Encumbrances on Commercial Real Estate
Generally speaking, an easement is a right to use another's property without owning it. Title to the land or property remains with the owner. The use of the land parcel and any structures is subject to the easement. The most common type of easement is a Utility Easement.
A Utility Easement grants public utility companies (water, electric, gas, cable, pipelines, etc) the right to use that portion of the land for their product systems. There are other types of easements as well such as city usage regarding access for drainage.
This right may be established by law or may come into effect due to continuous use over a period of time. These easements are in the interest of the public and help the community function and grow smoothly.
For example, an electric company may need to bury electric cables on a commercial property. By obtaining an easement, the electric utility company gains a legal right to use the property. The owner cannot interfere with the use of the easement and is required to allow use.
When considering buying a commercial real estate property, it is critical to research any easements that are held against the property. As a new property owner, keep in mind the new owner will have to honor the easements. Certain easements can reduce the economic value of the property. It is important to research any easements that are held against the commercial property. This can be accomplished with an ALTA survey.
Most commercial real estate transactions already require an ALTA Land Title Survey which provides information relating to easements, rights-of-way, exact boundaries, encroachments and other factors influencing the future use and ownership of land or commercial property. Land title surveys provide enough information which can be used to reduce the risk of those who are involved within the commercial property transaction. ALTA surveys may also be modified to include optional information which is needed based on the location (flood zones, environmental risk area, etc) and scope or category of business (factory, senior care center, restaurant, car dealer, shopping mall, hospital, etc).
Please contact SRN today for any questions and we will be happy to help.
