Sep 28, 2022
Buyer Beware - Of Easements
Technology, the pandemic, and the ever-increasing demand for efficiency have made real estate closings move faster and often fully remote. A closing is commonly consummated without any in-person conferences between the buyer and their attorney.
In a fast-moving, remote setting, additional caution and diligence is required in reviewing title searches and, particularly, the easements that burden the property. Whereas previously the buyer and their attorney would review the title search in-person, it is now frequently sent in as a 100-page pdf.
There are many different types of easements. Many appear standard or non-material, but only a careful analysis can determine if they impair the value of the property. When a title company has disclosed and excluded the easement in the title commitment, the purchaser of the property is on notice of the existence of the easement and the title company will not be insuring any negative impact due to the easement. A few examples will illustrate the importance of careful analysis.
Right-of-way easements are common. Most right-of-way easements are described as a distance from the center line of the road. The right-of-way easement reserves a government’s right to make changes to the road that may invade the property. A ROW might be 50 feet wide where there is only a 22-foot paved roadway. This means that up to 25+ feet of the property might be encumbered by the ROW easement. For a homeowner, this might restrict the ability to build a retaining wall or having to remove an existing structure in the ROW in the future if the road is expanded or realigned. For a commercial property, it is common for parking spaces to be located all or partially in the ROW. This means that commercial property could lose a material number of parking spaces, which in turn then limits the use.
Similarly, utility easements exist on nearly every property for power lines on poles as well as water and sewer pipes underground. These easements are necessary and benefit the property. However, they must be carefully evaluated. Often utility easements have a right of access to service the power lines or pipes. A buyer should carefully evaluate how much notice is required to enter the property and whether the access is defined. Older utility easements might not define the location of the right of access. This essentially means that the utility company might have the right to enter and exit the property from any point they chose. For a homeowner, this might have significant privacy impact. For a commercial property owner, this might interfere with customers or business operations.
Underground utility easements can often have a significant impact on development of property. Underground utility easements may prohibit using sections of the property or require more expensive construction in the areas crossing the utility easement. This can significantly impair a property’s development potential and value.
Stormwater easements create a right to direct water onto property. It might be from a neighboring property following an obvious watercourse with only a minor impact or it might be from a road catch basin discharging all the stormwater from the surrounding area.
It is also increasingly common to see conservation easements on portions of property, particularly in farmland and on commercial property where a portion of the property is environmentally sensitive. Conservation easements can vary widely in what is permitted and not permitted and may dramatically limit development potential and value.
A buyer of real estate must beware and take the time to review the title search and commitment with their attorney.
For more information, contact John E. Ursin at firstname.lastname@example.org or at (973) 295-3673