One of the best parts about investing in real estate is that you get to review and invest in many different properties. Whether you are looking at opportunities in large urban cities or in sleepy rural areas, there are plenty of properties that can help you accomplish your financial goals.
Having said this, there are many different challenges to investing in real estate. One of those challenges centers on the nature of the property itself. While you may find a house that seems like an extremely attractive investment opportunity, the property may have several unique characteristics that impact adjacent properties. For instance, the property that you are eyeing may only be accessible by crossing over the neighbor’s land. Upon first glance, it can be unclear whether (or how) this arrangement will affect your investment.
While this is just one example, these types of situations involve legal concepts called easements. Easements are legal instruments that can give you (or others) property rights in land or property owned by another person. Even if you are just hearing about easements for the first time, it’s important to understand what they are and how they affect you.
In this article, we want to specifically discuss one specific easement. It is called easement by appurtenant. Understanding the easement by appurtenant, you can recognize the obligations that come with these legal devices and the financial opportunities that may come from them.
This picture from ThisMatter.com does a great job depicting what an appurtenant easement is!
Exploring the Easement by Appurtenant
To start this discussion, it is helpful to settle on an easement appurtenant definition. To reiterate, easements generally are the legal right to use another person’s property for a specific reason. The easement holder doesn’t get a possessory property interest in the relevant property. Rather, it is simply permission to occupy the property or to exclude people from it.
There are two more important terms when speaking generally about easements. The specific piece of land that benefits from the easement is called the dominant estate. The piece of land that provides the easement is called the servient estate. So building on the example discussed above, the dominant estate is the prospective investment property that you cannot access without walking on the neighbor’s property. The servient estate is the neighbor’s land.
Easements by appurtenant (also called easements in appurtenant) are a particular type of easement. Specifically, they are rights to use adjoining property that transfer with the land. This ability to transfer the easement with the land is its most distinct and notable feature. An easement by appurtenant always transfers with the land unless the owner of the dominant estate decides to release it. Ultimately, this means that if the dominant estate is sold, the easement in appurtenant will transfer to the new owner. And if the servient estate is sold? The purchaser of the servient estate is still bound to the easement by appurtenant.
Some Examples of Easements in Appurtenant
To help contextualize all of these ideas, let’s walk through several easement appurtenant examples. Even if these examples don’t necessarily conform with the property that you are considering, they will give you a better sense of the type of easements in appurtenant that you may encounter.
A common easement in appurtenant example comes from crossing over the servient estate’s land for some type of reason. For instance, let’s say that you are looking at an investment property that borders another piece of land. Right next to that piece of land is a public park. The only way to access that public park is by walking over that neighbor’s piece of land. This is a situation where you may find an easement in appurtenant. Specifically, that easement in appurtenant lets the owners of the investment property cross over the neighbor’s land to reach the public park.
Because this is an easement in appurtenant, the easement will continue to exist—regardless of whether the investment property or neighbor’s property is sold in the future. This sort of example doesn’t only apply to things like parks. More notably, it can also apply to roads. If, for instance, you are looking at a landlocked investment property, there may be an easement in appurtenant to access the only nearby road.
Another easement in appurtenant example comes from enhancing life for both the dominant estate and servient estate. With this example, let’s assume that you are looking at an investment property that is located on top of a hill. When it rains or snows, water flows from the investment property down to your neighbor’s property. In this sort of situation, it may be more cost-effective and less disruptive if the investment property’s drainage system can connect with the neighbor’s drainage system. Assuming that both property owners would agree to such an arrangement, an easement in appurtenant may be mutually beneficial.
These are just several common examples of easements in appurtenant. If you have been looking at investment properties for some time, you may have already encountered them in your research. If you are relatively new, however, we encourage you to keep these examples in mind. Not only may you see them as you review investment properties, but you may want to strategically consider them in your own investment portfolio.
Important Considerations To Keep in Mind
Easements by appurtenant may affect rental properties that are currently in your portfolio or that you are considering adding to your portfolio. Throughout this discussion, we have primarily been taking the perspective of the dominant estate. If you are looking at a potential rental property, you may find out that it is, in fact, the servient estate. If so, it’s important to consider the fact that the dominant estate can access some benefit on your land. That benefit will not disappear when you purchase the investment property.
With that being said, when you are looking for investment properties, there are some key considerations related to this subject. Keeping these considerations in mind can help you avoid nasty surprises and capitalize on the benefits of easements by appurtenant.
First is the fact that easements in appurtenant do not need to be made in writing. It’s natural to think that easements by appurtenant would be nicely described in a deed conveying the land. Unfortunately for real estate investors like you, this isn't always the case. While easements by appurtenant may be in the deed conveying the land that benefits from it, it doesn’t necessarily have to be there.
Because of this, it is definitely worth your time to go past the deed to investigate whether a specific piece of land has an easement by appurtenant. It is better practice to include this fact in the deed itself, yet you can’t assume that its absence means there is no easement by appurtenant. By treading lightly here, you will avoid an unexpected surprise in the future.
Next, it’s worth understanding whether a prior easement in appurtenant has been terminated. Even though the easement in appurtenant passes with the land, it doesn’t necessarily mean that it is indefinite.
There are several different ways that an easement by appurtenant can be terminated. For example, the easement in appurtenant can be abandoned. In other situations, the easement in appurtenant may be terminated because it isn’t needed anymore. This necessity scenario can occur at unexpected times. Finally, the parties involved may decide to mutually terminate the easement in appurtenant. All of these scenarios may occur during (and even after) the diligence process, so keep them in mind when you’re reviewing your prospective rental properties.
Finally, consider whether your prospective property will need an easement by appurtenant before you make your investment. Even though you aren’t going to be living in the rental property, it’s important to step into your tenant’s shoes. He or she may need an easement by appurtenant to fully enjoy the property.
Because of this, you can potentially make your rental property more marketable by taking the initiative and starting the process. During this process, you will need to sit down with the owner of the relevant adjacent property (or properties) and pitch the idea. By putting in this work, however, you can increase the value of your rental property and have happier tenants.
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Easements by appurtenant aren’t new creations. They have existed for decades and are an extremely effective solution for property owners. Property owners can be confident that they can enjoy their land—even if they need to use part of their neighbor’s land to do so.
Ultimately, if you are purchasing a new rental property, you will need to do your research to determine whether your property has an easement by appurtenant. Even if it doesn’t, you may want to investigate the possibility if it will serve your tenants well.
In the end, easements by appurtenant don’t need to be overly complicated or confusing. We wish you the best of luck on your investing journey.