Summary:

The property owners need the crucial rights of entry and exit (ingress/egress), but there are physical barriers, and they are essentially handcuffed from accessing their property.

This means they cannot legally access their property, potentially leading to the risk of trespassing on someone else’s land.  This could result in legal disputes, substantial financial liabilities, and substantial liability settlements.  The potential economic implications of these disputes, including the loss of access, could also affect the property’s value and marketability, making it difficult to sell or lease.

It’s a stark reminder of the potential risks and legal implications of not having a property-drafted written easement in place. The consequences, such as the loss of property value and marketability, underscore the gravity of the situation and the need for proactive measures.  Taking proactive measures is not just a suggestion; it’s a necessity in this scenario.

Article: Ingress/egress:

Ingress refers to the right to enter a property, while egress refers to the right to exit a property.  These rights are established through law and legal agreement, such as easements or rights-of-way. With an ingress/egress easement, the property owner may be able to enter or exit their property through a particular pathway or route, even if there are more direct or convenient ways to access the property.

For example, suppose other properties on all sides surround a property and do not have a public road leading directly to it.  In that case, the owner may be required to purchase an ingress/egress easement from one or more neighboring property owners to access their property.

Property owners must understand the importance of their title and deed and ensure they have the necessary ingress/egress rights to access their property.  Seeking professional guidance from an attorney or a real estate professional to create one is not only crucial but also empowering.  This professional guidance will equip them with the knowledge and protection to navigate property rights confidently, reassuring them in an otherwise complex situation.

The loan request:

My client has a 3,000-square-foot industrial building that he wants to finance.

The lot is 40 ft by 100 ft and has adequate parking. I will provide data for your lender to review.

The lender comments after reviewing.

We have reviewed the file. We have found that the parcel has a 40-foot-wide industrial building on a 40-foot-wide lot.  There is parking at the rear of the building, but access to it is only available by driving down a 10-foot-wide paved entrance on the adjacent parcel.  We have checked, and no written easement exists between the two owners that would ensure continued access to parking.  The neighboring owner could cut off access at any time for any reason.  If not now, subsequent owners could also cut off access.  Upon speaking with the property owners of both parcels, a solution is to record a mutually reciprocal ingress/egress easement, ensuring that the easement runs nonpossessory.

As a matter of clarification, an easement is a nonpossessory right conveyed from one property owner (#1) (left side property owner) to another property owner (#2) (right side property owner) to use, enter, or cross a portion of that is owned by the party (#1).  Nonpossessory means that party (#2) possesses a right to use, enter, or cross, but does not own or have nonpossessory property ownership claims of the property.

A nonpossessory interest in a property restricts its unrestricted use because it is an encumbrance on the property and generally runs with the land.  The nonpossessory interest (easement) is typically recorded against the property in municipal public records, which serves to cloud the title.

Prescriptive Easements:

Conflicts can arise when a party claims to pass over a property without a written agreement in place. This is known as a ‘prescriptive easement,’ a ‘claim of possessory right to pass’ across another person’s property acquired by continued use without permission of the owner for a legally defined period.  In simpler terms, it’s like earning the right to use a neighbor’s shortcut by using it every day for a specific period, even if they don’t permit you.

Typically, a claimant bears the burden of proof for the elements necessary to establish that an easement has been created over time by prescription (California Code of Civil Procedure 321).  In California, a claimant must adequately prove that they have possessed the prescriptive easement by continuous use for at least five years. Other states have similar regulations.

The statutory time for prescriptive easements varies from state to state.  Each claim is fact-specific, with the possibility of winning or losing. Roving the claimant’s rights can be time-consuming, potentially leading to litigation and a risk of losing.  This is why a well-documented agreement is crucial to avoid all misunderstandings and ensure a smooth transaction.

A Borrower will want to review the distinction between exclusive and non-exclusive easements.  An exclusive easement grants the holder the sole right to use the property for a specific purpose. In contrast, a non-exclusive easement allows others to use the property for the same purpose., But not exclusively, will the easement run with the land and bind all future owners? California Civil Code 1104 provides that a transfer of real property passes all easements attached to it.  In California, 2d 872 (2002).

In this real-life example, a strong argument exists for a prescriptive easement to prove the right of access.  Proving this could result in significant litigation expenses and time for a future owner.  The original and subsequent owners have operated with the condition of entry for 40 years. Still, the potential financial burden of proving this right is a stark reminder of the risks involved and the need for caution. For instance, if the property were to be sold, the new owner might face legal challenges from the neighboring property owner, who could claim that the right of access was not legally established.

The Two Adjacent Properties:

In this transaction, the right-side collateral property is owned, free, and clear by the owner.  The left-side property owner, who had the driveway, held the first lien of $300,000.  There was a suggestion that the two property owners hire a civil engineer and a lawyer to draft a reciprocal usage easement for ingress/egress. The owners must submit the plans and a proposed agreement to the building and planning department for approval.  Upon city approval, a recorded reciprocal easement agreement will be executed.  The contract was signed and recorded, and the easement will remain on the property title. However, this is not the case because a defaulted Borrower on the left side of the property would result in the easement being foreclosed and extinguished.

In this real-life example, the problem was that the newly drafted easement would be in the first lien position on the right-side property. Still, it is a second or junior position on the left side of the property. The left-side property’s recorded easement would be in a second lien position behind a $300,000 first trust deed.  If the left-side Borrower defaulted on his loan and the property was lost in foreclosure, the recorded usage easement would be foreclosed on, extinguished, or cease to exist.  The risk was minimal since the left-side owner had owned the property since it was built.  The investor agreed and funded the loan.

https://www.calrealestatelawyersblog.com/1072/

https://schorr-law.com/how-to-establish-an-easement-by-necessity/