Effects of Easement on Land Value

Easements can give a land owner added value to his property or restrict the ways in which he could use the property. Some easements are more desirable than others. There are easements that remain in effect in perpetuity and others that end with the death of the owner. Whatever the type of easement, though, it affects the property's value and use.

A land valuation is an estimate of what a property is worth. There are three basic types of valuations. A "fair market value" appraisal determines what a fair selling or purchase price for the property might be, considering the local housing market. A loan valuation is an appraisal performed by a licensed property appraiser to help determine what amount of money a mortgage or home equity lender might approve for the property. An insurance valuation is an estimate of how much money would be needed in order to restore the property to its present condition, should some disaster happen. Many factors go into determining a land's value, including whether or not the property has any easements attached to it.

According to MAI-designated appraiser Richard Mario Leslie, an easement is "an interest in real property that conveys use, but not ownership, of a portion of an owner's property." There are four basic types of easement: right of way, utility, access and conservation. Often, a payment for the easement will be made to the owner of the property for the creation of the easement. An easement can either increase or decrease a property's value, depending upon its desirability or the amount of loss of use it causes the property owner.

Easements that enhance a property increase its value. For instance, a cable company in a rural area might obtain an easement from a property owner to run data cables under ground along one of the property's borders. This allows the company to provide, for instance, high-speed Internet service to 30 homes in the area. Furthermore, because the cable is buried under the property's border, it does not restrict the owner from the use and enjoyment of his property. Because a desirable service is now available on-site, the property's value increases.

If the easement limits the current or potential use or enjoyment of the property, then it decreases the value of the land. For example, if a power company obtains an easement to put one or more electric towers on a property, the property owner is no longer able to make use of a certain part of his land. Furthermore, many people consider power lines suspended over one's property unsightly and a health risk. If the owner wants to sell the property, its fair market value will most likely be lower than a similar property without that type of easement.