I learned this week about 150 acres of land for sale that was priced at about $300/A. It seems to have a lot of merchantable timber, more than enough to cover the cost of acquisition. But I haven’t had a chance yet to confirm that prospect. It did have two problems.
First, it came burdened with a conservation easement that prohibited any residential construction. I could live with that in a timberland investment. Second, however, was disclosure that it had no legal access. Is being landlocked a deal-killer?
Well, like so many other things, it depends on the particulars. These no-access deals can be winners or absolute disasters. Only thorough research before submitting a contract will show you where on that continuum you’re likely to land—and even then it can be chancy.
The buyer looking at such a property needs to involve in the pre-offer scoping stage a local real-estate lawyer whose judgment he trusts. You need to be convinced that your claim for an easement will prevail. I’d stop pursuing a property if my lawyer told me the odds in court were 80-20 in my favor—not good enough. Losing this type of case means that you are out the legal costs, still landlocked and probably unable to sell.
On the other hand, I’ve bought landlocked property in another state, negotiated an access easement with the neighbor and made a good profit on the sale of the timber and land. I made sure to get the easement agreement worked out on paper before making the purchase. An access contingency might also be used. Had the adjoining owners not been receptive to my offer, I would not have bought that property. I had no interest in getting into a fight with them.
The general principle in real-estate law is that private property cannot be landlocked, that is, denied reasonable vehicular access from a public road. But states and their courts differ in how this principle is interpreted, and several situations can exist that modify the rule. Things can also get complicated when you are seeking an easement over public land or land that is improved or occupied.
The landlocked party can bring suit against one or more neighbors claiming a right to obtain an access easement by necessity. A court will decide which neighbor(s), if any, should be burdened with this easement, usually by looking back through the deeds to determine the origin of the landlocked tract. An easement would typically be granted over the property from which it came. There are, however, always exceptions.
The landlocked party does not have a right to force an easement over his most convenient route to his property. The easement awarded in court should be that route most justified by the property’s history, which may or may not be the cheapest or easiest for the landlocked owner.
Pre-purchase scoping of the particulars is essential. The lack of an easement may indicate a long-standing dispute between adjoining property owners. This may be a matter of personalities, or it might indicate an absolute refusal by one or more landowners to sell an easement at a fair price to anyone. I’ve run into a situation where the neighbors refused to sell an easement as a tactic to force the landlocked party to sell his parcel to them at a steep discount. The lack of access may also suggest a thorny legal war that needs to be fought, but no one ever wanted to fight it.
Still, you may find that the adjoining neighbor will sell an easement to you, but not to the current owner. That’s an opportunity.
The buyer has leverage over the adjoining landowner to the extent that the law will award him the easement if he seeks it in a lawsuit. If everyone agrees that the buyer will win in court, why would an adjoining owner go to the expense of a losing lawsuit? All I can say is that individuals do not always act on what is their obvious economic interest. I’ve seen both anger and pride trump logic and money.
If you and your lawyer are convinced that the court will rule in your favor, I’d approach the landowner through your lawyer to see whether an easement can be obtained without a fight. Make sure that the easement is sufficiently wide for your purposes; and figure out who is responsible for its maintenance.
The buyer needs to pencil out a couple of different scenarios before submitting a contract to the seller of a landlocked tract:
Easy Resolution. Easement is purchased for $X; easement is developed for $Y.
Skirmished Resolution. Adjoining landowner resists, but ultimately settles. Add in lawyer’s fees.
Lawsuit. This can get very expensive. You may not get the easement you want.
Any deal that predictably involves an unpredictable lawsuit is one I would avoid. The Easy Resolution is likely to be profitable, since you will be getting the parcel at a discount.
And the Skirmished Resolution…well, that’s a deal that just depends.
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Great article Curtis!
This is one area that I have to explain constantly to people. Definetly a topic that the land buying public needs to be educated on. I have several landlocked (without easement) properties for sale currently and people always want to know why these properties are so heavily discounted when comparing to other properties in the area. I always disclose in my listings when the property is landlocked and I still get tons of contacts from people wanting to look at the property. I always try to make sure they understand that situation prior to meeting people to see these properties and I still have customers look at these properties that are utterly surprised that what I was telling them is true.
Its even harder explaining this to a landowner that wants to sell his property and has a gentlemen’s agreement with the adjoining landowner. I advise them to go ahead and work out a written easement, but most are not willing to go ahead with the process. Once they have made the decision to sell, that is just not a process that most sellers are willing to undertake. Occassionally the difference in market price of the property will motivate a seller to get it worked out, but not often. This leaves it for a potential buyer to work out…and money on the table for the seller.
I have the same problem. We have had access to our property for 50 years 3km being private road then 4km being council road which we live on. The private land owners of the first 3km will not give us a written easement, so selling has become difficult and the neighbours have offered us $180.000 less than what our property is worth. Also another land owner whom is behind us is in this same situation. We are now taking this matter again to our council to be sorted out. This has been going on since 1994. Regard Terri-ann
great piece, who says you cant learn something every day!
i like insight that you check history of where parcel came from.
I would like to buy this land if i can get a ezment and build a small hunting camp.small down down payment,owner finance.Thanks
Very good article. We sell a number of landlocked properties and there is always a discount involved. The amount of the discount depends on the individual circumstances.
We normally advise our seller clients to first try to acquire the easement through negotiations and if this does not work investigate legal methods.
In some cases the best avenue for a seller is to discount the price and “sell the problem”.
How much of a % reduction off the value assessment for property tax assessments would be appropriate on a property which is accessible across a grandfathered-in railroad crossing-but cannot be financed? The tax appraiser values the property at 250,000$; 20 acres and a nice home and has given a 25% reduction in the past?
Hello I’m from Ontario but have enjoyed the articles there seems to be alot if similar issues.
My question is for a 200 acre parcel of vacant “hunting land” landlocked, what might the reduction be on its cost per acre given its inaccessible. This particular lot is accessible by me as I border it.
Mike