Easement

Quick Definition

An easement is a legal right that lets one party use a portion of someone else's property for a specific, defined purpose without owning it. Common examples include utility companies running power lines across private land, shared driveways between neighbors, and public walking paths. Easements are recorded in the public record and typically run with the land, meaning they transfer to new owners and survive property sales.

What It Means

When you buy real estate, you might be buying property subject to easements that give others the right to use part of it. A utility easement along the back of your lot allows the electric company to access their lines. You cannot build a permanent structure there. A shared driveway easement means your neighbor has the right to use your driveway permanently, regardless of who owns either property.

Understanding what easements encumber a property matters before purchasing because they can restrict what you build, where you park, and how you use portions of your land. Some easements have minimal impact. Others, like conservation easements, can permanently strip development rights and reduce property value by 10% to 40%.

Types of Easements

How Easements Are Created

Dominant Estate vs. Servient Estate

For appurtenant easements, both concepts apply. The dominant estate holder has the right to use the easement. The servient estate owner must allow that use but retains ownership of the land.

How Easements Affect Property Value

Easements and Title Insurance

Easements discovered during the title search are listed as title exceptions. They are not covered by title insurance. The policy insures against undiscovered encumbrances, not those already known and listed:

Always review the title commitment's Schedule B, the list of exceptions to coverage, to understand all known easements before closing. If you skip this step, you could discover after purchase that you cannot build a garage where you planned or that a neighbor has legal access across your backyard.

Conservation Easements: Tax Tool Under Heavy Scrutiny

A conservation easement voluntarily restricts development on land in perpetuity to preserve natural, scenic, or agricultural values. In exchange, the landowner can claim a charitable deduction for the reduction in property value.

The IRS has been aggressively cracking down on abusive syndicated conservation easement transactions. In May 2026, the IRS announced a new time-limited settlement opportunity (IR-2026-65) for eligible taxpayers involved in conservation easement disputes. Over 1,100 cases remain pending, including approximately 740 docketed cases in U.S. Tax Court. On average, the Tax Court has allowed only 6% of the original claimed deduction and imposed a 40% gross valuation misstatement penalty.

The 11th Circuit's 2026 decision in Savannah Shoals v. Commissioner reinforced this trend. The court affirmed the Tax Court's rejection of a $23 million deduction, valuing the easement at a fraction of the claimed amount and sustaining a 40% penalty. The case highlights how courts evaluate "highest and best use" claims and how aggressively the IRS challenges inflated valuations.

If you are considering a conservation easement, work with a qualified appraiser and a tax attorney who specializes in IRC Section 170. The deduction rules are strict, and the penalties for overvaluation are severe.

How to Find Easements on a Property

1. Title search: The title commitment lists recorded easements; review Schedule B exceptions
2. Property survey: A survey physically locates all easements, rights-of-way, and encroachments
3. County recorder's office: Search public records by property address or legal description
4. Walk the property: Visible utility lines, paths, and structures often indicate easement areas
5. Ask the seller: Disclosure requirements in most states require known easement disclosure

Real-World Example: The Backyard Utility Easement

A homeowner purchases a property with a quarter-acre backyard. The title search reveals a 10-foot-wide utility easement running along the back fence line. The easement allows the local electric company to access buried power lines.

The homeowner wants to build a detached garage that would partially overlap the easement area. The utility company refuses permission because they need clearance to access the lines for maintenance. The homeowner must redesign the garage to avoid the easement, losing 120 square feet of potential building footprint.

This is a common scenario. Utility easements are nearly universal in suburban developments, and most homeowners never think about them until they try to build something.

Key Points to Remember

• Easements give others a right to use part of your property without owning it
• They run with the land: they survive property transfers and bind all future owners
• Utility easements (power, water, sewer) are nearly universal and typically create minimal restriction
• Conservation easements permanently restrict development. They can be a powerful tax tool but are irreversible and heavily scrutinized by the IRS
• Prescriptive easements are acquired through long, open use without permission, similar to adverse possession for use rights
• Review title commitment Schedule B for all known easements before purchasing any property

Common Mistakes to Avoid

• Skipping the survey to save money: A property survey typically costs $500 to $1,000. Skipping it means you might not discover an easement until you try to build a fence, shed, or addition and get stopped by the utility company or a neighbor's legal claim.
• Building over a utility easement: Even if the lines are buried and invisible, building a permanent structure over a utility easement gives the utility company the right to remove that structure at your expense if they need to access their infrastructure.
• Assuming an old easement is no longer enforceable: Easements do not expire just because they have not been used recently. Unless formally terminated through legal means, they remain in effect indefinitely.
• Overvaluing a conservation easement deduction: The IRS has won case after case against inflated conservation easement valuations. A 40% gross valuation misstatement penalty on top of disallowing the deduction can cost more than the original tax savings. Use a qualified appraiser and follow IRC Section 170 requirements to the letter.

Related Concepts

Easements intersect with several other real estate and property law concepts. A deed is the legal document that may create or reference an easement. Title insurance protects against undiscovered encumbrances but lists known easements as exceptions. A lien is a different type of encumbrance that secures a debt rather than granting use rights. A professional survey physically locates easements on the property. Zoning regulations work alongside easements to determine what can be built where. When the government acquires an easement without the owner's consent, it does so through eminent domain. Conservation easements can also affect property tax assessments.

Frequently Asked Questions

Q: Can I remove an easement from my property? A: Easements can be terminated by agreement (both parties sign a written release), abandonment (the easement holder clearly abandons the right), merger (the dominant and servient estate come under common ownership), expiration (if the easement had a defined term), or court action. Express easements that are properly recorded are difficult to remove. You typically need the cooperation of the easement holder. Easements by prescription can sometimes be extinguished by blocking the use for the statutory period.

Q: What can I do on my land where an easement is located? A: You retain ownership and can use the easement area in ways that do not interfere with the easement holder's rights. For a utility easement, you can plant grass, install a removable fence, or park temporarily. You cannot construct permanent structures like buildings or concrete slabs that would interfere with utility access. The specific scope of permitted and prohibited activities depends on the easement's language. Read the recorded document for your specific easement.

Q: What is an "easement appurtenant" vs. "easement in gross"? A: An easement appurtenant benefits an adjacent parcel of land. It is tied to the dominant estate and automatically transfers when either property is sold. When your neighbor has an appurtenant easement to cross your property, that right transfers to whoever buys their property. An easement in gross benefits an individual or entity rather than adjacent land. A utility company's power line easement is in gross. It may or may not be transferable depending on its nature and state law.

Q: Are conservation easement deductions still viable after the IRS crackdown? A: Yes, legitimate conservation easements remain a valid tax planning tool under IRC Section 170. The IRS targets syndicated transactions that inflate appraised values to generate outsized deductions. If you contribute a genuine conservation easement on land you own, use a qualified independent appraiser, and follow all statutory and regulatory requirements, the deduction can still be legitimate. The key is that the valuation must reflect reality, not an aggressive interpretation of "highest and best use."