Does an Easement Affect the Value of Land?

Power companies purchase easements to run transmission lines.

Power companies purchase easements to run transmission lines.

An easement allows another entity to use part of your land for a specific purpose, while you also continue to use and own the property. The holder of the easement usually pays you a fee for the easement, but does not own the land outright. Easements may extend in perpetuity and continue even if you sell or transfer the property. Easements affect the value of the land; the size and type of easement as well as the market for land determines how much effect the easement has.

Conservation Easements

Conservation easements allow landowners to continue using their land as they always have, for farming, ranching, recreation and as a home, but prevent the land from being subdivided or developed. These types of easements also prevent the landowners’ heirs from dividing or developing the property. Buyers who want to subdivide or develop property, such as in a resort area, may consider easements as reducing the value of the property. Land under conservation easement may have limited income-producing potential, since it can’t be developed for mining or mineral extraction or for commercial purposes. Some buyers see conservation easements as enhancing the value of land, precisely because these easements limit development.

Right-of-Way Easements

Some easements allow the public or private entities to cross the land to obtain access to other properties. For instance, you might have an easement on your land to allow a road or a public trail to cross the property. The easement forbids you from blocking access. You can’t put up a fence or reroute a trail or pipeline. Some easements, such as for a highway, may increase the land’s value. An easement along the edge of the property impacts the value less than an easement that cuts through the middle of a piece of land, limiting the land’s potential uses.

Utility Easements

Utility companies acquire easements to run transmission lines and pipelines. A study by retired professor of economics and appraiser David Enns that looked at land sales in Lancaster, Pennsylvania, between 1989 and 1999 found that utility easements had little to no effect on the value of agricultural land. Land used for residential purposes might be adversely affected by such easements, since you can’t build a house on a utility easement, and power lines and pipelines aren’t esthetically pleasing.

Determining Value

Real estate values vary from one county to the next. Local economics, the way the land will be used and its features, such as water or a view, all determine land values. An easement might have a significant impact on land in one part of the country and a lesser impact in another. Rural land might be less affected than urban property. The size of the easement compared to the size of the land is also a determining factor: A small easement on a large piece of property generally has less impact than a large easement on a small piece of property. A real estate professional or appraiser can help you determine the exact impact of an easement on your property.


About the Author

Cynthia Myers is the author of numerous novels and her nonfiction work has appeared in publications ranging from "Historic Traveler" to "Texas Highways" to "Medical Practice Management." She has a degree in economics from Sam Houston State University.

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