Knowing what you are Buying, Easements and their Impact on Real Property Transactions

Who can do what with my property!?

There are few things in life people spend a higher percentage of their money on than real property. In fact, according to the Federal Reserve, across all income groups and family types in the United States, the median value of the average American household’s “primary residence” is approximately $225,000.00. (See THE FEDERAL RESERVE, SURVEY OF CONSUMER FINANCES,  [summarizing consumer finances in the United States current as of 2019].) This is a substantial amount of value, especially when considering that the average American household’s median total assets totals approximately $227,500.00. (See, FEDERAL RESERVE, [summarizing consumer finances in the United States current as of 2019].)

Given so many Americans have so much of their value tied up in real property, it is critical for any buyers of real estate to be aware of the different types of easements, as well as to be aware of how to make sure your property is not subject to an easement.  What are easements and why are they important? An easement is “an interest in land owned by another person, consisting in the right to use or control the land, or an area above or below it, for a specific purpose.” (EASEMENT, Black's Law Dictionary (11th ed. 2019).) Easements are important in any real property transaction because they give a third-party (the “easement holder”) a right to use the property over and against the interest of the owner of the land. Further, like many areas of real estate practice, easements can get messy. Effectively, an easement gives someone else an interest or right to use your property. If you are investing large percentages of your net worth into real property, whether as a primary residence or as some type of investment opportunity, don’t you want to know if someone else has a right to use that property and how that use might affect the value of the property? This article will discuss the different types of easements which exist and how they might impact real property transactions.

Types of Easements

1. Express Easements:

An express easement is created through a written document between the property owner and the party who is granted the easement. This type of easement is generally  recorded in public records and is binding on all future owners of the property. It is often executed when the property is subdivided.  Typically, when performing a title search on real property during a real estate transaction, assuming the easement was recorded properly, express easements will show up in the title search. (See discussion infra, “Run a Title Search and buy Title Insurance [defining a title search in more detail].) This means attentive buyers should be aware of express easements because a title search will show their existence. Common express easements include those for utilities such as power lines, sewage, etc., which are held by utility companies. Express easements such as these can be related to the actual structural power lines and sewage equipment, or they can give utility providers a right to use the subject property to access nearby power or sewage equipment.  They are also common for access and egress.

2. Implied Easements:

An implied easement arises when there is no written agreement, but the parties involved conduct themselves in a way that implies an easement exists.

For example, imagine Landowner subdivides a contiguous parcel of land known as Greenacre into two parcels, Parcels A & B. Parcel A is situated on a highway and Parcel B sits behind Parcel A and does not have direct access to the highway or any other roads. Suppose Landowner lives in his house on Parcel B and there is a driveway that extends all the way from his house to the highway adjacent to Parcel A that he uses to get to and from his house to the highway. Imagine Landowner then sells Parcel A to Buyer but continues to use the driveway to get to and from his house on Parcel B to the highway adjacent to Parcel A. Even if the deed to Parcel A does not mention the driveway’s use for Landowner to access his house on Parcel B by using the driveway that runs over Parcel A, an implied easement may exist to allow Landowner to get to and from the highway to his house on Parcel B. Implied easements can be trickier than express easements by definition because they are “implied,” meaning there may be no clear record of them that shows up when a title search is performed in regard to Parcel A when the original buyer of Parcel A sells the Parcel to a new buyer.

3. Prescriptive Easements:

A Prescriptive Easement is created when someone “continuously” uses another person's property without permission from the owner for a statutorily defined period of time. In California, the time required to establish a prescriptive easement is typically five years. This means that if someone uses your property for a specific purpose, such as accessing a neighboring property, without your permission for five years in an open way, they may have a legal right to continue doing so.  The “trespasser” may seek a Quiet Title decree.

To picture this type of easement, assume the same facts as in our “implied easement” scenario except that now Landowner does not have a house on Parcel B and there is no driveway over Parcel A to Parcel B from the highway. Instead, both Parcels are wooded and undeveloped in a rural part of the county. Landowner sells Parcel A to Buyer. Buyer uses Parcel A adjacent to the highway to hunt and camp. Although Landowner has sold Parcel A to Buyer, Landowner kept Parcel B and he too uses his Parcel to hunt and camp. Even though Landowner did not create an express easement over Parcel A to access his Parcel B from the highway when he sold Parcel A to Buyer, for more than five years since the sale of Parcel A, Landowner has parked his car on Parcel A and walked along the same path over Parcel A to access Parcel B to hunt and fish on Parcel B without Buyers permission to park and walk on Parcel A. In this scenario, it is likely that Landowner has a prescriptive easement over Parcel A to park his car and walk the path to Parcel B to hunt and camp. Prescriptive easements are particularly tricky because like implied easements they are more unlikely to show up in a title search of the property, which is subject to the easement. If Buyer were to someday sell Parcel A to you, when you ran a title search, Landowner’s prescriptive easement would not show up in the title search. You would be buying Parcel A subject to Landowners easement to park and walk the path to hunt and fish on his Parcel, even though there was no record of it.  

