Easement Issues when Buying or Selling Real Property: California Court of Appeal Declines to Create Exclusive Implied Easement When Lot Line Application Was Not Finalized

In Truckee, Grass Valley, Nevada City, Placer County, and many other areas around Lake Tahoe and the Sierra region, landowners wrestle with easements, encroachments, and related land use problems. Many homeowners have listed or intend to list their properties on the real estate market to benefit from significant real estate appreciation. While land use issues arise in many ways, the purchase and sale of a house frequently uncovers material issues when new buyers investigate what they are buying. Surveys are conducted for perhaps the first time in decades. Disclosures are made by sellers that lead buyers to further scrutinize the property and surrounding factual circumstances. Buyers and sellers quickly realize they have problems to solve. And one problem can be the existence of one or more easements.

Easements — the basics.

Easements let one party use the land of another party for a specific use or activity. It is commonly called a “restricted right” to use another’s property for the defined use of activity and this “restricted right” must be less than ownership rights. The key distinction between an ownership interest in land and an easement interest is that the former involves possession of land whereas the latter involves a limited use of land. Put simply, one party owns and possesses the land. The other party has a nonpossessory right to use the land for a specific purpose—and that purpose is defined by the easement.

The first step in any easement analysis is finding whether an easement exists. One method of easement creation is a written agreement or deed. Known as an “express easement,” the written agreement should be recorded, run with the land (i.e., provide future owners with a benefit or detriment), and clearly identify the parties, scope, purpose, and location. Parties entering into an easement agreement can solve geographic problems like a driveway crossing both properties, placing a bear box on your neighbor’s property, or addressing stairs that overhang and encroach onto a neighbor’s parcel (including the right to use the neighboring property to access, repair, or maintain the stairs).

One of the most commonly known non-express easement is a prescriptive easement. A party seeking a court to create a prescriptive easement must show that its use of another’s land is adverse, notorious, open, and continuous use without the permission of the landowner for a five year period. See Windsor Pacific LLC v. Samwood Co., Inc. (2013) 213 Cal.App.4th 263, 270–271. Among other elements, it is frequently difficult to establish the adverse or “hostility” element during the entirety five-year period. Because neither party pursued a prescriptive easement theory in the case discussed below, this method is outside the scope of this article.

Two other methods of creating an easement are by implication or equity. These lesser-known easements—commonly called an “implied easement” or “equitable easement”— are harder to obtain because a court must agree that they exist since there is no written easement agreement. To discuss how these easements work we can look at Romero v. Shih, (2022) 78 Cal.App.5th 326, a case from the Second District of the California Court of Appeal.

If no express easement exists, the property owner can ask the Court to create one.

The Romero case concerned decades of historical records, claims and crossclaims, testimony of the parties, and a battle of testifying experts. The case started in 2016, and a five-day bench trial occurred in 2020. The original result was appealed, and the appellate decision was issued on May 5, 2022. An entire novel could be written about this case; and the attorneys’ fees incurred by the parties probably could fund its publishing costs. For this article, however, we’ll focus on the appellate court’s implied easement analysis.

In 1941, Edwin and Ann Cutler purchased two properties. Over 40 years later, in February 1985, the Cutlers applied to the Planning Commission of the City of Sierra Madre for a variance, seeking a property lot line adjustment. The Cutlers wanted to move the lot line so their son and his construction partner could build a new residence on their second parcel and then sell it for a profit. The Cutlers proceeded to complete the items needed to reach this objective: hiring a civil engineer, preparing a survey, a new legal description and post-lot line adjustment map, completing all the forms, payment of fees, and planning the proposed construction.

The new residence was thereafter built. The construction included a six-foot-tall block wall between the two properties, along the new legal boundary line surveyed and described by the Cutlers’ civil engineer. Several decades later, some unique facts were uncovered: there was no evidence the City of Sierra Madre approved the survey and new legal description. The city never executed a certificate of compliance. Similarly, there was no evidence the lot line adjustment was ever recorded. But the Cutlers acted as if the new legal description was operative, properly recorded, and completed construction anyway.

In April 2014, the Romeros purchased the second parcel where the new residence was built. The grant deed with the original lot dimensions was recorded and title was transferred to the Romeros. In July 2014, the Shihs purchased the Cutlers’ parcel. The legal description in the grant deed did not contain additional language increasing their square footage as reflected in Cutler’s lot line adjustment application. The Seller Property Questionnaire—received, initialed, and signed by the Shihs—provided there are no “[s]urveys, easements, encroachments or boundary disputes” regarding the neighboring parcel. But the Buyer’s Inspection Advisory disclaimed that the physical condition of the land and improvements being purchased by the Shihs were not guaranteed—and included boilerplate language that boiled down to a statement similar to: “buyer beware; do your own investigation and hire the appropriate professionals when investigating.”

At this point you probably have guessed that the parties had a dispute over the location and size of their lot—and the extent of an encroachment since the lot line application was never finalized. Everyone thought the lot lines followed the location of the six-foot wall, and why would they not? Parties buying and selling parcels three decades later had no idea that a prior lot line application was not finalized despite construction of the new residence. But this resulted in an encroaching area that included the wall between the two properties, the Shihs’ planters near the front sidewalk, and a portion of the Shihs’ driveway parallel to the misplaced wall. The Romeros sued seeking to remedy the encroachment on their property. The Shihs filed crossclaims seeking the creation of an implied easement and equitable easement, and for quiet title and declaratory relief.

