|Many buildings that were constructed prior to the 1960s lacked adequate parking, and/or even on-site common usage with for ingress/egress of automobiles. In property law, ingress/egress referred to rights of a person to pass over real property for entry, leaving, and returning to a property.
Walking, bicycles horseback, horse-drawn carriages were the planned sources of transportation. Clustering building growth around the center of town was also standard. The advancement of our automobile reliance-based culture had not yet matured.
In days gone by, two or more property owners may agree verbally that they would build adjacent buildings and use one or more of the land parcels for ingress/egress. Problems arose when future owners, descendants, and partners did not agree with the interpretation and or benefits of the original agreement. Many old verbal agreements have gone bad, as verbal agreements tend to do. Municipalities, property owners and their lawyers wised up and began memorializing the agreements into written form. At the same time the creation of municipal planning departments and zoning ordinances came into being. Owners were then required to hire a civil engineer to draft up a written placement of physical easements and the services of a lawyer to file an application for approval with the respective city planning department. Upon approval by the city, the agreements and drawing of physical placement of the easements encumbering the property would be recorded in public records. The objective was for the recorded agreements, was for the easement to provide public notice that the easement existed, and that it would bind all future owners in perpetuity.
A “prescriptive easement” is an “claimed” easement upon another’s real property acquired by continued use without permission of the owner for a legally defined period. Conflicts and litigation arose to prove up what is referred to as “prescriptive easements.” Usually a claimant has the burden of proof to prove each of the element necessary to establish that the easement has been created over time by prescription (Code of Civil Procedures 321). The claimant is required to adequately prove that they have possessed the easement by continuous use for period for California is 5 years. The statutory time-period varies by state to state. Proving the claimant’s rights can take time, resulting in litigation, and be fraught with the risk of losing, since each claim is fact specific. The issue of exclusive vs non-exclusive must be proved-up. Will the easement run with the land, and bind all future owners?
Many older buildings may have been built for retail use facing commercial-corridors, adjacent apartment buildings facing each other, and industrial that should have required mutual access agreements. Many older structures were built prior to the creation and enforcement of building and zoning ordinances. Zoning ordinances were adopted in California as early as the 1920’s and have continued to evolve ever since. Prohibitions related standards such as setbacks, height & density restrictions, floor area ratios, required parking, deed restrictions, installations of required amenities, acceptable building materials, all have occurred over time. Laws, over time, have been passed that now control all aspects of ownership.
There is a distinction between the written physical lay-outs or placement of an easement, and written usage agreements between parties, designed to create an understanding and of the terms and conditions, and to enforce them among the parties. Many easements were contemplated as part of the filing of the original tract map within a municipality. Most easement related agreements are recorded at a county records office.
Municipalities commonly use a tool of extortion to gain easements on certain properties. When the owner files an application to process a tentative tract map the city planners frequently condition the approval to include an easement that has little or no benefit to the property owner. In many cases the property owner is even required to pay for the improvements, I refer to this as “easement by extortion.”
Both voluntary and government mandated easements create an encumbrance against the property. An encumbrance refers to a claim and/or agreement to enforce the rights and obligations relating to a property. There are dozens of recorded instruments that create or inhibit rights relating to the ownership of real property, all of which encumber the property, and/or cloud the title. Final Tract maps, covenants, conditions and restrictions, by-laws of mutual associations, utility easements, notices of substandard condition, and special notices now affect what may be built or reconstructed.
In many cases, multiple parties who own adjacent property’s, shopping centers, retail centers, industrial, historic properties, all these have a need to create written agreements for mutual benefits, to protect the interest of all participants. Examples include, easements for parking, mutual access of ingress/egress corridors, access for installation and maintenance of utilities, operation and management of common areas, and many others.
Here are a few short case studies:
- Two adjacent property owners occupied industrial parcels in Gardena CA. Each parcel was 40 ft wide by 100 ft deep. The property owner on the right side wanted to build a zero-lot line building that was 40 in width. Zero-lot line means that the property was built up to the property line with no setbacks. The left-side property owner agreed to construct his building only 30 feet wide so that there would be 10 feet available for ingress/egress of automobiles for both properties. The actual physical location for traffic flow was only on the left-side property. The right-side property contained no other method of entry other than his left neighbor’s property. No written agreements existed, but merely two good old boys agreeing on a hand shake, and hopefully an occasional cold beer. An argument for a prescriptive agreement would be excellent, since the buildings were built in the 1960’s and have operated that way ever since. The right-side property owned his property free and clear. The left side property owner had a lien of $300,000. If the property owners hired a civil engineer and a lawyer to draft up a reciprocal usage easement for ingress/egress, the agreement could be signed, and recorded to run with the property title. The owner would be required to submit the plans and agreement to the building and planning department for approval. Upon city approval, the plans and agreement could be recorded. In this fact specific case the problem was that the easement would be recorded in first lien position on the right-side property, but as a second lien position on the left side property. The recorded easement of the left side property would be in a second lien position behind a $300,000 first trust deed lender. If the borrower on the left side defaulted on his loan, and the property lost in foreclosure, the recorded usage easement would be foreclosed out, extinguished, or ceased to exist. The other property owner would be screwed and have not right of access. Which would drastically diminish the functionality and desirability and of course, value would be severely affected. This would be a delightful job for an attorney to file an action to prove up that the property on the right has a prescriptive easement on the left side. This loan request was denied by the commercial lender because of this risk.
- An auto body and fender shop also in Gardena, CA was fronted on a busy street but has no direct access to the auto storage yard. Entry into the repair shop was available only through an alley way. All the properties along the street has the same issue and potential risk. The task of the processing and underwriting was to verify that there was a written reciprocal easement agreement in place signed and approved by the property owners who would continue to be able to enter through the alley. The recorded easement was verified that it existed and did run with the land. Risk abated.
- A barber shop operator had the chance to purchase the real property at the location of his operating business. The location was an A+ situated at the entry to a regional shopping. Part of the processing and underwriting staff’s task was to verify that there was a reciprocal parking easement agreement in place for all the tenants in the shopping center, as well as the inline retail shops near the entry. The recorded easement was verified and does in-fact run with the land. Risk abated.
- An informal letter agreement may be used when two property owners find good reason to benefit by being able to use the other owner’s property. The informal agreement does not run with the land. The agreements are usually for a specified time period, and cancellable with a 30/60/90-day notice. A large church occupied one side of the street, with semi-adequate parking, although Sunday morning were problematic. There is a shopping center across the street with semi-adequate parking, although Saturdays are problematic. A letter agreement was drawn up for reciprocal usage of parking, rather than an easement. The agreement specifically spelled out the terms of times for needed use of both parties and was cancellable by either party with a 60 days’ notice.
The term “run with the land” refers to the fact that a written mutual usage agreement or easement agreement is recorded and cannot be extinguished, except by operation of law. The term in perpetuity is used and, in most cases, this is preferable.
The subject of reciprocal usage agreements is complex. Do not attempt to circumvent best practices, including hiring a lawyer who specializes in real estate law, and a civil engineer to draw up the property boundaries and alignments. The process will absolutely require filing an application with the city for approval and recording the final documents. Upon approval recording can occur, with proper title insurance.
What would the sub-text be in relating to lending real property? When evaluating the risk of properties loans, the consideration of mutual reciprocal rights needs to be identified, quantified and satisfied as to the potential risk.