Easement Creation & Removal: A Developer’s Guide

Introduction

In Australian property law, easements are a significant yet often misunderstood constraint that can impact a development’s design, costs, and overall viability. For property developers, understanding easements is crucial, as a seemingly minor right of way or utility line can substantially reduce buildable area and complicate project feasibility if not managed correctly from the outset.

This guide provides essential information on the legal processes involved in both creating an easement and navigating the removal of easements that may hinder a project. Given the complexities involved, engaging an experienced conveyancing lawyer is a critical step in identifying risks during due diligence and managing the intricate legal requirements for altering property rights.

What Property Developers Need to Know About Easements

The Role of Dominant & Servient Tenements

In property law, a private easement creates a legal relationship between two or more parcels of land. The property that gains the benefit of the easement is known as the dominant tenement. Conversely, the land that has the burden of the easement is called the servient tenement.

This distinction is fundamental to understanding easements. For instance, consider a landlocked property that requires a driveway across a neighbouring parcel to access the main road:

• The landlocked property is the dominant tenement because it benefits from the right of way
• The neighbouring property that provides the access is the servient tenement, as it is burdened by the easement

Why Easements Matter for Your Development Projects

For property developers, paying close attention to easements is crucial as they can fundamentally impact a project’s viability and profitability. Understanding easements from the outset of a project can prevent costly surprises and delays down the line.

The key impacts of easements on development projects include:

Impact on Development	Description & Examples
Reductions in Site Coverage	An easement can decrease the buildable area. A 200m² easement on a 1,000m² property could reduce the development footprint by 20%, affecting project yield.
Design & Layout Constraints	Easements impose strict limitations on structure location, potentially forcing less efficient or desirable site layouts and compromising project design.
Significant Cost Implications	Accommodating easements can increase costs substantially, from tens of thousands for foundation modifications to hundreds of thousands for relocating services.
Project Timeline Delays	Gaining approvals to build near an easement can take weeks. Modifying or removing an easement through legal processes can cause delays of several months to over a year.
Reduced Property Value	A significant easement typically lowers market value. Land with easements often sells at a 5% to 20% discount compared to unencumbered properties.

The Process for Creating an Easement

Creating an Easement by Agreement & Registration

The most common method for creating an easement involves a mutual agreement between the relevant landowners. This process is formalised through legal documentation and registration with the appropriate land authority, such as NSW Land Registry Services.

To establish an easement this way, several steps are required:

• Securing an agreement: The owner of the land that will be burdened (the servient tenement) and the party who will benefit (the dominant tenement or an authority) must first agree to the terms of the easement.
• Preparing an easement plan: A registered surveyor must prepare a plan that clearly defines the location and dimensions of the proposed easement.
• Lodging legal documents: A “Transfer and Grant of Easement” form must be completed and lodged with the relevant Land Titles Office. Once this instrument is registered against the land title, the easement is legally created.

Creating an Easement Through Subdivision Plans

Developers can also create easements as an integral part of the subdivision process. This is achieved by specifying all proposed and existing easements directly on the subdivision plans before they are submitted for registration.

When the plan of subdivision is registered, the easements shown on it are legally established. In Victoria, for instance, this process is governed by provisions in the Subdivision Act 1988 (VIC) and the Transfer of Land Act 1958 (VIC).

Section 12(1) of the Subdivision Act 1988 (VIC) requires that all proposed easements be detailed in subdivision plans, ensuring they are formally created once the plan is registered.

Creating an Easement via a Court Order

In certain situations, a court can impose an easement on a property even if the owner does not consent. In New South Wales, Section 88K of the Conveyancing Act 1919 (NSW) gives the Supreme Court the power to grant an easement if it is deemed reasonably necessary for the effective use of another parcel of land.

A court will typically only grant such an order if specific conditions are met:

• The applicant must demonstrate that the easement is essential for their land, not just for a particular proposed development.
• Furthermore, the court must be satisfied that the burdened landowner can be adequately compensated for the imposition of the easement and that its use is not against the public interest.

A Developer’s Guide to the Removal of Easements

Removal of an Easement by Agreement or Express Release

The most direct method for the removal of easements is through mutual agreement, often referred to as an express release. This approach involves the property owner and all parties benefiting from the easement consenting to its termination. When all parties cooperate, this can be a straightforward process in property law.

To formalise the removal, the process typically includes:

• Securing written consent from every beneficiary of the easement
• Preparing a formal agreement to extinguish the right
• Lodging the agreement with the relevant state land registry, such as NSW Land Registry Services, to officially update the property title

Removal of an Easement Due to Abandonment & Non-Use

An easement may also be removed on the grounds of abandonment if it has not been used for a significant period. However, proving abandonment requires more than just showing non-use; you must also demonstrate a clear intention from the benefiting party to relinquish their rights permanently. This is a key aspect of understanding easements and their potential for removal.

