Chapter 11 Easements Affecting Commercial Real Estate

• Library: Practical Guide to Commercial Real Estate in South Carolina (SCBar) (2024 Ed.)

Chapter 11 Easements Affecting Commercial Real Estate¹

Ryan W. Newton

A. Scope

While the topic of this book is Commercial Real Estate, most of the cases involving easements—and the rules to be derived from those cases—do not specifically involve commercial real estate.² In most of the cases, the subject property seems to have been residential, but it is not always clear. Insofar as they are applicable, the principles pertaining to easements apply equally to commercial and non-commercial real estate, and it will be my attempt to summarize the rules and anomalies generally applicable to easements, with particular reference to commercial real estate where that distinction can be drawn.

B. Introduction

An easement is usually defined as the "liberty, privilege or advantage without profit, which the owner of one parcel of land may have in the lands of another; it is a service which one estate owes to another, or a right or privilege in one man's estate for the advantage or convenience of the owner of another estate."³ The words "without profit" in the definition distinguish an easement from a profit a prendre, which is a right exercised by one person on the soil of another, accompanied with a participation in its profits, or the right to take from the land some portion of its produce.⁴ Typically, for example, the right to hunt and fish recreationally and the right to draw water from property are easements; the right to cut timber, mine, graze livestock and remove ice may be regarded as profits a prendre, since they involve withdrawing a part of the profit or produce from the soil itself. A profit a prendre may be appurtenant to another piece of property, or in gross.⁵

It is occasionally important to note that an easement is technically an interest in land, rather than an estate.⁶ As distinguished from a license, which is the mere permissive use of land, wherein one is granted a personal privilege to do some act or acts on land without possessing any estate or interest therein.⁷

Most discussions of easements by grant divide them into two categories: easements appurtenant and easements in gross. Much has been written about whether particular easements are of one type or the other, and the determination is often critical. As will be seen, commercial real estate developers will more likely create easements in gross, but will usually acquire development property encumbered by appurtenant easements. An understanding of both is essential. It is often said that the determination of the existence of an easement is a question of fact in a law case, and a lower court's finding of fact will not be disturbed on appeal unless there is no evidence to support its finding. The question of the extent of a grant of easement is an action in equity, permitting an appellate court to takes its own view of the evidence.⁸

Practitioners normally expect easements to be in writing, signed by the grantor and properly witnessed, acknowledged and recorded. That, however, is not always the case. In Ten Woodruff Oaks, LLC v. Point Development, LLC, 385 S.C. 174, 683 S.E.2d 510 (Ct. App. 2009), our court of appeals considered facts which showed that Ten Woodruff Oaks, LLC ("TWO") had entered into a letter agreement with the owner of an adjoining tract of land in which each agreed to grant an access easement to the other for the purposes set forth in the letter agreement. The adjoining owner sold a portion of his property to Point Development, LLC ("Point"), by deed which referred to a plat showing the easement described in the letter agreement. Additionally, a number of other plats of the TWO property and Point's property showed the easement, but the easement was never otherwise memorialized on the public records.

At trial and on appeal, Point argued that the letter agreement was a contract evidencing the parties' intent to create an easement, which called for the preparation and recording of various legal documents, none of which were ever executed, and that the easement therefore never came into existence. The court of appeals disagreed, citing authorities for the proposition that any words clearly showing the present intention to grant an easement are sufficient to establish an easement. Additionally, the court noted that while there was language in the letter agreement that suggested the parties intended to create formal easement documents, there was no indication that the rights of either party were contingent upon more formal documents. The court found that there was sufficient evidence in the record to support the Master's finding that the letter agreement established an easement in favor of TWO.

