Easements, Covenants, Leases, and Licenses: Top Misconceptions Clarified

Easements

An easement is considered to be a property right provided to a non-owner of real property for his, her, or its use and benefit over the property rights of the owner of real property. It qualifies as an interest in real property and confers a right, benefit, dominion, or lawful use out of or over the real property rights of another. There are various types of easements and some examples include ingress and egress for access or utility access easements. As an interest in real property, an easement should be prepared much like a real estate deed and then recorded in the real estate records of the county in which the properties are located.

A common misconception or just downright confusion with easements is the distinction between an easement in gross and an easement appurtenant. An easement in gross is "a mere personal right in the land of another." It is therefore "not given for the purpose of ingress or egress to and from other land." And furthermore, it only involves one parcel of real estate. An example of an easement in gross would be a right of way that a private corporation, such as a railroad company, pipeline, or public utility, has across an individual parcel of land. An easement appurtenant exists when there are at least two parcels of land and the dominant estate receives benefits from the use of the servient estate.

Covenants

A common misconception with covenants in the commercial context is that zoning regulations automatically displace them. This will be the case if the zoning regulation is more restrictive than the covenant, but not vice-versa. Thus, as long as a covenant does not violate public law or public policy, it is enforceable, despite a zoning regulation allowing operation of the property in such a manner.

Leases

Most commercial leases contain a clause which automatically places the tenant into default upon the commencement of a bankruptcy action. Such a clause may read as follows:

This Lease shall terminate, without notice, (i) upon the institution by or against either party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of either party's debts, (ii) upon either party making an assignment for the benefit of creditors, or (iii) upon either party's dissolution or ceasing to do business.

Surprisingly, even though many leases contain these types of provisions, they are generally unenforceable. The Bankruptcy Code generally renders these types of ipso facto clauses void. This is because at the moment a bankruptcy action is commenced, any interest of the tenant in property becomes "property of the estate." Section 365(e)(1) explicitly voids such clauses.

Licenses

A license in real property is defined as "authority to do a particular act or series of act on land of another without possessing any estate or interest therein." A parol license to use another's land is revocable at any time if its revocation does no harm to the licensee. It may, however, become irrevocable if the licensee has acted pursuant to the license and in doing so he has incurred expense.

A common misconception is that a license may ripen into an irrevocable license if the licensee makes improvements to his property in reliance on the license. Georgia appellate courts have held that this is not enough as "the mere fact that a licensee erects improvements upon his own land in expectation of enjoying a parol license, and thereby incurs expense, is not enough to make the license irrevocable under O.C.G.A. § 44-9-4." Instead, the correct analysis is whether the licensee improved and increased the value of the licensor's property. Only then does the license have the ability to become irrevocable.

Creating and Enforcing Easements

There are essentially three (3) different types of easements in Georgia: (i) an express easement, (ii) a prescriptive easement, and (iii) an easement by necessity. In the commercial context, an express easement is the most preferable method of obtaining an easement.

Rountree Leitman Klein & Geer, LLC provides real estate litigation services to its clients. Please contact David S. Klein for a consultation on any disputes involving real estate in Georgia.