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Striking the Delicate Balance Between Easement and Fee Owners

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Striking the Delicate Balance Between Easement and Fee Owners STRIKING THE DELICATE BALANCE BETWEEN EASEMENT AND FEE OWNERS STEVEN L. MILLER, JR., Houston Greenberg Traurig, LLP State Bar of Texas 29TH ANNUAL ADVANCED REAL ESTATE DRAFTING March 15-16, 2018 Dallas CHAPTER 3 STEVEN L. MILLER, JR. Greenberg Traurig, LLP 1000 Louisiana Street, Suite 1700 Houston, Texas 77002 713-374-3500 FAX: 713-374-3505 BIOGRAPHICAL INFORMATION EDUCATION B.A., in History and Political Science cum laude, Southern Methodist University J.D., The University of Texas PROFESSIONAL ACTIVITIES Of Counsel, Greenberg Traurig, LLP, Houston, Texas - Real Estate Section Member, State Bar of Texas Former President, Child Builders, Board of Directors Founding Member, Colonial Williamsburg National Advisory Council Founding Member, United Way Young Leaders Council PUBLICATIONS, ACADEMIC APPOINTMENTS AND HONORS Team Member, Chambers USA Award for Excellence, Real Estate, 2017 Team Member, U.S. News - Best Lawyers®, "Law Firm of the Year" in Real Estate Law, 2015 Team Member, The Legal 500 United States, "Top Tier" Firm in Real Estate, 2014 Team Member, Law360 "Real Estate Practice Group of the Year," 2013 and 2015 Listed, Who’s Who Among American Law Students, 1998 Striking The Delicate Balance Between Easement and Fee Owners Chapter 3 TABLE OF CONTENTS INTRODUCTION .......................................................................................................................................................... 1 I. FEE OWNERSHIP ................................................................................................................................................. 1 II. EASEMENT ALTERNATIVE TO FEE OWNERSHIP ........................................................................................ 1 III. EASEMENT AGREEMENTS ................................................................................................................................ 1 IV. TYPES OF EASEMENTS ...................................................................................................................................... 2 V. CONFLICTS BETWEEN EASEMENT AND FEE OWNERS ............................................................................. 2 A. Exclusivity ....................................................................................................................................................... 2 B. Property Subject to the Easement .................................................................................................................... 3 C. Use of the Easement ........................................................................................................................................ 3 D. Excavation and Restoration ............................................................................................................................. 3 E. Term of the Easement ...................................................................................................................................... 3 F. Conflicting Easements ..................................................................................................................................... 4 VI. EASEMENT VERSUS LICENSE .......................................................................................................................... 4 CONCLUSION ............................................................................................................................................................... 4 ATTACHMENTS: Reciprocal Easement Agreement (Annotated) Water Line Easement (Annotated) i Striking The Delicate Balance Between Easement and Fee Owners Chapter 3 STRIKING THE DELICATE nonpossessory (non-ownership) interest in the land burdened by the easement. In situations like these, an BALANCE BETWEEN EASEMENT easement may provide a benefit of land ownership AND FEE OWNERS (e.g., the right to use the land) without the expense and capital illiquidity involved in acquiring fee title to the INTRODUCTION land. However, unlike fee ownership which permits a Easements are commonly referenced in real estate landowner to generally use the property for any lawful transaction documents and sometimes constitute the use and in perpetuity, agreements granting easements entire transaction. In spite of this, easements are often are usually (if properly negotiated) for a limited scope, not fully understood or drafted in a manner that a specific period of time (though they may be perpetual accomplishes or maximizes the benefits to the grantor in certain easement agreements, such as utility or the grantee. More commonly in real estate easement agreements or certain access agreements), transactions, the ownership-related documents receive and contain restrictions on the use of the easement and a much greater level of attention and scrutiny. obligations regarding the property during and at the However, easement owners possess many of the same termination of the easement agreement. As with deeds rights as fee owners do. This paper examines the conveying title to land, easement agreements should in similarities, differences, and interrelationship of writing3 and be recorded in the real property records of easements and fee interests, and perhaps most the county in which the land is located to put third importantly, how to approach easement documents parties on notice of the easement agreement and to from both the grantor and the grantee perspectives. protect against loss by the easement holder of its easement rights due to a conveyance or foreclosure by I. FEE OWNERSHIP a subsequent lender of the property burdened by the In the most straightforward of real estate easement. The actual compensation, if any, to the transactions, land is conveyed directly by means of a landowner from the grantee of the easement may be set special warranty deed or general warranty deed forth in the recorded easement agreement or in a providing the purchaser with fee1 ownership of the real separate agreement or side letter. As is usually the property, which deed is recorded in the real property case with deeds, if the compensation is set forth in the 2 records of the county in which the land is located. easement agreement that is recorded, such Generally, subject to complying with law, recorded compensation will be stated in a nominal amount (e.g., restrictions, and any limitations set forth in the deed, $10). A third option, the ground leasing of property, is the new landowner may utilize the property as it an alternative to purchasing property or obtaining an chooses. Non-owners of the property have no rights to easement over the property (and contains elements of use it unless permitted by the fee owner. Fee owners fee ownership and easement rights), but ground leases may generally transfer ownership of the property are outside the scope of this paper. It should also be without restriction. However, land ownership also noted that in custom and practice, many agreements involves necessary obligations and burdens such as the between adjacent landowners are done by means of an purchase price, ongoing maintenance and repair easement agreement, so an analysis of whether a sale obligations, and ad valorem tax obligations. of a specific tract, a ground lease, or an easement agreement is most desirable to the parties may be, and II. EASEMENT ALTERNATIVE TO FEE often is, secondary to custom and practice. For OWNERSHIP example, access easement agreements are routinely Often a party desires the benefits of land entered into by custom. ownership, such as the right to use the land for a particular purpose, but for a number of reasons, III. EASEMENT AGREEMENTS purchasing the property is not feasible or desired. For An easement, in its most basic form, is a example, the intended limited use of the land may be nonpossessory (non-ownership) interest in land owned disproportionate to the cost of purchasing the land, the by another party providing for the right to use such tax implications of ownership may negate or materially land.4 The owner of the land may continue to use the lessen the purpose for which the land is desired, property it possesses, including the easement area, acquisition financing may not be attainable or may not subject to the easement. The easement holder may not be economically feasible, or quite simply the subject exclude others from using the land that is burdened land may not be for sale. An easement is very likely to unless its use of the easement is adversely impacted (or be a much faster acquisition transaction than acquiring the property in fee and provides the grantee with a 3 McClung v. Ayers, 352 S.W.3d 723, 729 (Tex. App. – Texarkana 2011, no pet.) 1 Texas Property Code § 5.022(a) 4 Marcus Cable Assocs., L.P. v. Krohn, 90 S.W.3d 697, 700 2 Texas Property Code § 13.02 (Tex. 2002) 1 Striking The Delicate Balance Between Easement and Fee Owners Chapter 3 it has an exclusive right) and (unlike fee ownership) particular tract of land). Thus, the grantee is may not use the land except in the exercise of its prevented from transferring the right to use easement rights. While there are easements that are the easement, absent an express provision in not created via contract, such as a prescriptive the easement agreement. However, if the easement or an implied easement, this paper addresses burdened property is conveyed, the holder of easements contractually agreed to by a grantor and a the easement retains the right to use the grantee. Typically, as noted above, the legal right to easement. Easements in gross are very use the property of another
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