An easement is a recorded right for someone else to use part of your land, and it can cap what you build without ever touching the deed to who owns it. Buyers underwrite the acreage and the zoning envelope, then discover late that a strip running through the middle of the parcel is a no-build zone that no premium and no rezoning will remove. The line was drawn years earlier, it sits in the public record, and it does not care about your site plan. Easements are not a title footnote. They are a physical constraint on the buildable area, and the buildable area is what the pro forma is really buying.
Key Takeaways
An easement is a nonpossessory right to use another party's land, and per the legal presumption, an easement that does not state its type is presumed appurtenant, meaning it runs with the land to every future owner.
Easements limit a property's usability, reduce its buildable area, and can restrict future development, and appraisers treat those effects as direct inputs to market value, per Boston Appraisal Services.
Schedule B-2 of the title commitment lists the easements that affect the property, and the ALTA survey shows the location and width of each one, per Millman Land. Reading them together is how development risk is found before closing.
A conservation easement generally lowers property value by 25 to 60 percent because it restricts development potential and highest and best use, per conservation appraisal practice.
The correct way to price an easement's effect is the before-and-after method: value the property without the encumbrance, then with it, per Appraisal Institute methodology. The difference is the cost the buyer keeps.
What Are the Main Types of Easement and How Do They Differ?
An easement is a nonpossessory right to use land you do not own, and the type determines who holds the right and whether it survives a sale. The two structural categories are appurtenant, which attaches to a neighboring parcel and transfers with it, and in gross, which belongs to a person or company rather than to land.
An easement appurtenant benefits a specific parcel, the dominant estate, and burdens another, the servient estate, and it stays with the property when it changes hands, per Schorr Law. An access easement that lets a landlocked parcel cross your lot is the classic example, and it is permanent. An easement in gross belongs to an entity, most often a utility, and does not attach to neighboring land, per Silberman Law Firm. The power company crossing farmland to service a line holds an easement in gross. Two more matter to underwriters. A prescriptive easement arises from open, continuous use over a statutory period, without a recorded grant, which is why it can exist without appearing cleanly in the chain of title. A conservation easement is a recorded restriction, held by a land trust or government, that limits development to preserve the land, and it runs with the parcel to present and future owners, per WeConservePA. The table below maps each type to its effect on what you can build.
Easement type | Who holds the right | Typical burden on the parcel | Effect on buildable area |
|---|---|---|---|
Appurtenant (access) | Owner of the neighboring dominant estate | A defined path or strip must stay open for passage | Removes the strip from buildable land, permanently |
In gross (utility) | A utility or entity, not a parcel | A corridor for lines, pipes, or maintenance access | No-build zone over the corridor, often mid-parcel |
Prescriptive | Whoever established continuous use | Use rights that may not be cleanly recorded | Constrains use where the pattern was established |
Conservation | A land trust or government body | Long-term restriction on development and use | Can cap or eliminate development potential entirely |
How Does an Easement Reduce Buildable Area and Value?
An easement reduces buildable area by turning part of the lot into a no-build zone. Even a utility line buried deep underground blocks construction above it, and when the corridor cuts through the middle of a parcel, it can severely limit the buildable area, per architectural site-planning practice. Setbacks, building lines, and easements together define what can actually be built.
The mechanism is subtraction. A parcel's buildable envelope is its total area minus setbacks, building lines, and easement corridors, and an easement that runs through the interior removes usable land the same way a setback at the edge does, except it can sit anywhere. Appraisers treat this directly: easements limit usability, reduce buildable area, and restrict future development, and those impacts feed into market value because anything that restricts where improvements can be placed changes what the land is worth, per Boston Appraisal Services and Lowery Property Advisors. The severity scales with placement. An easement along a lot line the owner would never build on may have little effect, while the same easement bisecting the developable footprint can be decisive, per utility easement valuation guidance. This is why two parcels with identical acreage and identical zoning can carry very different value: the recorded lines inside them are not the same.
What Does an Easement Cost a Development Deal? A Worked Example
An easement's cost to a development deal is the value of the building that can no longer fit. When a project is footprint-limited, meaning the developable ground area caps the square footage rather than height or floor area ratio, an easement that removes land from the envelope removes finished building one-for-one, and the value of that lost building is the loss.
