Everyone enjoys a surprise now and then. That is, everyone except commercial real estate owners who just discovered their ability to use and develop their property has been severely limited without their consent. The neighbor claims it has the right to drive delivery trucks across the owner’s parking lot. Another neighbor asserts it has the right to drain treated effluent into a stream on the owner’s land. How did this happen?
Prescriptive easements were established.
A prescriptive easement is a property interest acquired through a party’s unauthorized use of another’s real property for a certain period of time. If that party can prove their use met the required elements discussed below, the easement grants the party a right to use a specific portion of the property for a specific use. Because a prescriptive easement is by definition established without the landowner’s consent, and because it can have a significant impact on the property’s value and marketability, its appearance can be a most unwelcome surprise.
This article briefly describes the history and rationale for prescriptive easements, and then outlines:
- The elements necessary to create one
- How buyers can identify prescriptive easements, including the role title insurance can play
- Steps landowners can take to identify and quash potential easements
- How they can be terminated
- The legal action used to enforce or eliminate an easement, and
- Limitations on uses under prescriptive easements
But first… a cautionary tale.
The Drive-Through Bank with Drive-Through Delivery Trucks
In 1971, the Felgenhauers purchased property in Paso Robles, CA to build and run a restaurant. Felgenhauer v. Soni, 121 Cal.App.4th 445 (2004). Immediately behind their property was a parking lot owned by and servicing a neighboring bank. And immediately behind that, a public alley. From 1974 until 1999, trucks entered the alley and then crossed over the bank’s lot to make deliveries to the rear of the restaurant. Although the Felgenhauers owned the property during this entire period, they leased the land at certain times to third parties who bought the restaurant business.
The Felgenhauers never asked for permission to use the lot, nor did they assert they had a right to the truck use.
In 1988, the bank manager told one of the restaurant operators that the bank was going to erect a fence to separate the two properties. The operator asked if the bank would install a gate so deliveries could continue across the lot, and the bank manager agreed.
Given that the bank never intended to grant an easement, and because no one had ever brought a legal action to enforce or terminate the right to use the lot, there was no easement of record.
In 1998, the bank property, including the parking lot, was sold. The new owners informed the Felgenhauers their delivery trucks could no longer use the lot, and the bank was going to cut off the restaurant’s access. The Felgenhauers brought a quiet title action asserting the prior deliver truck use, done continuously and uninterrupted, openly, adverse to the bank owner’s property interest, and for the required period of time, established they had created a prescriptive easement.
The court agreed.
It turned out the new bank owners had purchased real estate not only with drive-through banking services, but also with drive-through delivery truck service to the restaurant next store.
A Brief History of Prescriptive Easements
As described in Michael V. Hernandez’s article “Restating Implied, Prescriptive, and Statutory Easements,” courts have recognized the right to prescriptive easements for centuries. Before 1275, English common law allowed for a prescriptive use if it extended beyond “living memory” or to the Norman Conquest (1066). After 1275, pursuant to Parliament’s enactment of the Statute of Westminster, the requisite period became the “limit of English Memory,” meaning to the time of King Richard (1189). The English courts then once more modified the prescriptive period, requiring that the continuous use had existed during “living memory.”
This practice continued until the 17th century, at which point the courts replaced the living memory standard with a specific number of years. This change coincided with the court-created fiction of a “lost grant.” This fiction meant that where property was used for a specific period of time, such use was evidence that the user had once been granted a right for such use, but the grant had been lost. The initial period selected was 20 years, the time related to an ejectment action. While the fiction of the “lost grant” has largely been abandoned by U.S. courts, the right to an easement based on continuous and unauthorized use for a specific period of time remains.
Rationales for the Concept of Prescriptive Easements
It seems counter-intuitive that a court would give away a portion of an owner’s property rights without their consent, especially to a party that had acted adversely to the owner’s rights. As Professor Hernandez discussed, the various rationales for prescriptive rights appear at times illogical, and often in conflict with the reality of modern day real estate usage. Nonetheless, courts and commentators have proffered the following justifications:
- Punish an Owner for “Sleeping” on Their Rights: Some courts have suggested that well-established land uses should be protected, and owners who sleep on their property rights (not paying attention to others who may be infringing upon them), should be punished by losing some of those rights.
