Can I sell an easement on my property?
March 9, 2016 5:45 AM Subscribe
My property's title has an easement onto my neighbor's property for a right of way through the neighbor's property to my property. I don't need this easement to get into my property, although I do occasionally use it. My neighbor's property has been purchased by developers and they would like to buy back the easement (pay me to extinguish the easement) in order to develop across the easement. This seems straight-forward, but selling a portion of my property would seem to violate my mortgage agreement. Would it?
To start off with, I have asked this question to a lawyer (who stated they would have to read the entirety of my mortgage paperwork while charging their hourly rate to answer the question) and to a mortgage company customer service representative (who simply stated they do not provide legal advice and that I need to abide by my mortgage agreement). I have not been able to find an answer to this question online. This seems like a problem that nobody has ever been faced with.
I know that this is not rocket science. People sell easements onto their property to other companies (particularly utility companies) all the time. I would like to do the reverse - sell back an easement that I own onto someone else's property. This seems like the same thing. However, it seems to me that my mortgage company doesn't want me to do anything that decreases the value of the property - I'd effectively be selling off a portion of my property to someone else. So, what's the guiding principle here? Is it "don't ask, don't tell"? I'm fine with going back to the lawyer to answer this question, but it seems like the answer is more obvious than I'm thinking.
To start off with, I have asked this question to a lawyer (who stated they would have to read the entirety of my mortgage paperwork while charging their hourly rate to answer the question) and to a mortgage company customer service representative (who simply stated they do not provide legal advice and that I need to abide by my mortgage agreement). I have not been able to find an answer to this question online. This seems like a problem that nobody has ever been faced with.
I know that this is not rocket science. People sell easements onto their property to other companies (particularly utility companies) all the time. I would like to do the reverse - sell back an easement that I own onto someone else's property. This seems like the same thing. However, it seems to me that my mortgage company doesn't want me to do anything that decreases the value of the property - I'd effectively be selling off a portion of my property to someone else. So, what's the guiding principle here? Is it "don't ask, don't tell"? I'm fine with going back to the lawyer to answer this question, but it seems like the answer is more obvious than I'm thinking.
This seems like a problem that nobody has ever been faced with. Well, no, it happens all the time, but the answer depends entirely upon the language in your mortgage agreement and various state and local rules, laws and prior outcomes. Which is why a lawyer said she'd have to read the documents before giving you an answer and why the mortgage company told you they won't give you legal advice.
Easements are a pain in the ass even for skilled property lawyers. Which is why questions about people building fences past the property line around here get such resounding recommendations to get a survey and enforce the property line.
posted by crush-onastick at 5:52 AM on March 9, 2016 [6 favorites]
Easements are a pain in the ass even for skilled property lawyers. Which is why questions about people building fences past the property line around here get such resounding recommendations to get a survey and enforce the property line.
posted by crush-onastick at 5:52 AM on March 9, 2016 [6 favorites]
This is where you tell the developers "As I would need to speak to a lawyer to find out what my legal obligations are, to move forward in discussing this I need you to pay me [estimate amount of lawyer fees here] to cover legal costs, not contingent on an eventual sale." This is something they want, not something you want, so you can just refuse to pay money. If they want it enough, they'll pay up.
posted by jeather at 6:00 AM on March 9, 2016 [84 favorites]
posted by jeather at 6:00 AM on March 9, 2016 [84 favorites]
The developer should cover your legal costs to find out. Without it, he is not developing. Also, the sale of that easement could raise the value of your property depending on what is being developed on the property versus what is on it now.
posted by AugustWest at 6:11 AM on March 9, 2016 [2 favorites]
posted by AugustWest at 6:11 AM on March 9, 2016 [2 favorites]
You know, I can't think of any developer that got screwed, but I can sure think of people I know that have worked with developers that have. They are not your friends. They don't have your interests at heart.
Lawyer up.
posted by BlueHorse at 7:14 AM on March 9, 2016 [3 favorites]
Lawyer up.
posted by BlueHorse at 7:14 AM on March 9, 2016 [3 favorites]
Go to /r/legaladvice and search for easement issues - you need a lawyer. There are huge implications to this.
posted by lpcxa0 at 7:15 AM on March 9, 2016 [1 favorite]
posted by lpcxa0 at 7:15 AM on March 9, 2016 [1 favorite]
Jeather has it. They need you. You don't need them. If they absolutely need that easement (for example if they are going to build a building on it), they will pay what it takes. You should ask for:
-- Your legal costs (in advance, as needed)
-- Any closing costs on your side
-- The actual value of the easement to them, not to you. Since you don't really need it, it's not worth much to you. But it could be worth a lot to them, if without it they lose or compromise their opportunity to develop. You may want to retain a real estate advisor (to be paid on a contingency basis at closing) to help you determine what that value really is.
