For many buyers of commercial and private real estate, easements often sound like a bland technicality to skim over quickly. But missing the meaning of an easement at the wrong time can change a person’s life and hurt the viability of a business forever.
As a large hotel project recently showed, unexpected and sometimes dazzlingly high expenses might be avoided by fulling understanding the easements in a new asset before it is too late.
A few basics about easements
An easement is a set of rights someone has on a property they do not own. Easements often entitle a person, a company or even a broader local community to exercise their interests over someone else’s land.
The usual time most people encounter an easement is when they call the city or county to ask where the sewer, water or gas lines run through their land. Even when you dig into your own dirt, a utility company or government agency has rights you cannot violate. You might even need permission in the form of a permit.
Often, easements develop over time as a person or community simply uses part of someone else’s property. Maybe the locals use a beach as a community beach, or they take advantage of a logical location for a boat landing. No matter how much a new owner pays for the land, the community may have earned an easement giving it the right to use it.
Mixed-use project relies on using city parking garage
Citizens of Tallahassee watched a fight between city government and developers of a major downtown hotel project.
Planners of the hotel project had factored in their ability to use the ground floor of a city-owned parking garage behind the county courthouse. This easement would allow for back-of-house activities like deliveries.
A 2016 agreement specified that the project’s use of the garage would be “perpetual.”
A year after signing, it turned out the garage had critical structural problems and might even have to be demolished. The city also said it interpreted “perpetual” as applying only to the current structure. No structure, no easement, the city claimed.
In its lawsuit, the hotel project said it had to stop construction after already spending $19 million, not counting $4.4 million for the land itself. Two leased 300-feet cranes and other equipment sat idle as the project lost investors and anticipated tenants.