[WSBARP] Extinguishment of easement and effect of security interest

Mon Apr 20 15:03:08 PDT 2020

From the peanut gallery:   during my pre-WSBA years in mortgage, a version of this scenario popped up frequently when mortgage clients wanted to remove (some) part of the lender's original security, usually where they felt increased property value supported it.   But the lender unsurprisingly never voluntarily agreed to any form of reduction of their security, not once.  And title was never going to agree to it without a proper agreement/modification with the lender of the original note, 😉

Kate F. Love

WSBA No. 51314

Hawkes Law Firm P.S.

main line 206 367 5000
fax line    206 367 4005
katel at law-hawks.com<mailto:katel at law-hawks.com>

www.hawkeslawcenter.com<http://www.hawkeslawcenter.com/>

19944 Ballinger Way NE Ste #100

Shoreline, WA 98155

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> on behalf of John McCrady <j.mccrady at pstitle.com>
Sent: Monday, April 20, 2020 1:58 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Extinguishment of easement and effect of security interest

My take, unsupported by research:

John Doe owns Blackacre, and has an appurtenant easement over Whiteacre, and then grants a mortgage to Lender.

Just as John Doe cannot impair Lender’s lien on Blackacre by conveying Blackacre, neither can John Doe impair Lender’s lien on the easement over Whiteacre by unilaterally terminating the easement.

Put another way, John Doe has mortgaged his interest in Whiteacre (an easement);  the mortgage will govern how and when the Lender’s rights as to Whiteacre can be eliminated.

John McCrady

Counsel

Puget Sound Title Company

5350 Orchard Street West

University Place WA 98467

253-476-5721

j.mccrady at pstitle.com

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Friday, April 17, 2020 3:22 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Extinguishment of easement and effect of security interest

I agree that mechanically the sheriff's deed or the trustee's deed is likely to list the easement. But if the easement was previously extinguished, I would argue that the deed cannot re-create the easement, because the Deed of Trust can't have a security interest in, or foreclose on, something that doesn't exist. But I guess that also begs the question—I don't know that an extinguishment of an easement, executed by the owner of the encumbered property, is effective. I really think it should be, but I have nothing to back up my opinion.

If I could rephrase the problem: We generally think of mortgages and DOTs as being secured by land, a chunk of dirt that always exists and always will exist. It can be transferred to someone else but it's easy enough to envision that the security interest "stays" with the land even if the ownership changes.

But an easement can be "destroyed" by extinguishment in a way that dirt can't. An easement isn't a fee interest and by definition has to be situated outside the boundaries of the dirt that is the main focus of the security interest. The owner of land benefitted by an easement has, so far as I am aware, a unilateral and unlimited right to extinguish an easement that benefits the owner's property. It's not a transfer away, it's a cancellation. And once it's cancelled, there is no easement for the security interest to attach to.

Sincerely,

Eric

Eric C. Nelsen

Sayre Law Offices, PLLC

1417 31st Ave South

Seattle WA 98144-3909

206-625-0092

eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Joseph McIntosh
Sent: Friday, April 17, 2020 2:27 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Extinguishment of easement and effect of security interest

If I understand the question properly, the proposition I think you are looking for is this -- the person auctioning the mortgaged interest, whether a sheriff or trustee, gives the purchaser a deed to that precise interest.

So, here, the buyer at the foreclosure would acquire the mortgaged interest, to include the easement.

This is how, mechanically, junior encumbrances are extinguished by senior lien sales.

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Friday, April 17, 2020 2:16 PM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Extinguishment of easement and effect of security interest

A philosophical question:

B owns Blackacre, which has an easement appurtenant for a driveway across Whiteacre, owned by W.

B has a loan, secured by DOT on Blackacre. The DOT's legal description says it covers "Parcel A: Blackacre and Parcel B: Easement for driveway over Whiteacre."

W and B execute a document extinguishing the driveway easement over Whiteacre. So, the easement no longer exists.

Then B's lender forecloses on its DOT.

The question: Can the foreclosure "recreate" the easement over Whiteacre? In other words, was the earlier instrument extinguishing the easement ineffective because of the security interest, so that when the lender forecloses on "Blackacre plus easement over Whiteacre," the easement springs back into being?

Related question: Same result if the DOT's legal description just said "Blackacre" and didn't mention the easement appurtenant? Regardless of whether or not an easement appurtenant is mentioned in a deed, it travels with the benefitted land.

Sincerely,

Eric

Eric C. Nelsen

Sayre Law Offices, PLLC

1417 31st Ave South

Seattle WA 98144-3909

206-625-0092

eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - Sayre Law Offices remains available to serve our clients and the public during this time, subject to the orders and recommendations of government authority. Please do not hesitate to contact us if we may be of service to you, your family, or your business.

All attorneys are working remotely during regular business hours and are available via email and by phone; please call the Seattle office. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis; please call the Seattle office.

MAIL AND DELIVERIES can be received at the Seattle office. For any other needed arrangements, please call the Seattle office.

Be assured that we will continue to advise and support our clients throughout this health emergency.

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