Commercial property with an easement can be an excellent investment, but it is essential to understand precisely how it will impact the property and its value before closing the deal.
Easements are legally binding interest in a property that enables non-owners or non-possessing parties’ legal access to the property with an easement. It falls under the broader umbrella of property encumbrances, which may lower the attached property’s value. They give access outlined explicitly in the easement and may only include a portion of the property.
Different easements have different purposes
The five common types of easements are:
Easement by necessity: This enables an adjacent property owner or possessor to use the easement to access their landlocked (no public road for access) property, business or home. A property owner may sell the land and offer an easement to access it.
Private easement: This can be an arrangement between the owner and the neighbor. Perhaps the owner saw the easement as a way to generate customer traffic on the property. The easement may transfer with the property or stay with the original parties and not get transferred to subsequent owners or possessors.
Utility easements: It is common for ranchers and others with large tracts of land to allow utilities because it serves the greater good of the surrounding community. There may be certain conditions, such as the owner building structures or planting trees in places that hinder the utilities’ function.
Public easement: Unlike the arrangement between two private parties, this involves public use. For example, a business may own a large piece of land with a historically significant site that is of interest to the general population located on the property. This type may involve a specific decree or implied through years of use.
Prescriptive easement: This one involves an individual gaining access to the property and staying there. It is an open but unauthorized occupation. Failure to expel the occupant or ask them to leave can lead to a prescriptive easement that gives the occupant the legal right to be there. This type likely will negatively impact the property’s value, and owners should take steps to avoid them.
What does it mean?
The circumstances surrounding each easement will be different. Some will have a positive impact on the property’s value, some will have no impact, and some will have a negative effect. Those interested in real estate transactions involving an easement can weigh benefits, establish the value and determine the best course of action. The buyer or seller may also wish to discontinue the easement. Buyers and sellers can get experienced legal guidance from an attorney who handles easements and other real estate matters.