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5 min read
Author: Tina List
Tina List, Client Relationship Manager and property investor
There’s a lot to learn when you buy an investment property. You’ll speak to lawyers, accountants and advisers who use a lot of new words. And one of the terms that confuses many investors is “easements”.
Here at Opes Partners, I get asked all the time: “What is an easement … and how do I check my easements are correct?”
This is a really good question, because unless you’ve bought a property before you might not know what an easement is.
So, in this article you’ll learn what an easement is and what you have to do to check them.
We’ll also discuss just how important they are with New Build properties. That way you can feel comfortable and confident in your property investment journey.
An easement is a legal term; it gives someone else the right to access part of your property.
That doesn’t mean someone can come onto your property for any odd reason. It’s not like, “If you buy this house, anyone is allowed to enter your property and read a book.”
It’s more practical than that. Have you seen a section that has been subdivided, so there is a house at the front, and a house at the back?
The driveway to the rear property might cross the front property’s land. So there will be an “easement” that says the back person is allowed to use that land to get to their house.
When it comes to New Builds easements can include:
These rights are practical. It means that even if your neighbour sells the property, they can’t stop you from using their part of the shared footpath.
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I find the biggest problem with easements comes from investors who are overseas or out of town.
This is created with New Builds when their lawyer gives them a copy of the title, which has the legal description of the property and has easements in the file.
At this point, your lawyer will say: “We cannot verify the location of the boundaries, easements and services.”
This is because the lawyer doesn’t go and physically inspect the property. So, they’ll ask the investor to check these. But if you live out-of-town from your investment property you might ask: “How am I supposed to do that?”
The short answer is … you can’t. And honestly, most investors don’t. Sure, in an ideal world you would check:
But, you’re probably not going to go underground and check the electrical wires yourself.
This is why we recommend you get a building inspection, even when you buy a New Build. That way someone physically checks the property to make sure it is as it should be.
Most New Build investors don’t worry too much about easements. That’s because a New Build has to pass multiple checks before you pay the money and own it.
For example, the property will not pass the council’s Code of Compliance if there is no party wall. That’s the wall between you and your neighbour’s unit.
Neither will they give the green light to a property with no electricity, water or sewage pipes. All the pipes need to be installed correctly. That’s how the developer gets the Code Compliance Certificate (CCC).
The fact that the unit got the CCC shows the council has looked at and approved these services. So physically checking the placement of pipes (digging up the dirt) isn’t often feasible.
Easements are more of a concern when you have an existing property, particularly when you have a cross-lease property and share ownership with your neighbours.
In this instance, easements could stop you renovating part of your property.
People buying existing properties will often get a surveyor to check things like if your neighbour has built on your land
For example, homeowner Jodi saw New Builds going up next door. There was an issue and the developer claimed her boundary fence was in the wrong place. The developer said Jodi’s fence was 20 centimetres over her boundary.
Over the years Jodi had planted a lot of beautiful trees right by her fence, so the developer wanted to demolish and move the fence back, which meant ripping out all Jodi’s trees.
But because Jodi had a surveyor’s report when she bought the property, she was able to stop that from happening because she could prove the developer was wrong.
The big fear investors have is: “If I don’t check the easements in person, what if they are wrong?”
If you’ve bought a property off-the-plans you’ve already signed up for all the easements at the start and there’s not a lot you can do.
However, if an easement significantly impacts your property’s value, you may be able to get compensation.
For instance, if a shared pathway was originally going to take up 10 square metres of your land … and now it’s 30 square metres, that’s going to be an issue. It’ll impact the value of your property and you might be able to get compensation from the developer.
If there’s a manhole on your property that wasn’t originally on the plans, that’s a little bit more tough luck.
Let me be clear, there are instances where you do have to worry about easements.
If you’re an existing property owner, particularly with a cross-lease, easements do matter.
You would never buy an existing property without seeing the site, or getting a surveyor to check it.
The thing is, New Builds are different. Easements are a normal part of buying a property, especially with New Builds.
Although you can’t check them in advance, your property will get checked several times by the council. If an easement does end up affecting your property’s value, you might be able to get compensation.
But in most cases easements are simply part of the New Build process that you should keep in mind, but not worry too much about.
Tina List, Client Relationship Manager and property investor
Tina List is a Client Relationship Manager with a Financial Adviser qualification. As a property investor herself in New Zealand, Tina brings firsthand experience to her clients. Originally from South Africa, she has a background in the Finance and Insurance industry.