Your mortgage company is probably going to be OK as long as the property you retain is still worth enough to cover something like 125% of the outstanding mortgage balance. You may need to have an appraisal done to convince them of this, which the developers should also pay for, in advance.
posted by beagle at 7:18 AM on March 9, 2016 [4 favorites]
-- Your legal costs (in advance, as needed)
-- Any closing costs on your side
-- The actual value of the easement to them, not to you. Since you don't really need it, it's not worth much to you. But it could be worth a lot to them, if without it they lose or compromise their opportunity to develop. You may want to retain a real estate advisor (to be paid on a contingency basis at closing) to help you determine what that value really is.
Your mortgage company is probably going to be OK as long as the property you retain is still worth enough to cover something like 125% of the outstanding mortgage balance. You may need to have an appraisal done to convince them of this, which the developers should also pay for, in advance.
posted by beagle at 7:18 AM on March 9, 2016 [4 favorites]
Don't forget to include compensation for your time dealing with all this. This has the ability to chew up a bunch of your free time that you could be spending doing things you like rather than talking to lawyers and bankers.
posted by Candleman at 8:14 AM on March 9, 2016 [6 favorites]
posted by Candleman at 8:14 AM on March 9, 2016 [6 favorites]
Ask the developer for a lawyer at his expense.
Don't say anything to the developer at all, let your lawyer do the talking. Some easements originated as financial assets, other easements originated as (essentially) an imposition to avoid the injustice of someone being cut off from their property. An easement that you admit you don't need is an easement they might be able to have rescinded without paying you!
You should expect you'll have to refi to do this -- regular consumer mortgages can't accomodate title changes like this. It may even be the developer will need to refi you, because even a new bank won't be willing to come into a simultaneous change in title because it will bollix title search and title insurance.
posted by MattD at 8:42 AM on March 9, 2016 [8 favorites]
Don't say anything to the developer at all, let your lawyer do the talking. Some easements originated as financial assets, other easements originated as (essentially) an imposition to avoid the injustice of someone being cut off from their property. An easement that you admit you don't need is an easement they might be able to have rescinded without paying you!
You should expect you'll have to refi to do this -- regular consumer mortgages can't accomodate title changes like this. It may even be the developer will need to refi you, because even a new bank won't be willing to come into a simultaneous change in title because it will bollix title search and title insurance.
posted by MattD at 8:42 AM on March 9, 2016 [8 favorites]
My parents went through something like this a few years ago. Their house was paid off, so no mortgage issues, but they did still get legal advice. N'thing that the developers should pay for the lawyer's fees, as well as any other associated fees, over and above the price they are paying for the easement. And make sure YOU select the lawyer (don't just listen to their legal folks - you want your own independent person who is looking out for YOUR best interests).
If they don't want to pay for this, I would assume something is shady and just tell them you are not interested in selling.
posted by rainbowbrite at 9:41 AM on March 9, 2016
If they don't want to pay for this, I would assume something is shady and just tell them you are not interested in selling.
posted by rainbowbrite at 9:41 AM on March 9, 2016
Where are you located? This will likely depend on your jurisdiction.
posted by any portmanteau in a storm at 9:43 AM on March 9, 2016
posted by any portmanteau in a storm at 9:43 AM on March 9, 2016
To clarify what others have suggested above, ask them to cover the cost of a lawyer, but don't use any lawyer they suggest.
posted by nobody at 9:56 AM on March 9, 2016 [11 favorites]
posted by nobody at 9:56 AM on March 9, 2016 [11 favorites]
Does your current access go away at some point? Are there other unforeseen consequences involving your lot or adjacent lots? These are Qs a real estate attorney will advise you to think about. If you're reasonably certain they need to abolish your easement, pay for some advice then increase your asking price accordingly. (I know, easy for an internet-stranger to say! But sound, I think.) As mentioned, remember that the developer's legal team has no obligation to help you. (They shouldn't lie to you, but they owe you no duty.)
(IAAL, not yours and not in any kind of real estate practice, despite the handle, which is a truly ancient in-joke between me and a self-professed "dirt lawyer" pal. If by wild coincidence you're in N. Fla., I can recommend him.)
posted by easement1 at 1:16 PM on March 9, 2016 [2 favorites]
(IAAL, not yours and not in any kind of real estate practice, despite the handle, which is a truly ancient in-joke between me and a self-professed "dirt lawyer" pal. If by wild coincidence you're in N. Fla., I can recommend him.)
posted by easement1 at 1:16 PM on March 9, 2016 [2 favorites]
This thread is closed to new comments.
It's not. This is a fairly complicated question, with a lot riding on it. You need that lawyer.
posted by Oxydude at 5:51 AM on March 9, 2016 [18 favorites]