Structuring Complex Easement Agreements in Commercial Real Estate Deals

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Structuring Complex Easement Agreements 
in Commercial Real Estate Deals
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INTRODUCTION TO EASEMENTS
IRWA - Wisconsin Chapter
Quarterly Meeting
December 5, 2013

Jesse S. Ishikawa
Reinhart Boerner Van Deuren s.c.
22 East Mifflin Street, Suite 600
Madison, WI 53703
[phone]
[email protected]

© 2013 by Jesse S. Ishikawa
All Rights Reserved
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I. WHAT IS AN EASEMENT?
A. Definition. A good working definition states that an easement is a
nonpossessory interest in land owned by another to use the land for a
specific purpose without profit. Elements:
1. Nonpossessory.
2. Interest in land.
3. Owned by another.
4. To use the land for a specific purpose.
5. Without profit.
B. Benefits and burdens. Every easement has a benefit and a burden.
1. The benefit consists of the easement rights granted to the
easement holder over somebody else's land.
2. The burden is the obligation imposed on the owner of the land
that is subject to the easement.
3. Examples:
a. Where Parcel A is served by an access easement over
Parcel B, Parcel A benefits from the easement in that
the owner of Parcel A has the right to drive over
Parcel B. Parcel B is burdened by the easement since
the Parcel A owner can drive over Parcel B.
b. The telephone company has an easement to put an
overhead line over a farmer's property. The telephone
company enjoys the benefit of this easement and the
farmer is subject to the burdens of this easement.
c. Where there is a party wall easement that provides for
joint maintenance of a common wall between two
buildings, the owner of each building is both burdened
and benefited by the easement.

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C. Easements appurtenant vs. easements in gross.
1. Easements appurtenant are easements where the benefit of the
easement runs with a particular piece of property.
a. For every easement appurtenant, there is a "benefited"
property and a "burdened" property. With an easement
appurtenant, when you transfer the benefited property,
the easement goes along with the property even if it is
not specifically mentioned in the deed. All who
possess, or who succeed to title to the benefited
property become, by virtue of the fact of possession,
entitled to the benefit of the easement.
b. There can be no conveyance of the easement right
apart from the conveyance of the benefited property.
c. Example: a driveway over Parcel B for the benefit of
Parcel A.
2. Easements in gross. With an easement in gross, there is no
"benefited property." There is only a benefited easement
holder.
a. An easement in gross runs to a named easement holder
who can assign these rights to some other party
irrespective of whether the beneficiary owns any
particular land.
b. Example: a utility easement runs to the utility, not to
the owner of any particular lands.
3. There is a judicial preference in favor of easements
appurtenant over easements in gross.
D. Easements are used for numerous purposes, such as:
1. Pedestrian and vehicular ingress/egress.
2. Utilities.
3. View corridors.
4. Building setbacks.
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5. Temporary construction.
6. Subjacent and lateral support.
7. Party walls.
8. Use of airspace.
a. Avigation easements near airports.
b. Tower crane "overswing" rights.
II. CREATION OF EASEMENTS.
A. There are a number of ways in which easements are created.
1. Express grant.
2. Implied easements.
3. Necessity.
4. Prescription.
5. Notations on plats and certified survey maps.
6. Condemnation.
7. Vacation of streets.
B. Express grants are the easiest and most common way in which to
create an easement.
1. An express easement must be granted by the owner of the
property that will be burdened by the easement.
2. Since an express grant is an interest in land, the statute of
frauds applies (Section 706.05, Wis. Statutes).
a. The general rule, 706.05(2m)(a), is that an easement
must have a full legal description.
b. But: Section 706.05(2m)(b) provides an exception to
the general rule, and states that the requirement of a
full legal description does not apply to descriptions of
easements for the construction, operation or
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maintenance of electric, gas, railroad, water,
telecommunications or telephone lines or facilities.
3. An easement may be a separate document or it may be created
by the addition of easement language to a deed.
