Easement
A legal right to use a portion of someone else's property for a specific purpose — such as utilities, access, or drainage — without owning it.
An easement is a non-possessory right to use a part of another person's real estate for a defined purpose. The easement holder does not own the land; they have the right to use it in a limited way — for example, to run utility lines, cross a neighbor's driveway, or maintain a drainage channel. Because an easement burdens the property it sits on, it is a form of encumbrance that shows up in a title search and can affect a property's value and use — which makes it relevant to evaluating the collateral behind a mortgage note.
Common types of easement
- Easement appurtenant — benefits an adjacent parcel (the dominant estate) and burdens another (the servient estate); it typically runs with the land and transfers with ownership. Example: a shared driveway easement.
- Easement in gross — benefits a person or entity rather than a parcel, such as a utility company's right to run power lines.
- Prescriptive easement — acquired through long, continuous, open use without permission (similar in spirit to adverse possession).
- Easement by necessity — created when a parcel would otherwise be landlocked and needs access across a neighbor's land.
- Utility and access easements — the most common, often routine and expected.
Do easements hurt value?
Most easements are routine and have little effect on value or marketability — a standard utility easement along a lot line is normal and expected. But some easements meaningfully reduce value or use: an easement that crosses the middle of a buildable lot, restricts construction, grants a neighbor broad access, or creates a maintenance burden can lower the property's worth and complicate a sale.
Why easements matter when you buy or sell a note
For a note buyer, easements are part of the due diligence picture because they affect the collateral's value and usability. The analysis is proportionate: a routine utility easement is a non-issue, while a significant easement that impairs the property's highest and best use can reduce the equity protecting the note and warrant a more cautious price. A title search and survey reveal recorded easements; an unrecorded prescriptive easement is a hidden risk that title insurance and a survey help manage.
For a note seller, being transparent about any unusual easement on the collateral helps avoid surprises that could slow a sale. Most of the time, easements simply confirm the property is normal; occasionally they require explanation.
Example
A note buyer reviews a property securing a $140,000 first-lien note. The title report shows a standard 10-foot utility easement along the rear lot line — routine, with no effect on the home or its value. The buyer treats the easement as a non-issue and prices the note on the strength of its clean first-lien position and the borrower's payment history. Had the easement instead granted a neighbor a driveway across the front yard, the buyer would have looked harder at the impact on value.
This entry is general information, not legal advice. How easements are created, transferred, and terminated varies by state; consult a qualified attorney or title professional.