- Incent the Productivity of Property: Courts have argued that society benefits when a property is put to productive use. Where an owner doesn’t do so, the owner should give way to those who are. As Prof. Hernandez pointed out, however, there are instances where society benefits from unproductive land. As an example, he cites farms that are paid by the federal government to not operate.
- Quieting Title Increases Certainty and Marketability: Some have opined that a process to determine if a use has met the prescriptive elements, and thus whether an easement exists, removes uncertainty about interests in the property. It is argued that increased certainty encourages market transactions, and gives lending institutions greater comfort when providing credit for these transactions. However, given that a prescriptive easement is created when the requisite elements are met, and not when a court is asked to enforce the easement by legal action, the ability for a prescriptive easement to exist without being of-record actually promotes uncertainty.
- Reducing Litigation: Some have suggested that if a specific legal right can be created through granting a prescriptive easement, then litigation relating to arguments over property uses that have existed for a long time should be reduced. Prof. Hernandez responds that the statutes authorizing prescriptive uses actually increase litigation because they provide the use becomes a right after a set period of time. This forces the owner to bring a lawsuit to challenge the easement before the period has run.
Elements Required to Establish a Prescriptive Easement
To establish a prescriptive easement one must prove that all the requisite elements have been met: that the use was (1) adverse (sometimes referred to as “hostile”), (2) actual, open and notorious, (3) continuous and uninterrupted, and (4) for the statutorily required period of time.
Adverse means the user is acting without the consent of the owner, and in conflict with the owner’s property interest. Typically, if a use would give rise to a trespass, then it would satisfy this element.
In the Felgenhauer case, the bank claimed that the adverse element was eliminated in 1988 when the then-manager agreed to put a gate in the dividing fence and allow the restaurant’s delivery trucks continued passage over the lot. An act cannot be adverse to a property owner if the owner has given consent. Why then didn’t this consent defeat the prescriptive easement? Because the court found the prescriptive period had been satisfied before 1988, and the easement had already been created. Naturally, an owner’s consent to a use that has already been perfected will not extinguish the right to use.
Actual, Open and Notorious
This requirement means that the party seeking the easement must have actually used the property, and that his use was visible enough to give the owner actual or constructive notice. Constructive notice is when a hypothetical reasonable landowner should have noticed the use.
In one California case, a party sought to establish a prescriptive easement allowing them to cross a neighbor’s property with their motorcycles. However, no one had ever seen a motorcycle on the property, and in fact, the party had hidden their motorcycles following crossings. The court held that such “clandestine” uses failed the open and notorious element, and would not support granting a prescriptive easement.
It should be noted that while a user must make actual use of the property, their use doesn’t have to be exclusive. Another’s use may not disqualify a claim for prescription. And, as shown by the Felgenhauer case, a prescriptive use will not be denied simply because the owner also uses the easement property (the bank had used its own parking lot).
Continuous and Uninterrupted
The party seeking to enforce an easement must establish they have used the property continuously for the statutory time period, but continuously does not mean constant. For example, an easement for a car crossing property may be established if the driver crosses the property only twice a day–on its way to and from work. Seasonal uses may even meet this standard, provided the uses regularly occur each “on” season.
Additionally, the use must not have been interrupted by the owner. Generally, if a party other than the owner interrupts the use, this will not defeat continuity.
Required Period of Time
The period required to establish a prescriptive easement varies by state. For example, it is five years in California, 10 years in New York, and 20 years in Wisconsin. While the use must exist for this period, through the doctrine of “tacking” it can be accomplished by combining the times that successor parties used the property. For example, where Andrew uses Zach’s property for 10 years, Andrew sells his property to Barbara, and Barbara continues the same unauthorized use for another 10 years, a 20-year prescriptive period has been met.
Impact of Prescriptive Easement
Property Interest: Right to Use, Not Ownership
If a prescriptive easement is established, it conveys only a right to use the property, and conveys no ownership interest. Title to the property is maintained as it was prior to the easement. In contrast, when real estate is acquired by adverse possession, actual ownership of the land is transferred.
Diminished Value of Burdened Property
The marketability and value of real estate can be significantly reduced as a result of an unanticipated easement. When a property owner works with utility companies and public bodies regarding utility and roadway easements, and even when working with neighboring landowners for access easements, the easements are located and limited in scope to allow for the owner’s anticipated use of the property. But when an easement is created without the input of the owner, its location and intensity can drastically impact an owner’s ability to develop or sell their property.
