Easements Are Easy – but Read the Fine Print

But who is that guy walking around your property? He must be trespassing, right?

Actually, if your property has easements – legal rights granted to others for specific purposes to enter or use your property – the holder of the easement has every right to be on your property.

Nor should such a fact be disturbing. Almost every property has an easement of some kind, and such easements are not only common, but stated openly well before the purchase takes place.

“The title company I use will delineate the easement on the plot map, so it is very easy for a buyer to know what easements affect the property,” explains real estate agent Joanne Gardiner. “The buyer has to approve the preliminary title report, where easements appear,” she explains.

According to Gardiner, the most common easements are for utilities, such as PG&E, Comcast or other cable operators, telephone companies, cellular phone companies, and rights of way for nearby railroad, BART or other transportation entities.
Gardiner says it is also fairly common for a right of way to be granted to a neighbor – for example, to allow that neighbor to use part of the property as a driveway so they can reach their own home.

Gardiner advises her clients to look at both the preliminary and final title reports closely for this very reason. “It would not be wise to overlook them,” she admonishes. While most easements are routine, any out-of-the-ordinary easements could make life difficult for the buyer later.

Related to easements, Gardiner notes, are mineral and other rights to a property, which may not necessarily belong to the property owner. “So if you were to dig deep into your property and discover oil, you may not own it,” she explains. This, too, is a fairly common occurrence.

If the easements remain fairly routine, then obtaining a loan shouldn’t be an issue, either, according to Kevin Casey, a mortgage broker. “Of course, if you aren’t fully aware of it, it might surprise you when you have the cable guy walking through your back yard,” he says.

But Casey says it would take a very unusual easement to stall the loan for a home. “Where the lender would become concerned would be if the easement was somehow affecting value.” As an example, he cites a home in the Bay Area where there is an easement for a road that runs right down the middle of the home itself.

“That is something a lender might have an issue with. But that being said, could we get around it? We might have to switch lenders, but we could probably find a lender who would do the loan, yes,” he adds.

Even if easements seem routine at closing, Gardiner advises her clients to hang on to their title insurance just in case. “Many people will throw away their title insurance, and they should really keep it. In most cases, the title insurance covers them for the length of the ownership.”

And that is, perhaps, when easements are most likely to cause problems – when an easement is not recorded or divulged, and surprises the property owner later. “If the easement is done informally,” Gardiner notes, “then adverse possession kicks in.” That means that, after five years of practical use, the person using the informally given easement may have a permanent, legal right to it.

Gardiner says that this can happen when a homeowner gives permission to a neighbor, for example, to use part of their property for a driveway, or allows a fence to be installed that overlaps their property – and then doesn’t disclose it or isn’t aware that it needs to be disclosed.

“In California, the seller is required to disclose everything they should know,” she explains. “So if an easement was granted, or they knew of the easement and didn’t disclose it, they can be held liable.”

In the meantime, even though the right to the easement was not formally acknowledged, the neighbor may technically have the right to the easement because of what is known as adverse possession. “Have you ever noticed those signs in the sidewalk?,” Gardiner asks. “The ones that say, ‘Right to pass can be revoked at any time’? This is why, so someone who passes on the sidewalk, day after day, for five years cannot acquire the property via adverse possession.” (Usually, if the easement has been in use for five years continuously, the easement can be considered valid.)

As an example, Gardiner cites an East Bay client who bought a home a number of years ago. “The house next door to him was sold, and the new neighbors built a new fence, claiming that their new fence was more accurately on the property line than the old fence had been.”

After the neighbors put in the new fence, the property next door was sold again. “The newest owner of the property next door now wants to move his fence within one foot of this man’s house,” she says, and any land that had belonged to Gardiner’s client now being claimed by the neighbor.

Gardiner also notes that a survey should have been done when the original dispute arose. “Surveys can be expensive, and often people won’t do it,” she notes, adding that the money saved now can cause headaches later.Of course, such situations can readily require an attorney, too. “If I can’t help a client, then I will refer them to someone who can, and that is often an attorney who specifically specializes in real estate,” Gardiner notes.

So while easements may seem easy, buyers need to pay close attention to specifically what easements exist on a property – and hang onto their title insurance in case surprises pop up later.