What property investors need to know about easements

What property investors need to know about easements

When you buy a property, you expect full control over your land. But an easement — a legal right for someone else to use a portion of your property — can limit what you can do with it. For property investors, failing to identify easements before closing can lead to unexpected restrictions, reduced property value, and even legal disputes.

An easement is a nonpossessory interest in land that grants the holder permission to use another person's property for a specific purpose, as defined by Cornell Law School. Easements do not convey ownership but allow limited use, such as access for utilities or a neighbor's driveway.

Types of easements every investor should know

Easements fall into two main categories: easement appurtenant and easement in gross. An easement appurtenant benefits a neighboring property (the dominant estate) and runs with the land, meaning it transfers to future owners. An easement in gross benefits a specific person or entity, such as a utility company, and is not tied to an adjoining property.

Common types include:

• Utility easements: Grant access to power, water, or internet companies to install and maintain infrastructure.
• Right-of-way easements: Allow passage across your property, often for a neighbor's driveway or a public road.
• Conservation easements: Restrict development to preserve natural resources, which can limit building or land use.
• Prescriptive easements: Created through continuous, open use of land without the owner's permission, similar to adverse possession.

How easements affect property value and usability

Easements can impact your investment both positively and negatively. A right-of-way easement may improve accessibility, making the property more attractive. However, restrictive easements — such as those that block construction or limit signage — can deter buyers and reduce marketability.

For commercial properties, easements can affect parking, drainage, ingress and egress, and even the ability to develop the site. As noted by Tri-State Paralegal Service, easement review is a critical part of commercial title search due diligence before closing, financing, or development planning.

Your due diligence checklist for easements

Before purchasing any property, take these steps to uncover existing easements:

1. Order a title search: A professional title company or abstractor will examine public records to identify recorded easements, liens, and other encumbrances.
2. Review the property survey: A boundary survey shows physical features and easement locations, such as utility lines or access roads.
3. Check county records: Visit the local assessor's office or county clerk's office to search for easement documents.
4. Contact utility companies: Ask about any utility easements that may not appear on standard title reports.
5. Walk the property: Look for signs of easements, such as utility poles, drainage ditches, or shared driveways.
6. Read the seller's disclosure: In many states, sellers must disclose known easements.

When to walk away from a deal

Not all easements are deal-breakers, but some should raise red flags. If an easement prevents you from building your intended structure, blocks access to a key amenity, or creates ongoing maintenance obligations, it may be wise to reconsider. As one investor guide notes, some easements are not worth worrying about, while others should motivate you to walk away immediately.

Quiz: Test your easement knowledge

Which of the following best describes an easement in gross?

A. An easement that benefits a neighboring property and transfers with the land. B. An easement that benefits a specific person or entity, such as a utility company. C. An easement created by continuous, open use without permission.

Correct answer: B. An easement in gross benefits a specific person or entity and is not tied to an adjoining property.

How the Featured Expert Can Help

Hazelwood & Associates, LLC is an owner-operated title abstracting and mineral search firm based in Wise, Virginia, with over 14 years of experience. They provide detailed title examinations and document retrieval for residential and commercial clients, helping investors identify easements and other encumbrances before closing. With a BBB A+ rating, they offer personalized service from a local expert who knows the region's history. Visit their website at hazelwoodassociatesllc.com to learn more.