The importance of easements

Recent experience highlights two important aspects of easements: the need to secure formal easement rights, and whether money has to be spent in order to use an easement.

Neighbour says “Nay”

A client owns a rural property on which she runs a horse stud. For many years, she used a driveway on her neighbour’s property to access parts of her own property, with the neighbour’s consent. There was no easement and nothing in writing, just a friendly oral arrangement with no money changing hands. The client used the driveway for vehicular access to an office, stables and other buildings on her property. Being virtually on the (unfenced) boundary, and facing the neighbour’s property, these buildings can really only be accessed via the neighbour’s driveway. Access is needed for the client to move stock, feed and water around the property. It is not practical for her to create an alternative vehicular access route over her own property.

Problems arose when the neighbour sold his property. The new neighbours swiftly announced their intention to close off our client’s access to the driveway. They have since fenced the boundary, meaning our client has no vehicular access to the relevant buildings. Our client tried to negotiate an easement along the driveway, and has offered to pay the neighbours compensation, but her requests have fallen on deaf ears. She is considering an application for a Court-ordered easement under section 88K of the Conveyancing Act, but the expected legal costs of Supreme Court proceedings are a major deterrent, particularly given the presumption in section 88K(5) that the applicant is to pay the neighbours’ costs of the proceedings.

The lesson: if you rely on access over a neighbour’s property, make sure you formalise your access right by getting an easement registered on title. Your friendly neighbour may move at any time, and the new neighbour may not be quite as friendly!

The bargain that wasn’t

A client purchased a very large acreage property at auction. Prior to auction the client was aware there was no road frontage, but the auction contract disclosed that there is legal access to the property from the public road, via a right of way over a neighbour’s property. No driveway is yet constructed on the easement site, but the client (whose background is in construction) believed there would be no difficulty constructing one at a reasonable cost after he bought the property.

The client felt he’d secured a bargain, as he paid far below the reserve price, until a few weeks later when he got a quote to build the driveway. Due to the land’s topography, a driveway built within the right of way will cost roughly $200,000, far more than he had expected.

The client is now asking his neighbour to vary the route of the easement over some flatter terrain, to reduce the cost of the driveway. If negotiations with the neighbour are not successful, he may need to consider making a section 88K application to the Court.
The lesson, as expressed by the client himself: “I shoulda done my homework!” Legal due diligence only takes you so far. If you are planning to carry out works on the land you are buying, then you need to consider other relevant due diligence, including planning and construction issues.

Boundary Realignment – Not a simple matter

Most neighbours who seek to change the position of their property boundaries underestimate the complexity of the process and the delays often experienced in dealing with their mortgagees and other secured creditors.

Boundary realignment is essentially a re-subdivision of the properties involved and proceeds in the same way as a traditional subdivision of property.

The parties should firstly properly document the agreement and include a full Contract for Sale of Land in relation to the properly changing hands.

Normally the proposed plan of subdivision is first approved by the Local Council and then signed off by all the registered proprietors and their mortgagees and is then lodged for registration at the Lands Dept together with the Certificates of Title of each property and any other necessary related documents (these typically include land transfers, discharges of mortgage, mortgagee consents and new mortgages).

Without the simultaneous registration of such “related documents” the newly issued Titles will note the entitlement of the registered proprietors and their mortgagees of the land gained. This is commonly referred to as a “dual entitlement” and as a result the mortgagee’s security may well be unenforceable if the subdivision is registered without the related documents being registered at the same time.

Accordingly the role of any mortgagees is significant prior to the subdivision being registered and they will normally request new mortgages be entered into and control of all related documents and the registration process.