Driveway Easment Value-HELP

[BONNIE BALDWIN]

Thanks for all the ideas

Thanks all for your inspiring ideas! I'll have to chew on this a bit more before deciding which way to go. I sort of really like Jim's ideas because it feels sort of right. And because I don't have much time to read a book before I do this assignment.

Well I knew I was going to learn something with this assignment.

Any other ideas are of course always appreciated.

 

[beowulf]

2 cents worth from somebody that appraises them on a regular basis.

Bonnie:
Assuming this easement is to encumber land only, you can't value the easement for more than what the fee-simple value in the serviant land is worth. Under the state rule, an easement interest is measured as by the percentage of the bundle of rights associated with the fee ownership in the land only, and has nothing to do with the value of what is improved upon it (ex-$60,000 prk spaces). The interest being appraised are "those rights associated with a permanent access easement". The bundle of rights include air rights, surface rights and subsurface rights. If the surface rights, which are the most valuable, are being deeded for exclusive use by the dominant estate, then the value of the easement could be as high as 90%to 95% of the fee value of the land in the easement area. There is literature in the AI Lum Library archives on typical percentage breakdowns of various types of easements compiled by those who have researched sales of easements.

 

[xm39hnu]

Assuming this easement is to encumber land only, you can't value the easement for more than what the fee-simple value in the serviant land is worth.

Gotta disagree, Lee.

I believe your comments are aimed at determining market value in a condemnation situation. She's doing use value, from what we can tell here. So I'll argue that the value to a specific party for a specific use can be 'way higher than the MV of the whole damned place. Depends on how bad the other guy wants it. In this case, she's determined a positive impact to the dominant estate of $60K. She might need to factor in the negative impact of not getting the easement, as well as the expense of condemning an easement if the situation should get to that point. Balance that with the negative impact on the servient estate. (Actual loss plus damages, if any.)

I think this one will be surface rights for ingress/egress only. No air or subsurface rights appear to be needed.

 

[Fred]

The required approach in an eminent domain

Under the state rule

Intended use, intended use.

This is not a condemnation. The price is what the traffic will bear, not fixed by what court-made law says is “just.”

 

[beowulf]

Jim - it wouldn't sound to me that a 5 foot easement along a property line would have any adverse impact on the servient estate. Use value is a whole nother world - How did her initial inquiry get all the way down to value in use anyway?

 

[xm39hnu]

Lee, please excuse my lousy manners. I just noticed that you've just joined us. Welcome.

The initial inquiry got to value in use because that's what Bonnie described: An easement which has a specific use to a particular party, and which stands to increase the value of the dominant estate by $60K. It isn't market value. Have you (or anyone reading this) EVER seen an advertisement offering an easement for sale? I haven't.
"For sale: Surface use easement 5' wide going east to west over the north edge of Map 049, parcel 003.00, 300' in length. $5,000 OBO. (615) 555-1212 after 6:00 PM"
With no exposure to the open market, no marketability can be proven. Without proof of marketability, how can a market value be found?

And to assume that it won't damage the servient estate is a dangerous assumption. It depends heavily on the rights conveyed. An easement like the one Bonnie's asking about should be carefully worded, and she should obtain a copy of the written easement before proceeding. If it allows unlimited use of the full bundle of rights, then the damage to the servient estate could be considerable. But if it allows only surface traverse of the servient estate for ingress/egress to the dominant tract, then damages might not be so bad.

There's definitely a loss to the servient property if a dang parking place is worth $20 grand. Whether damages will be present is a function of how the easement is written and what rights are to be conveyed.

 

[Fred]

Lee

How did her initial inquiry get all the way down to value in use anyway?

The thread covered that. I would say it’s still a form of most probable price, but in a market of one. I wouldn’t use the same terminology as Jim, but he seems to know that buy-sell is not a condemnation.

Jim

There's definitely a loss to the servient property if a dang parking place is worth $20 grand.

If the easement area had a feasible use, it likely would likely have been pressed into service already. Like I said, if the buyer’s value gain, does not exceed the seller’s value loss, there is no deal to be made – and if they both didn’t smell part of that net gain already, they wouldn’t be calling an appraiser.

 

[xm39hnu]

Steven's got a way of distilling these problems down to their essence.

If the easement area had a feasible use, it likely would likely have been pressed into service already

This makes a good case for a highest and best use analysis to be included in the appraisal. HBU analysis isn't required for use-value appraisals, but it would certainly give you something to compare the use (and resulting value) against.

and if they both didn’t smell part of that net gain already, they wouldn’t be calling an appraiser.

...and I would add that the appraiser had better know the problem and its elements thoroughly, and address them with adequate support. Because of the blood (profit) in the water, if one of them feels slighted by the opinion, he'll be apt to sue.

 

[xm72mhd]

Lee
The thread covered that. I would say it’s still a form of most probable price, but in a market of one. I would’t use the same terminology as Jim, but he seems to know that buy-sell is not a condemnation.

Jim
If the easement area had a feasible use, it likely would likely have been pressed into service already. Like I said, if the buyer’s value gain, does not exceed the seller’s value loss, there is no deal to be made – and if they both didn’t smell part of that net gain already, they wouldn’t be calling an appraiser.

Steven nailed it. There is a market, but it is limited to these two and the value of the property is going to be what the buyer is willing to pay, which is no doubt going to be remarkably close to what the seller is willing to accept or they wouldn't be to the part of hiring an appraiser to tell them. Substitution just isn't here for you on this one. You may be able to convince the value of the easement is equal to the difference in value between the buyer's land with an easement and without. As Steven observed, it doesn't sound like there is any damage to the servient estate, so don't look too far under that rock.

Here in CO we have a constitutional personal right to condemn rights of way to landlocked parcels, so it is legitimate to add attorney's fees to the costs of acquisition, which litigants seem to think translates into value. I'm not so sure that I don't agree with them since you can't test the market and buyers for landlocked parcels are very rare.

 

[Bernie I. Garcia]

I have literally done hundreds of easements. Call me & leave a # where I can reach you after 5 PM. We'll talk about your assignment.

Respectfully,

Bernie I. Garcia, SCGA, IFAS, CA-S
Phone; 626.967.4245