VALUATION OF EASEMENT-ALL YOU NEED TO KNOW-COMPILED BY ER. AVINASH KULKARNI

VALUATION OF EASEMENT-ALL YOU NEED TO KNOW-COMPILED BY ER. AVINASH KULKARNI

Saturday Brain Storming Thought (120) 03/07/2021

COMPILED BY ER. AVINASH KULKARNI

VALUATION OF EASEMENT

Under this technique, Valuer evaluates the estimation of a property’s easements in addition to the harms those easements cause to the rest of that property

Basically, the other general run for easement valuation incorporates different harm on an incentive notwithstanding a pay esteem

Easement

An easement is a legal term used within real estate law that describes an agreement that the current owner of a property has with another party to utilize the property

An easement is the grant of a nonpossessory property interest that grants the easement holder to use another person’s land

Affirmative Easement

It gives the easement holder the right to do something on the grantor of the easements land, such as travel on a road through the grantors land

Impact of easement on property value

An easement can increase or decrease property value or have no impact on property value

Each property and situation should be evaluated on an individual basis, taking into account all the circumstances

Value of an easement

The value of the easement is based on the difference between the value of the whole property before

Easement Agreement

Easement agreement, in which one party uses the property of another party, where a fee is paid to the owner of the property used in return for the right of easement

Temporary Easement

Temporary easement means a grant in the manner of permission to enter, easements of limited duration or time, or other similar written permission for the purposes of temporary access

Easement in gross

An easement in gross is an easement that attaches a particular right to an individual or entity rather than to the property itself

Perpetual Easement

A perpetual easement is that type of easement which is to last without any limitation of time

It is a right which a person has on the property of another person which to an extent is permanent

Easement Termination

Ways of termination of easement

1) Abandonment

2) Merger

3) End of necessity

4) Demolition

5) Recording act

6) Condemnation

7) Adverse possession

8) Release of easement

Easement transfer to the new owner

An easement that grants the right to cross over someone else’s property to a specific individual or entity and as such are personal in nature

They do not transfer to a subsequent owner

Customary Easement

An easement may be acquired in virtue once the local custom

Easement of necessity

1) Right of way

2) Right to light or air acquired by grant

3) Prescriptive right to light or air

4) Prescriptive right to pollute air or water

5) Other prescriptive rights

Suspension of Easement

An easement is suspended when the dominant owner becomes entitled to possession of the servient heritage for a limited interest therein, or when the servient owner becomes entitled to possession of the dominant heritage for a limited interest therein

Easement Valuation

No two easements are alike

Each easement is associated with a particular property

The key to a correct valuation of the easement which shall comprise all the attributes of the real estate is the widest possible identification of the valuated easement

Basic principles of easement valuation

Easement represents the gain to the buyer as opposed to loss in value to the burdened property

1) to recognize and specify the rights conveyed to the property

2) collect and analyze all available data

3) calculation the value of real estate without the influence of an easement and then measures the impact of the easement on the burdened property

4) recondite the final value

Identification of main rights for real estate easement

1) benefits/losses to the owner

2) limitation of use

3) location

4) terms of removing

5) permissions

All rights are strongly connected with each other and are sometimes even overlapping

It is important to recognize the easement will impact the ownership title and may affect both current and future uses

Methodology of Easement Valuation

It is to measure the difference between the value of the real estate without the easement and the value of the encumbered property

The market value of easement does not relate to the value to the user

Methods available for easement valuation

1) cost method

2) comparative method

3) yield method

Each easement is unique
Easements are not traded in the open market

Hence comparative method for easement valuation is difficult to use

The cost of building up must not be the same as a loss in value to the burdened property

Hence cost me to do is not recommended for easement valuation

The best method for easement valuation is

Before and after methodology (rule)

1) valuer measures the impact of easement on the burdened property

2) the measure and impact or value of an easement is the loss in value to the remainder property after imposition of the easement

Easement valuation matrix

The valuation matrix came readily from analyzing two similar sales of encumbered property and property without the easement

Then the impact of easement on the value is measured

After having a number of multiple pairing there was observed a general trend of the measured impact

The matrix was also the results of interviews with buyers and sellers

Mr. Sherwood assembled the easement valuation matrix

Potential type of easements, comments in percentage impact

1) Small subsurface easement

Nominal effect on use of utility (0% to 10%)

2) Air rights, water sewer line

Subsurface or air rights that have minimal effect on use and utility, location with setback (11% to 25%)

3) Water or sewer line, cable line

The location along a property line, location across the nonusable land area (26% to 49%)

4) Water or sewer lines, cable line, Telecommunications

Balanced use by both owner and easement holder (50%)

5) Pipelines, scenic easements

Some impact on surface use conveyance of ingress/egress rights (51% to 74%)

6) Pipelines

Major impact on surface use (75% to 89%)

Compiled by:-

Avinash Kulkarni

Chartered Engineer
Govt Regd Valuer
IBBI Regd Valuer

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