Consider the bank’s position following the enforcement of Felgenhauers’ prescriptive easement. Is the property more or less attractive to future buyers with a permanent easement for truck traffic across its lot?
Owner May Not Interfere With Easement Holder’s Rights
Once a prescriptive easement is established, the landowner cannot interfere with the easement holder’s use. Nonetheless, an owner may continue to use the land underlying the easement so long as its use doesn’t unreasonably prevent the holder from its own rightful use.
How CRE Buyers Can Protect Themselves Against Potential Prescriptive Easements
Because prescriptive easements, prior to being validated by a court, are unrecorded, their presence will not be revealed by a due diligence process that only reviews title documents. However, there are steps a buyer can take to lessen the chance an undisclosed prescriptive easement exists.
Physical Inspection of Property, Aerials, and Interviews
When performing a traditional physical inspection of structures, buyers may also consider walking the property with a surveyor, reviewing the property lines and located improvements to look for signs of use other than the owner’s (e.g., paths, tire tracks, structures not included on the survey). While common prescriptive easements relate to a party passing over property, they can also permit other uses such as a drainage pipe discharging treated effluent into a stream on another’s land. Given that uses may be visible at limited times, if possible, a buyer may make multiple inspections at different times on different days of the week.
A review of aerial photographs can be helpful with property that is not easily accessible, e.g., heavily forested parcels (Google Earth is one resource for aerials). The bird’s eye perspective can also help identify uses that are more readily seen from a distance (e.g., a path across property which is well-worn in certain areas and near invisible in others). Additionally, the buyer may interview neighboring landowners and tenants about their use of the property, and whether agreements exist between the seller and neighbor.
Due to the unrecorded nature of many prescriptive easements, a title review will not help a buyer identify an easement. But, title insurance can transfer the risk of one from the buyer to the insurer. Under their general exceptions, American Land Title Association (“ALTA”) policies exclude coverage for “unrecorded easements and claims of easements.” However, a buyer may purchase an extended coverage policy to eliminate this exception, putting the onus on the title company to determine the risk of a prescriptive easement.
Additionally, if a buyer provides the title company with an acceptable survey, the buyer may secure a survey endorsement (also referred to as a “same as survey” endorsement), which provides that the insured land is the same as that shown on the survey. Accordingly, if it is later discovered that a prescriptive easement existed at the time the policy was issued, and the survey did not include the easement, the title company would be responsible for the omission.
How Owners Can Prevent Prescriptive Easements
As to Identified Users: Consent or Self-Help
If a landowner has identified the party using its property without consent, and if the use has not yet existed for the statutory period, the most effective way to end the threat is to simply give express and written consent to the user. If the owner consents, the “adverse” element is then lost and no prescriptive easement can be established. There are different ways an owner may accomplish this, but common practices include a revocable and non-transferable license or written agreement. Either should define the scope and location of the permitted use, state the permitted users, and explain how and when the permission can be revoked. While the licensed use may be permitted for a specific period of time, in order to protect against the use negatively impacting the ground’s value, sellers often require that the right terminates upon transfer of the seller’s property.
An owner may also consider using “self-help” methods to prevent the ripening of a prescriptive easement, such as posting “no trespass” signs, erecting fences to interrupt the use, or sending notices demanding that the use stop. However, there is a risk with these methods. If the use continues after the self-help measure, and the owner makes no further efforts to prevent it, the self-help act may then become evidence that the use was in fact adverse.
As to Unknown Users: Consent and Monitoring
When a landowner is not aware of any specific threat, but believes there is the potential for prescriptive use (e.g., undeveloped or rural real estate is susceptible to claims of easement because they often cannot be efficiently monitored), the owner may still attempt to issue a consent to unknown users. Such attempts include posting signs stating something to the effect of “Private property. Permission to cross, but may be revoked at any time.” An owner should determine whether the state in which the property sits has codified language for signs to defeat the adverse element.
If the owner is in a position to monitor its property, it may regularly make the same kinds of inspections suggested for a buyer’s due diligence review.
