The Impact of Easements on Property Value and Development in Maryland
Property values are subject to near-constant fluctuations, so it should come as no surprise that any easements attached to your property may impact its value. However, easements vary significantly in scope and purpose. As a result, so too does their impact on real estate. Learn more about how easements may impact your property value.
Property Values Are Dependent on Many Factors
To start, it’s quite likely that an easement will have some effect on your property value. Property value is influenced by so many factors that any change, no matter how apparently small, may drive the value up or down. Easements are just one reason that you may see a change in property value.
Your Location Matters
The location of the property may determine how much of an effect an easement has. For example, consider a property in a rural area with easements that allow access to a select group of people.
When you have acres of land in a sprawling rural region, an easement that changes a tiny part of your property won’t have nearly the same effect that it would in a dense urban area. In an urban area, where space is sparse and comes at a premium, anything that infringes on your enjoyment of that space could significantly influence the value.
Know the Specific Details of Your Easement
Easements vary so much that there’s no hard and fast rule about how they can change your property value and development options. For example, look at a utility easement. Utility companies need access to properties, and if you do not grant them access, they will simply force the issue legally.
This means that all the properties in one neighborhood or area will have the same easements, so there’s essentially no change in value. On the flip side, consider a beachfront home that has an easement allowing the public to cut through the land on a specific pathway to access the beach.
There’s a good chance that prospective buyers would value privacy in an expensive beachfront home. If there are other homes in the community with similar features but no public access easement, this type of easement could seriously affect your property value.
It’s also important to look at whether the easement is tied to the property itself or the party who benefits from the easement. If the easement is tied to the property itself, or an appurtenant easement, it automatically goes with the property. If the easement is a gross easement, it is limited to the current parties. The easement does not automatically transfer when the property is sold or given away.
Note that in many cases, an easement is already factored into the price of a property. If someone finds a property at a reasonable price, only to find out that it has an inconvenient easement attached to it, that doesn’t mean they automatically have grounds to demand a lower price. The price may already be lower than neighboring properties because of the easement.
Development Options May Be Limited
Many easements limit your development options. This could affect property value, as many people who are buying a home or commercial property want the freedom to develop it as they see fit. If an environmental easement prevents them from adding the gazebo or garage they think would complete the property, you could lose out on a potential sale.
That’s why, whenever you are buying or selling property, you should talk to a real estate attorney right away. Easements are thoroughly documented, and an attorney can explain how long the easement has existed if it is tied to the property or the party, how it may affect property value, and what limitations it places on the property.
Your Property Value May Benefit
While easements are more likely to have no effect or a negative effect on a property’s value, there are a few situations in which an easement can actually make a piece of property more valuable and attractive. Some easements are paid for by the party who benefits from them, which can add a small income stream for future owners.
This may be more than enough to offset the inconvenience of the easement itself. As an example, many environmental easements come with nominal payments or tax benefits.
Speak with a seasoned Maryland real estate attorney if you have any concerns about how easements might impact your property value.