4. Easements by Necessity:

An Easement by Necessity is created when a property owner sells a portion of their land that is landlocked, meaning it has no access to a public road. The new owner may then be granted an easement over the seller's remaining land to provide access to the landlocked property. Let’s assume the same facts as the “prescriptive easement” scenario where Landowner sold Parcel A to Buyer and they both use their respective Parcels to hunt and camp. Instead of waiting five years, however, let’s analyze if there is an easement on the first day following the sale of Parcel A to Buyer. Landowner would very likely have an easement by necessity because as we noted, Parcel B has no access to the highway or to any other road. Parcel B is essentially “landlocked” because Landowner has no legal way by which to access it. Therefore, if we assume there is no other reasonable path for Landowner to access Parcel B other than travelling over Parcel A, it is very likely that upon the completion of the sales transaction of Parcel A to Buyer, Landowner will have an easement of necessity over Parcel A to access Parcel B for the purposes of hunting and camping. If Buyer were then to sell Parcel A to you, Landowner would have an easement over Parcel A to park and walk to Parcel B, even though there was no record of it.

5. Government Easements:

The government can also grant easements over private property for public purposes, such as utility access or road construction. Government easements will most often operate in a similar manner to the express easements as discussed above and are usually discovered upon a title search being run on the subject piece of real property.

How will I know if there is an easement over my Property?

Run a Title Report and Buy Title Insurance

The main tool for discovering whether there is an easement over a piece of property is running a title search on that specific parcel of property. A title search produces a report that summarizes the property’s ownership history, documents any recorded liens, or encumbrances on the property (such as easements), and can identify other issues with the property that might affect title. Typically, a buyer will hire a title company to run the title report in the early stages of a real property transaction and will also purchase a title insurance policy just in case there are issues with title that do not show up on the title report (such as a prescriptive easement which are typically not recorded as discussed above). In the event an existing easement or encumbrance is not found by the title company upon performing the search, the title insurance will kick in to protect the investment made by the buyer in the property.

To conceptualize, let’s revisit our original “express easement” example where Landowner originally owned Parcels A and B as one contiguous Parcel named Greenacre before he subdivided it into Parcels A and B and sold Parcel A to Buyer. When Landowner originally purchased Greenacre, it included an express government easement over what is now Parcel A which gave the County Government ( “County”) a right to re-route the highway over Parcel A if someday the County determined it was necessary to do so. Doing his due diligence, when Buyer was considering buying Parcel A, he hired a title company to perform a title search on Parcel A. Because the government easement to build a road favoring the County was express, the title report included a description of the easement. While there were no plans to re-route the highway over Parcel A, if the County ever decided to do so in the future, a highway running over Parcel A would severely affect Buyer’s ability to hunt and camp on the property. With this information in hand, Buyer then proposed a purchase price to Landowner which took into account the potential interference with Buyer’s use and enjoyment of Parcel A that might happen down the road by virtue of the County’s express easement. In this hypothetical, Buyer then happily camped and hunted on the property until the highway was built on Parcel A at which point he subdivided Parcel A and sold it in parcels to commercial real estate developers at a profit.

Old School Options: Get Out and Walk the Property

Much of American property and real estate law has its roots in the principles of English property law (much older than its American counterpart), which was brought over from England on the Mayflower. Although there has been substantial evolution and modification of the original English principles over time, one hold-over from the English tradition (which has a very high practical value for a prospective real property purchaser today) is that the law tends to benefit those who “walk the land.” Meaning, if you are purchasing real property, go out and see it and examine it with your own eyes. Ask the neighbors about it. Observe it during busy times and when it is at rest. Whatever the property is, be it residential, commercial, industrial, etc., outside of the title search (which is essential) there is no substitute for seeing the property for yourself. In some circumstances, such as our prescriptive easement example, the only way to discover Landowner’s easement to park and walk on Parcel A would be to go to the property and see it firsthand. Suppose in that example, Buyer offers to sell Parcel A to you, and in addition to the title search that did not reveal Landowner’s prescriptive easement to park and walk over Parcel A to hunt and camp on Parcel B, you also decide to go and visit Parcel A for yourself. When you arrive, you notice what seems to be a well-worn parking space and an obvious trail leading from the highway, over and through Parcel A that goes all the way onto Parcel B. By walking the land, you have now become aware of a potential use of the land which was not shown in the title search. With this information you can now make a more accurate purchasing decision that reflects the full scope of the use of property and the encumbrances it is subject to.  

How can you protect yourself from unknown easements?

To protect your investments in real property, be sure you do your due diligence before purchasing. Given how substantial an investment in real property typically is in relation to the average American’s net worth, you should always seek to minimize the risk proposed by easements by performing a title search, purchasing title insurance, and examining the property firsthand for yourself. Following these steps will allow you to make the most informed decisions regarding your investments.

Disclaimer: This article is intended as a general topical analysis of easements and the effects they can have on real property. Readers should consult a licensed and qualified attorney regarding any specific issues or scenarios they are facing regarding easements or other encumbrances of real property.

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