How to Terminate a Prescriptive Easement
Easements can be terminated through release, merger, condemnation or abandonment, and lost by adverse possession.
Release (Or Release Plus License)
The most straightforward way to eliminate a prescriptive easement is to buy it from the user, thereby releasing their rights to use. If they are unwilling to immediately release their rights (this may happen where immediate loss of the easement makes the present use of their property impossible), they may agree to a release in exchange for a license. The license would allow the use, but will expire at a future, specified time. If the easement has not been validated by a court’s judgment, this option can be especially attractive to the holder because the license specifies the permitted use and location, eliminating the risk that a court either denies the easement or limits it beyond what the user anticipated. Of course, the licensee also enjoys the compensation they negotiated and the litigation costs they avoided.
The doctrine of merger provides that when the property owning the easement (referred to as the “dominant estate”) and the property burdened by the easement (the “servient estate”) are merged into a single ownership, the easement is extinguished. Put simply, an owner can’t have an easement over his own land. As this method requires the landowner to purchase the dominant estate, it may not be a desirable or feasible alternative.
Only a public body may condemn property through its exercise of the power of eminent domain. However, condemnation may be available to terminate a prescriptive easement across real property where a statutory public-private partnership is in use. For example, in certain states, the power of eminent domain may be used to advance a tax increment financing (“TIF”) project.
To establish that an easement holder has abandoned its rights, and terminate the easement, an owner must show the holder’s intent to permanently cease its use of the easement, plus an affirmative act (or a failure to act) that evidences this intent. Non-use of the easement will not on its own support a finding of abandonment.
An owner may attempt to terminate a prescriptive easement by the same steps used to create it in the first place: meet the elements of prescriptive easement. This commonly begins with an owner using some form of “self-help” to prevent the use. Provided this act satisfies the requisite elements, the easement will terminate.
However, two risks make this an unattractive method. First, the elements must continue for the statutory period. If at any point during that period the user asserts their easement rights, the owner’s prescriptive period will be reset, and they’ll have to start the process all over again. Additionally, the holder may not just assert its rights, but where the owner’s “self-help” constitutes substantial interference with an easement, the holder may pursue an action against the landowner for a private nuisance.
What Happens to a Prescriptive Easement When Land is Sold? When Land is Leased?
An easement is a property right, and as such passes with the property. The dominant estate’s right to use the easement is passed to its new owner, and the servient estate’s obligation to not interfere with the use passes to its new owner.
In contrast, where a prescriptive easement was created during a lessee’s possession of the servient estate, the statutory clock for the potential easement will reset when the lease term ends. This happens because although the user’s actions were adverse to the lessee’s interest, they were not to the landlord’s, as it held only a reversionary interest during the lease term.
Quiet Title Action: How to Enforce or Challenge a Prescriptive Easement
In order to enforce or challenge a prescriptive easement, a party must bring a quiet title action. This lawsuit is brought in a court with jurisdiction over the property to determine ownership and other property rights.
However, the action is not necessary to establish the easement. As shown in the Felgenhauer case, the easement is perfected as soon as the elements of prescription are met. The quiet title action only validates the easement (and the judgment then becomes part of the property’s record).
Limitations on Permitted Uses of Prescriptive Easements
Use Cannot be Intensified
An easement holder is granted the use established by its action during the prescriptive period, and the type or scope of this use cannot be expanded or intensified. For example, the delivery truck use granted to Felgenhauer could not be expanded to allow for constant semi-truck traffic if the Felgenhauers replaced the restaurant with a distribution center. Subject to the limitation below, exceptions to this rule may occur where a natural evolution in a dominant property’s use requires a change to the easement use.
Use Can’t Prevent Owner from Meaningful Use of Its Land
Where a prescriptive easement denies the landowner any meaningful use of his property, courts will recognize that it has the same effect as taking ownership by adverse possession. In such cases, no such easement will be enforced. Accordingly, while a use may be modified to accommodate a natural evolution, it will not be permitted if doing so would effectively eliminate any meaningful use of the servient estate.
In this article we discussed prescriptive easements by outlining what they are as well as how to create, protect against, and also prevent them. As always, it’s best to consult with an experienced real estate attorney if this is an issue you are dealing with. Have you encountered a prescriptive easement? Does your due diligence process include a physical inspection? Let us know in the comments below!