Seeking advice for Denver "alley dedication" development issue

[Trenton Lovell]

Hey BP fam, 

I've had a home in Denver for 8 years that I have recently torn down to build a duplex. This is the last item outstanding before I can receive my building permit. The city is holding my building permit until I resolve their alley dedication request. They are requesting that I forfeit the 1.5' X 37.5' piece of land bordering the alley and give it to the city in order to extend the alley by 1.5'. I tried to work the easement route so I could technically still own the land and they said not a chance. The good news is I have completed all of the necessary work with the title company to gather the deliverables, which wasn't as bad as I was told it would be.

However, since I do not own the land outright and have a note with Chase they are involved in releasing the land. In order to release the land to the city here is what Chase is requesting and here is how the city responded. Apparently, this has recently become a thing with the city of Denver relatively recently and it is only growing in population. Making it a nightmare for owners/developers. Thank you!!

This is what the lender (Chase) is requesting...

Below are the items still needed to continue processing this request:

1. A signed statement showing the proceeds amount, if any, and/or a copy of the contract of sale that

will be received in this transaction. Please keep in mind the investor could require that all or part of

the monetary consideration from this transaction be applied to the existing principal balance of the

loan. If no proceeds are received, this must be documented in a written statement.

1. A copy of the summary appraisal showing the amount being awarded for damages, landscaping, land

and easements, with an addendum showing the value of the residual property and improvements

after the release (which will remain under our lien). The value of the property and improvements

before and after the taking must be included. Please include a letter from the appraiser stating there

will be no change in the value of the residual property and improvements due to the taking if there is

no "after value."

1. A completed Partial Release of Mortgage, Partial Reconveyance or similar legal document

describing the property to be released in the format required by your state or county. The document

should include a cover letter from the attorney/title company that drafted the document. (We don't

prepare this document). The cover letter should show that the document covers only the released

property and that it's ready for recording in the appropriate state and/or county.

This is how the city of Denver replied

1. Doesn’t apply: This is an exaction due to new development. It is not a sale or a taking therefore there are no proceeds.
2. I don’t know the answer to this one. Did you have the property appraised? The lender is trying to determine the value of the land being exacted and removed from the lien. Since no money is changing hands, I don’t know if this is applicable.
3. In my experience, lenders have filled out the form. The city doesn’t have its own form because this relates to the lien on the property. I’ve attached a Partial Release form I found on the Land Title Guarantee Company’s website. This is what needs to be filled out and the legal description of the property being exacted included.

The only light at the end of the tunnel is that all parties have agreed to get on a call together next week to discuss the issue at large, but I was curious if anyone had any experience that might be able to help me out here beforehand with any information I may be able to provide in the call. Thanks again!!

[Rick Pozos]

It should all come down to WHY is the city taking 1.5'. If they are in fact taking land, YOU need to be compensated for it. That is what usually happens. That is why the bank is asking for the money to be deducted from the loan amount. City wants 1.5', they have to pay for it. They have eminent domain, but they have to pay for the land that they take. They should have done a survey and figured out how much money you should be compensated.

If for some reason, you will NOT get compensated, the city should at least give you a new survey so that you or your lender can get an appraisal to determine that the value of the property would NOT be affected. OR you could hire an appraiser to give you the determination that the value of the property will not change by the 1.5' off the back of the property.