Easements: The Grant that Keeps on Giving
Sooner or later the regular purchasers of property, whether vacant or improved, will encounter easements on property. The most common and understandable easements are for utilities, sewer and water servicing the property, and phone or internet service; these are usually of a same form. An American Land Title Association (ALTA)/American Congress on Surveying and Mapping (ACSM) survey sets forth the easements on the property and where they are located. No commercial piece of property should be purchased without an ALTA survey. It is surprising how often the legal description of an improvement does not match what has been physically placed on the improved property. An ALTA/ACSM survey will make sure there are no hidden surprises on the land you are purchasing.
This article is intended to be a brief outline of what an easement is, what an easement does, and what effect an easement has on the person granting and receiving an easement. Each situation is unique, but knowing the basics will help in gauging and measuring the risks and problems that crop up with easements.
The person or entity granting an easement is the grantor. The easement goes on, or affects, the grantor’s property. The property over which an easement is recorded is called the servient property. The person or entity receiving the easement is the grantee. The property that benefits from the easement is called the dominant property. Easements can be perpetual and follow the properties as they are transferred. This is called an easement that runs with the land. An easement can also terminate by its terms on the happening of an event (for instance, an easement for ingress and egress that terminates when the dominant owner gets access directly to the public road). The language of the easement governs the conduct of the dominant and servient owners as it relates to the easement area. If an easement is not drafted with all the elements and terms necessary to make it understandable over time, the seeds for disputes and loss of value in the future are sown.
A good example is easements granted on land divisions. It is common for surveyors to grant an easement by simply putting it on a survey, creating a legal description as part of a certified survey map. The language is typically “lot one conveys to lot two an easement for ingress and egress over the following described real estate.” Sounds pretty straight forward and correct, doesn’t it? However: who maintains the easement area? Can improvements for the ingress and egress area be maintained by the grantee? Can the grantee use the easement area to further subdivide the dominant parcel?
The best advice I ever received was from my father and mentor who told me to draft my easements for the person who reads it next and not the people in the room who are signing it. The people who are signing it understand the context of what they are doing. The people who come after must be able to understand what you are saying from the document.
When you buy a parcel subject to, or improved by, an easement, you have to have a full understanding of what you are getting. Oftentimes the time of transfer is a good time for the servient and dominant owners to get together and fix an overly broad or poorly drafted easement to insure value and use for both parties. If you need to buy, or are asked to sell an easement, you have a chance to set the rules and anticipate the pitfalls that may occur over time for the use of the easement area.
Let’s say you own farm land and want to subdivide part of it that is no longer farmable. The land has road frontage so it is buildable, but the terrain suggests an easement through the property you retain is the best way to access the parcel(s) with a driveway. The municipality wants a 60-foot easement so if it ever needs to make the easement area into a public road, or gain access with emergency equipment, the easement area will be adequate. Here are some of things to think about (and are born out of actual legal disputes over easements in which I have been involved):
- Can the grantor continue to farm the easement area outside of the improved driveway?
- Can the grantor drive on the improved driveway area to access other parts of the farm?
- If the grantor does use the easement area, and damages the driveway, who repairs it?
- How is use and damage defined?
- Can the grantor store equipment on the easement area if it does not impede ingress and egress?
- Does the grantee have the right to plant trees, put in utilities, install decorative structures or lighting?
- What if improvements are damaged by the servient (grantor) owner? Who repairs them?
This exercise may seem over-the-top to some. However, the inability to appreciate the possible disputes that can arise from a grant of an easement may lead to future loss of value for the parties for the gaps in the easement language. The questions posed show the potential for litigation, arguing, and the loss of value and use that could flow from a poorly drafted easement.
Now, back to a discussion of the ALTA survey. An ALTA survey is what gives you title protection for the purchase of your property for the physical improvements on the property. The surveyor calls out all the easements on the property (among other things) and locates them. It is surprising how often the legal description of an easement does not line up with the physical location of the improvements that effectuate the easement.
A good example of how this can affect a transaction is a recent deal where the survey found the easement for the sewer line servicing one of the improvements on the property being purchased ran right through the middle of an area that was necessary to expand the parking area to build additional improvements. Without an ALTA survey to find and locate the easement, the buyer would not have purchased what he thought he was purchasing. By ordering the survey, the buyer was able to negotiate with the seller and the municipality to redo the easement to reflect the actual location of the sewer line and allow the new parking area to go in.
In closing, easements are a wonderful way for people to further utilize, or gain value for, property. But care in drafting and discovering the easements on property that may affect use and value is key to avoiding future legal entanglements. Draft well up front, or problems will arise in the future. Stake and know what you are buying before you close. Resolve the issues of any easements affecting property you are buying before you close to save money and aggravation in the future.
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