Charging Developer For Easement

Q: I read an article where you answered a question about easements. So I thought I would ask my question.

If you own land and someone is building a very large subdivision next door and needs your property to put in sewer lines, should you charge him to use your land?

In my case, the builder stands to make millions on the development of his property. How should I decide what to charge?

A: You most certainly could charge your neighbor for the right to use your property in this way. Once the sewer lines go in, they will be there forever. Will that change what you can do with your property? Will it limit your ability to develop the land going forward?

One way to think about how much to charge the developer is to consider how much the portion of land he is going to use is worth today if you were going to create a subdivision. You can then think about how quickly property is appreciating in the area, and how much more valuable land would be going forward.

These figures should be a starting point in your discussion with the developer over payments. But before you say anything about money, ask how much he is willing to pay for the rights. The answer might surprise you.

In any negotiation, it’s best to let the other person make the first offer. If you were selling your home, you might put a list price on it, but it would be up to a prospective buyer to make an offer and then you would counter the offer.

I suggest you speak to a real estate attorney before dollar figures start flying around. You’ll need an attorney to draw up the easement, or at least review the easement the developer’s attorney is drafting to make sure it protects you and is filed correctly.

Good luck, and thanks for writing.

Published: Dec 12, 2005


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