C. Implied easements are easements that are created where the actions
of all of the parties suggest that everybody intended that an easement
should have been created, but that everybody simply forgot to write
it down. An implied easement may be created when the following
circumstances exist:
1. The grantor owns a piece of property that is served by a
common improvement--such as a roadway or a utility conduit.
2. The grantor then slices off a chunk of the property and
conveys it to a grantee but forgets to grant an easement for the
common improvement.
3. The rule in Wisconsin is that for an implied easement to exist,
the easement must be so absolutely necessary that without the
easement, the grantee cannot enjoy the use of the property
granted. Bullis v. Schmidt, 5 Wis.2d 457 (1959).
4. Implied easements are also called "quasi-easements" and are
disfavored. There are some old cases in Wisconsin that say
that implied easements simply don't exist in Wisconsin.
Scheeler v. Dewerd, 256 Wis. 428 (1950). However, more
recent cases say that they do exist. Stoesser v. Shore Drive
Partnership, 172 Wis.2d 660 (1993); Bullis v. Schmidt, 5
Wis.2d 457 (1959).
D. Ways of Necessity.
1. A way of necessity may be created when the grantor conveys
lands that have no outlet to a public road except over the
remaining lands of the seller. The grantee will then have the
right to go across the grantor's lands to get to the road at a
location which is reasonably convenient to both parties.
2. This is a little different from an implied easement because
with an implied easement, the location of the easement is
known. Remember that an implied easement always involves
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some preexisting physical improvement, such as a road. A
way of necessity doesn't require a physical improvement.
3. Also, a way of necessity will cease to exist when the necessity
ceases to exist.
4. Is an easement by necessity created when the act of
landlocking a parcel of land is the act of the owner of the
landlocked parcel rather than the owner of the parcel lying
between the landlocked parcel and the public right of way?
According to McCormick v. Schubring, 267 Wis. 2d 141
(Wis. 2003), it depends on "balancing the equities" of the two
sides. Note, though, that the Wisconsin Supreme Court, in
AKG v. Kosterman, rejected equitable considerations and
balancing tests in express easements.
E. Easements by Prescription. Prescription is the fancy legal term for
"squatter's rights." Just as the law recognizes squatter’s rights as they
apply to fee simple title, they also recognize squatter’s rights as they
apply to easements. To establish an easement by prescription in
Wisconsin, you must have:
1. Adverse use that is hostile or inconsistent with the exercise of
the title holder's rights. The opposite of a hostile use is a
permissive use. County of Langlade v. Kaster, 202 Wis.2d
449 (Wis.App.1996).
2. Such use must be visible, open and notorious. This means
that you can't acquire a right to a walkway easement by using
a path in the middle of the night when nobody can see you.
County of Langlade, supra.
3. There must be an open claim of right.
4. The adverse use must be continuous and uninterrupted for a
period of 20 years.
5. But: if the squatter is a domestic corporation organized to
furnish telegraph or telecommunications service or transmit
heat, power or electric current to the public or for public
purposes, or a cooperative organized to furnish telegraph or
telecommunications service or to transmit heat, power or
electric current to its members, the period is shortened to 10
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years. Section 893.28(2), Wisconsin Statutes. Furthermore,
this shorter period applies to permissive uses. Williams v.
American Transmission Company, 306 Wis.2d 181 (Wis.
App. 2007). In that case, an agreement that permitted an
electric utility to construct and maintain electrical poles and
transmission lines on a landowner's property made that right s
revocable upon 30 days' written notice. The Court of Appeals
held that the agreement met the terms of 893.28(2), and that
use by the utility of the property for more than 10 years
established the prescriptive use.
F. Easements Created by Plat. Easements can be created by the
placement of notations on the plat.
1. If a plat shows easements, streets, rights of way, and common
areas, and the plat is recorded, this automatically gives each
person who purchases a lot the right to use all of the
easements, streets, rights of way, and common areas that are
shown on the plat. Threedy v. Brennan, 131 F.2d 488 (C.C.A.
