Purchasing Real Estate Subject to an Easement

Quick Overview

You can buy a property with an easement, but only if you know exactly what the easement entails and how it will affect your use of the property, its value, your mortgage, and any future sale. Technical easements—such as access to a utility connection or a transformer station—usually pose the least problem. On the other hand, an easement for life, the right to use an apartment, or the right of way across the property can significantly restrict ownership.

• Check the title deed, especially Section C and, if applicable, Section B1.
• Request the contract under which the easement was established.
• Verify whether the bank will accept the property as collateral.
• Reflect these restrictions in the purchase price.
• Do not sign the purchase agreement until you fully understand the exact terms of the easement.

Not sure if the easement is properly addressed in the purchase agreement? Have a lawyer review all documentation before signing. With a property worth millions, a mistake in a single sentence can end up costing more than the entire legal review.

What is an easement?

Easements belong to the category of rights in rem and generally apply to real property, such as a house, land, or apartment. However, this is not always the case. They can also apply to movable property, but only to items that are registered in a public registry (such as cars).

The legal framework can be found in the Civil Code, which distinguishes primarily between easements and real burdens. In the case of an easement, the owner typically must tolerate something or refrain from doing something, such as allowing passage across the land. In the case of a real burden, the owner of the encumbered property may be required to actively provide something or perform a specific action.

A real burden is defined as a legal institution that allows certain persons to use property over which they have no ownership rights. For owners, on the other hand, this means they must perform certain obligations, are subject to certain restrictions, or must tolerate certain actions.

What types of easements are there?

Basically, we distinguish between two types of easements: servitude easements and real easements. As we indicated above, they differ in whether the owner must tolerate a certain interference with their rights or, conversely, actively perform a certain act.

However, there are many more classifications of easements:

Based on the entitled party

• in rem = the beneficiary is always the owner of the property (real estate); easements associated with ownership of real estate pass to the acquirer along with ownership of the property,
• in personam = the entitled party is a specific person (natural or legal), and the easement applies only to that person; upon the death (or dissolution) of the entitled party, the easement also ceases to exist.

By nature

• encumbrances involving an obligation to act ( the obligated party provides a specific performance),
• encumbrances involving an obligation to refrain from action (e.g., the obligation to refrain from building a fence higher than a certain height),
• easements involving an obligation to tolerate (typically a right of way or right of passage across the property).

By consideration

• easements for consideration
• easements granted without consideration

By duration

• perpetual,
• for a fixed term,
• for an indefinite period,
• for the remainder of a specific person’s life.

In terms of the benefit

• the benefit they provide to the beneficiary,
• a defect in the obligor’s real property.

Easement for the Use of an Apartment or Single-Family Home

An easement for the use of a certain type of real property (which need not necessarily apply only to residential property, but may also apply, for example, to land) allows the entitled person to continue living in an apartment or house even after the property changes hands. A typical use of this right occurs when parents wish to gift their property to their children. There are many reasons for this, and they go far beyond the fact that these are loving parents who want to provide their children with a good life. A practical reason is to avoid complications and disputes during probate proceedings. There are indeed many reasons.

The advantage of using this legal mechanism is that parents (or anyone in whose favor a right of use over the property has been established) need not worry about losing the roof over their heads, even though they do not own the property in question.

Sometimes, however, parents transfer real estate to their children in this way on the assumption that their children will have an easier time obtaining a mortgage if they own another property. But be careful here. Banks generally do not accept real estate with such a restriction as collateral. And even after the death of the entitled person, it sometimes takes a long time for this right to be removed from the land registry.

If you want to finance the property with a mortgage, resolve the easement before signing the reservation agreement. The bank assesses not only the value of the property but also whether it can be sold as collateral if necessary. A life estate or a broad right of use can significantly reduce the property’s value and, in some cases, complicate or completely prevent financing.

Conversely, a technical easement—such as a utility line running across the property—may not be a major obstacle. However, it always depends on the exact wording of the easement, its scope, and its impact on the use of the property.

How do you establish an easement?