Implied Easement — exclusivity matters!

Implied easements are not favored by the courts. As a result, the Shihs had an uphill battle. Implied easements are “an exception to the general rule that interests in real property can only be created by an express writing or prescription.” Kytasty v. Godwin (1980) 102 Cal.App.3d 762, 768. Parties claiming rights under an implied easement theory must establish that:

• a common owner of both parcels before the owner conveyed or transferred one part of that property to another party;
• “the owner’s prior existing use of the property was of a nature that the parties must have intended or believed the use would continue,” and
• the easement itself is “reasonably necessary to the use and benefit” of the party receiving the benefit of the easement (i.e., the dominant estate).

See Civil Code section 1104; Tusher v. Gabrielsen (1998) 68 Cal.App.4th 131, 141. Parties must be mindful that courts carefully guard against any unreasonable or inequitable extensions of easement rights and courts will not find an implied easement “absent clear evidence that it was intended by the parties.” Tusher, 68 Cal.App.4th at 142. In short, no property owner should expect to easily obtain a favorable ruling when pursuing an implied easement claim through the judicial system

In Romero, the Cutlers owned the entire property before splitting it into two parcels. Thus, there was a common owner; the first element required for an implied easement. Unlike this case, lack of common ownership commonly precludes a party from asserting the creation of an implied easement. If a landowner cannot prove that element, the quest for a court-created implied easement will fail. But the facts of the Romero case included a common grantor, so imposing an implied easement was possible.

The trial court created an implied easement but the appellate court rejected the theory for a couple of reasons, primarily because the evidence did not support a finding that the Cutlets intended to create any sort of easement. The importance of the Romero case, however, is not applying the factual circumstances to the implied easement elements. Instead, it is an exclusive versus non-exclusive easement. An exclusive easement allows one party the exclusive use of the easement area—essentially blocking the other party from any use. Courts have called exclusive easements “rare” and that “an unusual interest in land; it has been said to amount almost to a conveyance of the fee.” See Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 769, fn. 11. If a party has an exclusive easement, its rights are arguably the same as the party that owns the land. This has been a basis to deny other types of non-express easements for years, such as prescriptive easements. See Harrison v. Welch (2004) 116 Cal.App.4th 1084, discussed in this article. As stated already, easements provide a party only with the right to use the land—but not own it. Since this case included the request for an exclusive easement, the Shihs were in trouble.

The court discussed these problems and that “exclusive easements” are not prohibited under California law “so long as the language of the creating instrument clearly expresses an intention that the use of the easement area shall be exclusive.” Gray v. McCormick (2008) 167 Cal.App.4th 1019, 1025–1026, 1032. But recall that implied easements are not created by written agreements or instruments—so can an exclusive implied easement exist? According to the court in Romero, even if all three elements are shown, the answer in California is no.

The court’s reasoning is sound. It stated:

we are hard-pressed to infer the granting of an exclusive implied easement which precludes a property owner from any practical use and is nearly the equivalent of a fee [i.e., ownership] interest. Based on the foregoing, we hold, in the first instance, that an exclusive implied easement which, for all practical purposes, amounts to fee title cannot be justified or granted unless: 1) the encroachment is “de minimis”; or 2) the easement is necessary to protect the health or safety of the public or for essential utility purposes.

 

Let’s breakdown this material takeaway from Romero. There was no express grant of an exclusive easement between the property owners. Without this written intent, the court could not allow one party to encroach upon the other party’s land in manner that precluded the owner any reasonable ability to utilize land. Here, there was a six-foot wall that effectively created an inaccurate lot line between the parcels. All the other elements of an implied easement were established, but that was not enough for the court to create an implied easement exclusively used by the encroaching party. The primary reason, and the bottom line here, is the difference between a property ownership interest and an easement interest for limited use of another’s land. Even with the whacky facts in Romero, the 37-year-old application for a variance was not sufficient evidence to show intent to change the title or ownership of the property—although it was clear that the Cutlers intended to move the lot line and provide their parcel (now the Shihs’ parcel) with a larger lot.

Despite several years of litigation, expert testimony, and other evidence submitted by the parties, if a party is seeking an award of an implied easement that amounts to exclusive use of the easement area, it will be denied by a California court that finds the Romero decision persuasive.

So, after 37 years, did the Shihs tear down the wall? Nope. Because the court awarded them an equitable easement, which is discussed in the second part of this article.

Ethan Birnberg is licensed in California, Nevada, Colorado, and Wyoming. He is an AV-rated attorney and a 2022 Northern California Super Lawyer (awarded to only 5% of attorneys in California). Ethan regularly assist clients with all types of land use and real estate/construction issues, asset sales, and business acquisitions, along with landlord/tenant matters, lease formation and HOA disputes. He holds dual certifications as a business bankruptcy and consumer bankruptcy specialist from the American Board of Certification, and has extensive insolvency experience assisting entities seeking to restructure under chapter 11 of the U.S. Bankruptcy Code, borrowers and lenders seeking out-of-court workouts, representing chapter 7 trustees, and advising directors, officers, and executive management regarding fiduciary duties and corporate governance issues. He can be reached at birnberg@portersimon.com.