An easement is the legal right of another person or entity to use part of your property. Without understanding what an easement is and how it affects homeowners, it can sound worse than it really is. But for some homebuyers, receiving a survey report that reveals a previously unknown easement can have disastrous implications.
Most properties in Central Texas — and around the country, for that matter — have some type of easement. Whether it’s a legal agreement granting a utility company permission to erect power lines above ground or sewer lines underneath, without these arrangements, homeowners everywhere, from cities to suburbs and rural dwellers alike wouldn’t easily have access to power, telephone landlines, clean water, gas, cable, wifi and many other mainstays of modern life.
The reason why it’s important for real estate professionals to know what easements are and how the agreements work is because it’s just one more part of the pre-closing process that many prospective homebuyers in and around Austin are relinquishing in their effort to outbid the competition. Susan Horton, 2021 president of the Austin Board of REALTORS® (ABoR), worries for agents and their clients right now. “In this hot market, buyers are waiving everything. They’re waiving their right to cancel because of an appraisal, they’re waiving it because of a survey, they’re waiving the opportunity to get the home inspected,” she says. Another downside to buyers of giving up pre-closing rights so that they can secure the purchase of a property in Austin is finding out about easements after it’s too late.
Certain types of easements can prevent owners from using their property the way they want to, making it one of the most critical rights homebuyers are forfeiting, says Horton. If a buyer yields his or her right to an inspection, she or he might find out the house needs a new roof or new plumbing. That can cost a lot of money. But if there’s a drainage easement behind the house, it can prevent the new owners from putting an underground pool in their yard. If a property has a livestock restriction and that’s the sole reason a buyer chose that property, there’s no easy path for backing out of the transaction.
Horton has experience with restrictive easements. But that was a long time ago before buyers were waiving their pre-closing rights. In one instance, a couple got into contract for more than an acre of land that they wanted to use for raising emus. But then the survey arrived and it revealed the existence of a livestock land restriction. If the same transaction was pursued in today’s real estate environment, it could be catastrophic for the client and agent.
Fortunately, most easements are not that severely restrictive. There are three types of easements most brokers and agents encounter: right of way, utility and public.
An easement appurtenant is for when a neighbor needs to pass through another’s property to access a driveway or roadway. Another example is when two neighbors share a driveway or one’s driveway is partially on the other’s property. The owner whose property is burdened can grant an easement that provides the neighbor permission to use the property.
A utility easement is the most common type of easement most agents encounter. They’re granted to utility companies to install and maintain power lines, sewer pipes, telephone, television and wifi cables. These utilities may be overhead or underground.
Overhead utilities can prevent property owners from building vertically within a certain square-footage of the easement area. Underground easements can prevent landowners from digging an underground pool, building a guest house or adding an addition onto the home. Both can prevent the property owner from building a fence, or at least dictate where the fence can or can’t go. Since you can see overhead utilities, they’re not usually a surprise when they show up on the survey report — though the amount of space protected by the easement may be. But underground easements can be a surprise. They’re more likely to affect clients who are desperate to buy into the Austin housing market and specifically those who waive pre-closing contingencies for the chance to do just that.
A public easement grants the general public or local residents rights of access. These are commonly seen in condo communities and those managed by homeowner’s associations. With public easements, members of the community are granted access to common areas such as lakes, tennis courts, pools, clubhouses and playgrounds, even if it means walking through someone else’s property.
Easements are legal documents created when a property owner is approached by a neighbor or municipality requesting permission to use the land. According to the National Association of Realtors, “While the homeowner who originally grants the easement may be compensated, subsequent homeowners typically are not.”
An “in gross” easement is only between the individuals who originated the agreement. When the owner sells the property, the new owner has no obligation to honor the contract. But an appurtenant easement does transfer to subsequent owners and locks them into the preexisting agreement, whether they like it or not. And even when a new owner of a property is not obliged to recognize an existing in-gross easement, the situation can still be problematic when he or she has to break the news to their new neighbor that the agreement that had been in place — anywhere from a few years to a few decades — will be dissolved.
“That one sheet of paper that costs a little over $400 is so valuable,” says Horton, “I mean, who owns the tree that’s on the land? Unless you’ve got a survey, it may look like it’s on one side, but it might not be.” Horton and her ABoR colleagues can’t stress enough that a survey is critical for every real estate transaction. You really shouldn’t get into contract without one.