Wis.1943).
2. Under Section 236.293 of the Wisconsin Statutes, if any
municipality or governmental authority requires that a note be
placed on a plat as part of the plat approval process, then the
note is deemed to be for the benefit of that authority and can
be altered only with the consent of the authority that required
the note to be put on the plat. This has the effect of making
easements on plats not only easements appurtenant, in that
they run in favor of all of the other lots on the plat, but
easements in gross, in that they run to the various
governmental authorities as well.
G. Condemnation. Easements can be created by condemnation by
authorities that have the power of condemnation. These include just
about all governmental authorities (the state, cities, villages,
townships, school districts, vocational school districts) and public
utilities (sewerage districts, power companies, pipeline companies,
telephone companies, gas companies).
H. Vacation of Streets. Easements can be created by the opening of
streets, installation of public utilities within the streets, and the
subsequent vacation of streets. This is how it works:
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1. Under Sections 86.16 and 66.1005(2) of the Wisconsin
Statutes, any person may, with the consent of the department
of transportation (in the case of state highways), or with the
written consent of local authorities (in the case of highways
under their jurisdiction), construct and operate telegraph,
telephone or electric lines, or pipes or pipelines for the
purpose of transmitting messages, water, heat, light or power
along, across or within the limits of the highway.
2. Under Section 66.1005(2) of the Wisconsin Statutes,
whenever any public highway is vacated, the easements and
rights incidental thereto acquired by or belonging to any
county, school district, town, village or city, or to any utility
or person in any underground or above-ground structures, and
all rights of entrance, maintenance, construction and repair of
the same shall continue, unless:
a. the holder of such rights consents to the discontinuance
or the order of vacation;
b. the discontinuance of the easements and rights by the
owner thereof is a part of the discontinuance resolution
(in which case the owner of such rights is entitled to
damages); or
c. the owner of such rights fails to use the same for a
period of four years from the time that the public
highway was vacated.
In short, a utility can acquire easement rights by installing
improvements within a public highway. Once the highway is
vacated the easement rights remain unless separately
terminated.
III. INTERPRETATION ISSUES.
A. Overburdening the easement.
1. By increasing the intensity of the use. Suppose, for example,
that the easement is a farm road in favor of a 40-acre parcel.
30 years later, development has moved closer to the 40-acre
parcel and the benefited owner wants to subdivide the parcel
into 60 lots. There are no Wisconsin cases on point. What
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may have been contemplated as a road serving a single
farmette can end up being used to serve a 40-lot subdivision,
and in that case, is the increase in the burden reasonable?
Cases from other jurisdictions state that the parties are
assumed to have intended a scope that would reasonably serve
the purposes of the grant and to have foreseen reasonable
changes in the use of the burdened property. What's
important is the reasonable expectations of the parties at the
time the easement is entered into.
2. By extending its use to other lands.
a. General rule: an easement for a right of way cannot be
enlarged to benefit additional lands without the consent
of the burdened owner. Sicchio v. Alvey,
10 Wis. 2d 528 (1960).
b. What happens if benefited owner acquires additional
adjacent lands?
i. Gojmerac v. Mahn, 2002 WI App 22,
250 Wis. 2d 1: "an easement cannot be
enlarged to include property acquired after
creation of the dominant estate."
ii. Millen v. Thomas, 204 Wis. 2d 321
(Ct. App. 1996): subsequent acquisition of
property adjacent to a benefited parcel does not,
in itself, overburden the easement to the point
that the easement should be extinguished.
iii. Grygiel v. Monches Fish & Game Club, Inc.,
328 Wis.2d 436 (Wis. 2010): travel between
benefited parcel and nonbenefited parcel held to
overburden easement and give rise to an action
for trespass.
iv. Nettesheim v. S.G. New Age Products, Inc.,
2005 WI App 169: a benefited lot was
subdivided and conveyed to owners of an
adjacent lot. Court says, nice try, but no.
3. By making improvements to it.
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