The typical method is by contract, but there are many other ways to establish one:

• by written contract,
• based on a will in conjunction with the results of probate proceedings,
• by an approved agreement among the heirs,
• by decision of the competent authority,
• by law,
• a right corresponding to an easement may also be acquired by the exercise of a right (adverse possession).

Where can we find information about easements?

Information about easements related to real estate can be found by consulting the real estate cadastre, specifically in the title deed under Section “C” (easements encumbering the property) for the specific property, or in Section B1 (easements in favor of the property). Therefore, when purchasing real estate, always check not only who is the registered owner but also whether an easement encumbers the property and, if so, what type of easement it is.

From our experience, we know that buyers often check only the title deed itself but do not request the document under which the easement was established. Yet it is precisely this document that may conceal a significant restriction—for example, the right of a specific person to use the entire house, not just one room, or the obligation to allow access across the property without a clearly defined route.

The entry in the land registry alone is often insufficient. It is important to also read the deed on the basis of which the easement was established. It is in this document that it is usually specified who is permitted to use the property, which routes they may take, whether the owner is required to pay anything, and how long the restriction lasts. Be sure to verify this before making a purchase.

Should You Buy a Property with an Easement or Not?

There’s no simple answer to this question. You need to know what kind of easement is involved. Some easements impose almost no restrictions on ownership and may not prevent you from buying the property. For example, current or future apartment owners who have an obligation—linked to their apartment and share in the common areas of the building—to provide access to a transformer station located somewhere in the building’s basement can rest easy.

In practice, we repeatedly see that the greatest risk is not the mere existence of an easement, but its vague or overly broad scope. Only after the transfer does the buyer discover that they cannot use the property as expected, or that the bank will refuse to finance it as suitable collateral.

On the other hand, purchasing an apartment subject to an easement of use held by another person is generally not recommended, although this also depends on the purpose for which we are buying the apartment—such as whether we need to address an immediate housing need, etc.

A property with an easement always loses some value; however, this disadvantage may sometimes be reflected in the purchase price. Another important consideration is the possibility of reaching an agreement with the other party to cancel or modify the easement.

If the seller claims that “it’s just a formality,” be wary. An easement can determine whether you will actually be able to use the property, finance it with a mortgage, or sell it later. Therefore, we recommend a legal review of the entire transaction before signing the purchase agreement .

Selling Real Estate Subject to a Life Estate

If you are the seller and a specific person has a life estate or right of use established on your apartment or house, this does not mean you cannot sell your property. However, it is another matter entirely whether you will easily find a buyer for such a property. It depends greatly on the layout of the property (for example, the beneficiary may have a separate entrance and a small apartment within a single-family home) and, to put it pragmatically or cynically, on the beneficiary’s age and health. Be prepared, however, to sell below market value and to have a long sales process.

From our experience: A buyer decided to purchase a single-family home at a bargain price because the land registry listed “only” a life estate. It was only upon reviewing the contractual documentation that it became clear the beneficiary had the right to use not just one residential unit, but practically the entire house, including the garden. The price therefore did not reflect the actual restriction, and it was necessary to renegotiate the terms of the sale.

Termination of a Life Estate

An easement is terminated primarily:

1. a written agreement,
2. by decision of the competent authority,
3. by operation of law.

The Civil Code allows the specific rights and obligations to be defined in considerable detail by agreement between the parties. That is precisely why it is essential that a contract establishing, modifying, or terminating an easement precisely describe whom the right protects, how long it lasts, what the owner must tolerate or do, and how to proceed in the event of future changes in circumstances.

Summary

Purchasing real estate with an easement is not necessarily a bad decision, but it always requires careful scrutiny. The most important thing is to determine what easement is registered in the land registry, whom it benefits, how long it lasts, and how it restricts the owner. Special attention should be paid to life estates, rights to use an apartment or house, rights of way, and any easement described in vague terms. Such restrictions can lower the property’s value and complicate obtaining a mortgage or a future sale. Therefore, before signing a purchase agreement, it is not enough to simply review the title deed—you must also examine the supporting documents, the contract, and the actual impact of the easement on your plans.