Consider a single-story industrial project on stated inputs. This is a worked example, not a market quote.
Input | Value |
|---|---|
Gross parcel | 80,000 sf (about 1.84 acres) |
Buildable area after standard setbacks | 60,000 sf |
Utility easement corridor plus no-build buffer | 20 ft wide running 500 ft plus offset, removing 12,000 sf |
Buildable area after the easement | 48,000 sf |
Stabilized value per built square foot | $220 |
The easement cuts the buildable footprint from 60,000 to 48,000 square feet, a 20 percent reduction. Because the building is footprint-limited, that 12,000 square feet cannot be recovered by adding height. At $220 per built square foot, the lost building represents 12,000 times $220, or $2.64 million of value that the recorded line removes from the deal. A buyer who underwrote the parcel on its 80,000 gross square feet, or even on the 60,000 buildable square feet before finding the easement, overpaid for land that cannot carry the improvement the model assumed. The before-and-after method the Appraisal Institute treats as predominant for easement valuation captures exactly this: value the site as if unencumbered, value it as encumbered, and the difference is the number. For a conservation easement the difference is far larger, generally 25 to 60 percent of value per conservation appraisal practice, because the restriction can foreclose development entirely. This is the same development risk that lives before a shovel moves, expressed as a line in the record rather than a hearing on the calendar.
How Do Buyers Find Easements Before They Close?
Buyers find easements through the title commitment and the survey, read together. Schedule B-2 of the title commitment lists the easements and other encumbrances identified in the record title search, and the ALTA survey shows the location and width of each one on the ground, per Millman Land. The commitment names the risk. The survey shows where it falls.
This pairing is the diligence step that determines real exposure. A Schedule B exception that reads as a routine utility easement means one thing if the corridor runs along the boundary and another if the survey plots it through the planned building pad. Developers acquiring land for new construction rely on the ALTA survey to confirm buildable area, setback compliance, and easement locations before designing site plans, per ALTA survey practice, which is why ordering the survey against the commitment early is not a formality. It is how the Schedule B exceptions get converted from words into a footprint. Prescriptive easements are the harder case, because a right established by continuous use may never have been recorded, which is one reason a physical survey and an inspection of visible use patterns matter alongside the record. An easement you find in diligence is a term you can price, renegotiate, or sometimes cure. An easement you find after closing is a loss you already own.
Frequently Asked Questions
What is an easement in commercial real estate? An easement is a recorded, nonpossessory right for another party to use part of a property for a defined purpose, such as access, utilities, or drainage. It does not transfer ownership, but it can block construction over the affected area and restrict how the land is developed. Most easements run with the land to future owners.
Does an easement lower property value? It can. Appraisers treat easements as direct inputs to value because they reduce buildable area and restrict development, per Boston Appraisal Services. An easement along a lot line may have little effect, while one cutting through the developable footprint can be significant. A conservation easement generally lowers value by 25 to 60 percent, per conservation appraisal practice.
How do I find out if a property has an easement? Order a title commitment and an ALTA survey and read them together. Schedule B-2 of the commitment lists recorded easements, and the survey shows each easement's location and width on the ground, per Millman Land. Prescriptive easements may not be recorded, so a physical survey and inspection of visible use also matter.
Can an easement be removed? Sometimes, but not reliably. Some easements can be released, relocated, or terminated by agreement with the holder, and some survey matters can be resolved before closing. Others, including many utility and conservation easements, are effectively permanent. Treat an easement as a constraint to price, not one to assume away.
Conclusion
The acreage figure and the zoning envelope are the numbers buyers reach for first, and both can be right while the deal is still wrong. An easement is a recorded line that sits underneath those numbers, subtracting buildable land the pro forma assumed was there and handing part of the parcel's use to someone else in perpetuity. The buyers who get this right treat the title commitment and the survey as the same document, plot every Schedule B exception onto the ground before they design a site plan, and price the easement's effect with the before-and-after method rather than discovering it after funding. The line was drawn before you arrived. Whether it costs you depends entirely on when you read it.