Charging Developer For Easement
REM #A677
By Ilyce R. Glink
Summary: A homeowner has a large development being built next door and the developer needs their land for the sewer lines. How do you determine how much money to charge for an easement? Ilyce gives suggestions on how to handle this negotiation and suggests getting an attorney in on the deal.
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.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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