The Case For Smart Easements
Practically speaking, from a landowner’s perspective there are two types of easements, otherwise known as rights to use another person’s property. The first are those that I’ll call “beneficial easements.” These benefit the owner of the land burdened by the easement, such as a utility easement given to provide service to the owner granting the easement. “Burdensome easements,” on the other hand, encumber one property to benefit a neighboring property, such as a driveway easement granted to a rear lot. Although the granting owner usually has more negotiating leverage when requested to provide a burdensome easement, it can be a costly mistake to grant any easement without competent legal review. It’s important to recognize that unless it states otherwise, a recorded easement affects a permanent transfer of an exclusive interest in real estate. A hastily prepared easement may perpetually hamper an owner’s ability to alter or redevelop his or her property. Some of the more important considerations when granting an easement include the following:
Think small. The legal boundaries of an easement should be depicted on a recorded survey and the easement area should be as small as possible so that it encumbers the burdened property as little as possible. Easement boundaries should be defined as to length, width, height and depth. For example, if the easement is for subsurface conduits, the easement should then be limited to the subsurface, thus preserving your right as landowner to use the surface, so long as the benefitted party retains reasonably unobstructed access to the underground facilities.
Relocation rights. It is important to remember that the current and future owner of the burdened property has no legal right to alter the location of an easement without the consent of the benefitted property owner, unless the easement specifically allows the grantor, and the grantor’s successors, to relocate the easement to another area of the property. What if, years after an easement is granted, the burdened property may only be redeveloped for its highest and best use if the benefitted property owner permits relocation of, for example, a drainage pipe? Clearly, one would gladly pay to move a pipe if it would enhance the value of one’s property. But without an express relocation right in the easement, the burdened owner is stuck.
Duration. Unless the easement specifically states otherwise, its duration is perpetual — even if, many years in the future, the property receiving the easement no longer needs it. The ability to rid yourself of an encumbrance no longer needed by your neighbor because, for example, the neighbor acquired direct access to a public road, would enable you to extinguish the easement and reclaim full ownership and use of the former easement area.
Exclusive or nonexclusive. People are often surprised to learn that, since the Middle Ages, easements have granted exclusive use of the easement area to the recipient unless the drafter specifically states the easement is nonexclusive. Of course, shared access ways should always be granted on a nonexclusive basis, but so should surface and subsurface utility and drainage easements to the extent the width of the easement area would permit the burdened owner to install conduits for his or her benefit.
Cost sharing. If an easement affects shared use of a facility, such as a shared parking lot or driveway, consider requiring the benefitted owner to pay a share of the costs of maintenance, repairs, insurance or property taxes. Commercial owners often retain the right to lien the benefitted property for unpaid sums and, eventually, a right to terminate the easement for material defaults.
Future construction. If the benefitted owner or party plans construction on the encumbered property, remember to include a statement in the easement requiring the benefitted party to indemnify and hold the granting party and its tenants and lenders harmless from any liability for personal injury and property damage resulting from use of the easement area. Consider requiring the benefitted party to obtain liability insurance coverage for any construction activities, naming the granting owner an “additional insured.” And be sure the benefitted party obtains, or requires its contractors to obtain, workers’ compensation insurance for construction.
While it may appear that many of these issues are something to worry about only years after an easement is granted, remember you have no legal right to demand renegotiation of a recorded easement. Further, a sophisticated buyer, investor or lender may view an inelegant easement as a hindrance to marketability and future development. Bottom line: Don’t treat an easement requested of you as mere “boilerplate.” Since this article touches on only a few of the important considerations when granting an easement, competent legal representation will prove an investment in the current and future value of your real estate.
Geoff Fay practices commercial real estate law at Pullman & Comley L.L.C. and can be reached at firstname.lastname@example.org. Reprinted with permission from the June 29, 2014 issue of the Fairfield County Business Journal.