As to the appellant's argument that, even so, there was no notice of the easement on the public record, the court of appeals held that constructive notice is not limited to what can be seen after consulting the public records, but that such notice also may arise when a party becomes aware or should have been aware of facts which, if investigated, would reveal the claim of another. Although the master-in-equity did not find that Point had actual notice of the easement, the court of appeals does note that Point's plat shows the easement, including its width, length and location, and that its deed set forth that it was "subject to all restrictions, setback lines, zoning ordinances, utility easements and rights of way, if any, as may appear of record or on the subject property." Finding that the circumstances were sufficient to put Point on notice as to the existence of the easement, our court of appeals affirmed the master's decision.

An easement by grant is not required to be recorded to be valid. If the owner of the servient tenement has actual notice of the easement,⁹ or constructive notice¹⁰ it will be enforced.

In Rogers v. River Hills Limited Partnership, No. 4:09-cv-01540-JMC, 2011 WL 48082074 (D.S.C. Oct. 7, 2011), the court considered whether the minutes of a partnership meeting in which the partnership acted on a request by one of the partners to grant an easement of access to a tract adjoining the partnership property was a writing adequate to satisfy the Statute of Frauds. The court said that a record of corporate minutes, while generally not regarded as a written instrument, may be sufficient to satisfy the Statute of Frauds if it contains all the essential terms of the agreement and is signed by appropriate corporate officers. In this case, however, the court found that the text of the minutes evidenced an executory intention, or a willingness to enter into and execute an easement at a future time. Moreover, the court did not find that the minutes contained an adequate description of the easement in question, so summary judgment was granted against the claimant and no easement was found to exist.

C. Appurtenant vs. In Gross

Very little is written in South Carolina case law about the qualities and use of easements in gross prior to the case of Sandy Island Corp. v. Ragsdale.¹¹ About the only mention of easements in gross in early cases is the characterization the court made in cases where a litigant unsuccessfully attempted to establish an easement as being appurtenant. No consideration seems to have been given to allowing easements in gross to be transmissible until, in the Sandy Island case, Justice Moss considered an easement reserved to the grantor to unload logs and other forest products on a landing on the Great Pee Dee River and transport them across a road to market. The court reviewed the well-known distinction between appurtenant easements and those in gross, defining appurtenant easements in the usual way and noting that easements in gross are not transferrable or inheritable. Referring to authorities in other jurisdictions, however, the court concluded that an easement in gross is of a commercial character when the use authorized by it results primarily in economic benefit rather than personal satisfaction, and that easements in gross, if of a commercial character, are alienable.¹² Easements in gross of a commercial character may, by their terms, not be transferable.¹³

The distinction between an appurtenant easement and an easement in gross is also demonstrated by the case of Steele v. Williams, 204 S.C. 124, 28 S.E.2d 644 (1944). The grantor deeded the grantee a portion of his property, describing an alley as the boundary of the deeded property and providing that it was "reserved for the joint use of the grantor and grantee, their heirs and assigns forever." When the conveyed property was subdivided, with one portion being bounded on the north side by the alley in question and another side fronting on a municipal thoroughfare, the court held that the easement was in gross, not appurtenant, and was not transferrable or inheritable, notwithstanding the words of inheritance and assignability. Consistent with earlier and later cases, the court defined an easement in gross as a "mere personal privilege, which dies with the person who may have acquired it," while an easement appurtenant must (a) inhere in the land to which it is appurtenant, (b) be essentially necessary to its enjoyment, and (c) have one of its termini on the land which it is claimed to serve. In the case under consideration, the court concluded that the alley was not essentially necessary to the enjoyment of the plaintiff's property, since the lot fronted on a public street; additionally, the court found no terminus of the alleyway on the plaintiff's property, although it bordered the property on its northern boundary. Note that an alleyway which simply borders property does not have a terminus on it. In Kershaw v. Burns,¹⁴ the court addressed a claim to an easement over an alleyway which was adjacent to and bordered on the claimant's property. The court found no appurtenant easement to exist and noted that a right-of-way which has "neither of its termini on the premises of the grantee" could not be appurtenant, but was a mere easement in gross "which is personal...