews the title evidence; prepares a deed to the United States (an appropriate Forest Service officer checks and certifies the deed); and sends a preliminary title opinion to the Regional Forester. 2. Upon receipt of the preliminary opinion, the Regional Lands Staff checks and clears the land-payment voucher for payment, ascertaining that the payees named onthe voucher are the same as the landowners who have title or their agents. The Forest Service orders the check and the OGC designates where it is to be delivered. 3. The field office of the OGC that issued the preliminary opinion handles the closing, but qualified personnel at the forest level usually conduct the closings, under OGC supervision, as follows: a. Notify all involved parties of the place, date, and hour of closing, and explain what will be expected of each party. b. Ensure that use or possession of the premises are the same as when the property was originally examined. c. Check the county records for the period since the last certification of the title evidence to determine whether any new matters have been recorded or filed that could affect closing arrangements. d. Arrange for deed execution, recording, and payment for the property. The procedure for payment varies depending on the settlement of mortgages, tax liens, and other monetary encumbrances (FSH 6509.11k, chapter 40). Pay the vendor as soon as all of the conditions of the preliminary opinion have been met. 4. When the deed to the United States is recorded and payment made, OGC assembles the final title docket and sends the final title opinion to the Regional Forester. The remainder of the title approval procedures are the same as section 11.91. 11.93 - Closing by Condemnation. See chapter 70 for condemnation procedures. 11.94 - Deferred Payments. Limit deferred payments to purchases that can only be acquired from a landowner willing to sell when payment is made over a period of years. The landowner must sign a statement in the format indicated in exhibit 01. Attach this statement to the option. Deferred payments may be arranged for cases closed on deeds where an acceptable option cannot be obtained. In these situations, have the landowner execute a deferred payment agreement, similar to exhibit 02, before preparing the first payment voucher. The Forest Supervisor or designated representative shall sign the agreement on behalf of the Forest Service when the initial payment is made at closing. Ensure funds are available and obligate the entire purchase price at the time the option is accepted, or in the absence of an option, when the first check is vouchered. If landowners require that deferred payments be a certain percentage of the sales price, properties optioned on a per-acre basis may require an approved survey before a deferred payment schedule can be developed. Be sure the landowner understands that the maximum payment period is limited to 4 years, payments will be made annually, and emphasize that no interest will be earned or paid on the unpaid balance. Give no assurance as to how the Internal Revenue Service (IRS) will treat the deferred payments; and always recommend that the landowner contact an attorney, the IRS, a certified public accountant, a tax accountant, or bookkeeper before deciding on a payment schedule. Outstanding mortgages, title problems, or other unforeseen delays could complicate closings under deferred payment procedures; therefore, obtain preliminary title opinions before recommending acceptance of options subject to deferred payment schedules. Deferral of payment does not affect the vesting of title in the United States to the purchased land. 11.94 - Exhibit 01 Deferred Payment with an Option Vendor (Name) Tract (Number) No Unit (Forest) Deferred Payment Attachment I(W- (Landowner) o (Address) hereinaf- e) f ter called the vendor, agree to sell the property described in the attached option only on the condition that the purchase price be disbursed in deferred payments with no interest accruing on the unpaid balance. (amount) The first payment of $ shall be made on a schedule required by Forest Service closing procedures. Subsequent payments shall be disbursed within 45 days of the following schedule: (List schedule) Vesting of title in the United States shall not be considered as in any way deferred due to the payment procedures. (In some States, the Regional Attorney may recommend adding the following statement: The vendor expressly waives any lien against the above described property that may arise by implication or operation of law for the remainder of the purchase price.) The vendor agrees that the payment schedule shall not be accelerated. (However, in the event of the death of the vendor, the executor or administrator of the estate may request the balance due anytime before final payment, and the Forest Service shall issue a check for the balance within 90 days of receipt of the written request in the Regional (Insert address) Forester's Office at Attached and made a part of land purchase option and contract dated (Date of Option) NO REPRESENTATIONS HAVE BEEN MADE AS TO THE TAX EFFECTS OF DEFERRING PURCHASE PRICE PAYMENTS IN THIS TRANSACTION BY ANY EMPLOYEE OF THE FOREST SERVICE, USDA, IN THE COURSE OF NEGOTIATIONS. THE DECISION TO REQUEST DEFERRED PAYMENTS IS ENTIRELY THAT OF THE VENDOR. (Date) (Vendor) (Witness) (Vendor) (Witness) (Witness) Request approved: (Forest Supervisor) (Date) 11.94 - Exhibit 02 Deferred Payment without an Option Vendor (Name) Tract (Number) No Unit (Forest) Deferred Payment Agreement I(W- (Landowner) o (Address) hereinaf- e) f ter called the vendor, in consideration of the appraisal by officials of the United States of the land herein described and other good and valuable considerations receipt of which is hereby acknowledged, agree to sell the following described property to the United States. (Insert tract description) This sale is conditioned on the (Amount per acre or amount purchase price of $ lump sum) being disbursed in deferred payments, with no interest accruing on the unpaid balance. Payments will be disbursed within 45 days of the following schedule \ (List Schedule Vesting of title in the United States shall not be considered as in any way deferred due to this payment procedure. (In some States, the Regional Attorney may recommend adding the following statement: The vendor expressly waives any lien against the above described property that may arise by implication or operation of law for the remainder of the purchase price.) The vendor agrees that the payment schedule shall not be accelerated. (However, in the event of the death of the vendor, the executor or administrator of the estate may request the balance due anytime before final payment and, the Forest Service shall issue a check for the balance within 90 days of receipt of the written request in the Regional Forester's Office at (Insert address) NO REPRESENTATIONS HAVE BEEN MADE AS TO THE TAX EFFECTS OF DEFERRING PURCHASE PRICE PAYMENTS IN THIS TRANSACTION BY ANY EMPLOYEE OF THE FOREST SERVICE, USDA, IN THE COURSE OF NEGOTIATIONS. THE DECISION TO REQUEST DEFERRED PAYMENTS IS ENTIRELY THAT OF THE VENDOR. (Date) (Vendor) (Witness) (Witness) Request approved: (Forest Supervisor) (Date)