Introduction to Easements and the Valuation of Easements By Richard Mario Leslie, MAI It is my intention in this article and in future articles to describe and explain first what easements are and then how they are valued by appraisers in the market and in eminent domain procedures. This is the first installment in this newsletter and I will start from the simple explanation of what easements are and then go on in future installments to the more complex issues of valuation. I will cover the most common use of easements for access or rights of way, conservation restriction easements, temporary use, corridor easements and then valuation techniques employed by appraisers for each type. An easement is a portion of the ownership rights transferred to another individual or entity. Real estate is not only comprised of physical components such as land and improvements. It is also comprised of rights and interests in the property, which is often associated with the term “Bundle of Rights”. This Bundle to Rights concept compares property ownership to a bundle of sticks with each stick representing a distinct and separate right of the property owner, e.g., the right to use real estate, to sell it, to lease it, to give it away, or to choose to exercise all or none of these rights. When a property is purchased it is usually in the “Fee Simple” condition or estate. This means that the owner has all of the rights to the property allowed by law. But this right is restricted by various laws such as zoning, land use and the rights of the public in the form of the government. Therefore fee simple ownership is defined and utilized as: "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." This then is the full Bundle of Rights that fee ownership provides the landowner. This full ownership or fee simple estate can be sold in pieces or various rights can be subdivided and sold separately. This subdivision of rights is know as an easement. Easements can be almost all or very little of the available rights in a property and are dependent on the description of the easements and the property rights contained in the easement language, usually recorded in the local registry of deeds. Easements may be temporary or permanent or for a specific purpose or time period. An easement is defined as: "An interest in real property that conveys use, but not ownership, of a portion of an owner's property. Access or right of way easements may be acquired by private parties or public utilities. Governments dedicate conservation, open space, and preservation easements." Easements must be located on land not owned since once the owner of the easement and the owner of the (Property) fee simple are the same, the easement is extinguished by merger of the easement into the fee simple interest. Example An owner of a 2 acre lot with a single family home has a utility easement on the property located along the road frontage. The owner has given up some of his rights within the easement area (10 feet x the 200 foot frontage) to the owner of the easement (utility company). This easement allows the utility company to run and maintain electrical wires overhead or underground and maintain the lines, it may also prevent the owner from building on the easement area. But the owner can use the site for a lawn, cross (walk or drive) over it, use it for a driveway and any use that does not interfere with the use as a utility line. The owner has given up some rights only within the easement area but retains all rights not specified in the easement language. Use of Easements Rights of way Utilities Access Conservation Type of Estate Dominant – Property that benefits from an easement. An affirmative easement that give the holder the right to perform a specific action on a property owned by another. Servient – Property that is burdened by an easement. A negative easement. Types of Easement Affirmative – an easement that allows a specific use, such as a right of way. Negative – an easement that prohibits a specific use such as a building height limitation. Appurtenant Easement - an easement that is attached to, benefits, and passes with the conveyance of the dominant estate; runs with the land for the benefit of the dominant estate and continues to burden the servient estate, although such an estate may be conveyed to new owners. Easement in Gross - an easement that is not attached or appurtenant to any particular estate; does not run with the land nor is it transferred through the conveyance of title. Conservation Easement A restriction that limits the future use of a property to preservation, conservation, or wildlife habitat. Next article will be on Conservation Easements and the valuation techniques utilized by appraisers.
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