[WSBARP] Effect of Lender Foreclosure on Easement Agreement

[Paul Neumiller]

Without doing any research, I am surprised if this answer is correct.  I believe that a nonjudicial foreclosure does wipe out an easement that was granted across the tenement estate subsequent in time to the deed of trust.  Just as with boundary line adjustments or anything that affects real property, I have always advised getting the lender’s approval first.  As an example, a party wanted an easement across a condo’s common area.  We were advised by the title company (and my own assumption) to get all of the owners’ approval AND their lenders for the easement to withstand a foreclosure by a condo owner’s lender.

 

As a lender, I would want to know the value of my security when I make the loan and when (and if) I need to foreclose.  Why would I accept security in property if a borrower were able to willy-nilly decrease the value of my security by granting all kinds of easements across the property?  

 

Once again, without doing research, I would answer that B is screwed and that life is unfair.  A and B should have gotten A’s lender’s permission before they entered into a deal that encumbered A’s property that was subject to his lender’s deed of trust.

 

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Tom J. Westbrook
Sent: Tuesday, February 17, 2015 5:51 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

 

Hi Ron,

 

As you stated, if the easement is appurtenant to and runs with the land, no foreclosure would extinguish the easement. The foreclosing person (C) should have gotten title insurance when they elected to purchase at Trustee’s sale and if they did and it was not disclosed, then the title company may have a problem to C. If they didn’t, then too bad, it was a matter of public record. Not sure if the burden to build a public road was an easement requirement or a contractual agreement between two parties. You will need to research that – or at least, I would have to since I don’t know.

 

Sincerely,

 

Tom

 

Thomas J. Westbrook

Attorney at Law

 



 

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From: wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com>  [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Ron Housh
Sent: Tuesday, February 17, 2015 5:16 PM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

 

A grants B an easement across A’s land.

B agrees to develop a public road on the easement which road will then benefit both A and B who plan to separately develop their respective properties with single family homes.

B “goes under” and loses his property to a lender foreclosure.

C acquires B’s property from the lender.

 

C does not want the easement and when presented with the recorded easement says “the easement was extinguished at the time of the foreclosure.”  C obviously does not want to be burdened with having to build the public road.

 

1.        I don’t believe the easement is extinguished – in other words I do not believe foreclosures typically if ever extinguish easements.

2.       But – I am not sure about C’s obligation to build a public road.  C never assumed or agreed to assume that obligation.  Would the “run with the land” language in the recorded easement effectively pass the burden of building a public road to C?  

3.       Related question:  easement was recorded in 2007.  B actually did some work on the easement that was part of the public road construction process.  If the burden of building the public road does pass to C, when would a cause of action against B (and now C) accrue?  Wondering if there may be a statute of limitations issue? 

 

Thanks in advance for thoughts.

Ron 

 

 

 

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