To successfully apply for removal due to abandonment, you generally need to provide substantial evidence. This could involve:

• Showing the easement has not been used for 20 years or more
• Submitting a statutory declaration from the property owner
• Providing supporting evidence such as photographs of obstructions
• Including declarations from unrelated individuals confirming the long-term non-use

Removal of an Easement Through a Court Order

If an agreement cannot be reached, a property owner can apply to the state’s Supreme Court for an order to extinguish the easement. A court order is a formal legal remedy that can be pursued when other methods for the removal of easements are not viable.

When considering an application, the court evaluates several key questions, including:

• Whether the easement has become obsolete or is no longer necessary
• If changes in the property’s use or surrounding circumstances justify its removal
• Whether the continued existence of the easement creates an unreasonable hardship for the landowner

How Easements Affect Your Development Project

Building Restrictions & Design Constraints

Easements can significantly impact a development by imposing strict building restrictions and design constraints. Generally, property owners are prohibited from building over or too close to an easement without approval from the benefiting authority. Constructing a structure over an easement without permission can lead to a legal requirement to remove it at your own expense.

The specific limitations often depend on the type of easement. For instance, utility easements for services like sewerage and electricity come with distinct rules:

• Sewer Easements: Authorities may permit lightweight structures or even dwellings over smaller pipes, but often with strict conditions. These can include:
  • Using specialised foundations
  • Encasing the pipes in concrete to ensure they remain accessible and protected
• Electricity Easements: These tend to have the most stringent restrictions. An electricity provider might require continuous, unobstructed access along the entire length of the easement, prohibiting:
  • Houses and sheds
  • Swimming pools
  • Even overhanging structures

These restrictions directly affect the usable area of a property. Most planning schemes treat land covered by an easement as unbuildable when calculating site coverage or Floor Space Ratio (FSR).

For example, consider a 1,000-square-metre site with a 200-square-metre easement; this could reduce the potential development footprint by 20%, significantly impacting the project’s overall yield and design possibilities.

Financial Impacts on Your Project Feasibility

The presence of an easement can have substantial financial consequences that affect a project’s overall feasibility. These impacts are felt across various stages of the development, from acquisition to construction. Understanding these financial implications is a key part of property law for any developer.

The financial impacts can be broken down into several key areas:

Financial Impact Area	Detailed Consequences & Metrics
Reduced Land Value	Properties with easements often sell at a discount. A minor service easement might cause a 2-5% value reduction, while a major transmission line could result in a 15-30% reduction.
Increased Construction Costs	Building around easements often requires specialised methods. Foundation modifications like pier and beam systems can add a 20-60% premium to base construction costs.
Authority Approval Fees	Obtaining approval to build near an easement involves costs for applications, engineering reports, and legal agreements, ranging from a few hundred to several thousand dollars.
Project Delays	Approval processes or negotiations can cause delays, leading to higher holding costs. A delay of a few months could add tens of thousands of dollars in interest payments alone.

The Critical Role of Your Conveyancing Lawyer

Identifying Easements & Risks During Due Diligence

An experienced conveyancing lawyer is essential during the due diligence process to identify and assess the risks associated with easements. Vendors are required to disclose all easements affecting the land in a property contract, and your lawyer will thoroughly review these documents to explain their potential impact on your development plans. Understanding easements is a critical component of property law, and professional guidance can prevent costly future complications.

A lawyer’s investigation goes beyond a simple title search. The process involves:

Due Diligence Action	Purpose & Scope
Reviewing the Certificate of Title	To identify any registered easements, covenants, and other encumbrances noted on the property’s title.
Analysing Subdivision Plans	To determine the physical location and dimensions of the easement, helping to visualise its impact on the buildable area.
Conducting Additional Searches	To uncover hidden infrastructure, as some statutory easements for utilities may not be registered on the title. Recommended services include Dial Before You Dig Australia.
Inspecting Vendor Disclosure Statements	To find crucial details about easements, planning certificates, and water authority information, particularly in states like Victoria and South Australia.

By combining these steps, your lawyer provides a comprehensive overview of all easements affecting the property, advising on the restrictions they impose and the potential risks to your project’s feasibility.

Complex Legal Processes & Disputes

A conveyancing lawyer plays a vital role in managing the legal procedures for both creating an easement and the removal of easements. They handle the preparation and lodgement of all necessary legal paperwork with the relevant authorities, such as NSW Land Registry Services, ensuring compliance with all requirements.

When disputes arise, legal representation becomes indispensable. Your lawyer can assist by:

Legal Action	Description of Lawyer’s Role
Negotiating with Beneficiaries	When seeking removal by agreement, a lawyer facilitates communication and negotiates terms with benefiting parties to achieve a mutual resolution.
Managing Court Applications	If an agreement is not possible, a lawyer prepares and manages a Supreme Court application for an order to extinguish the easement, arguing on grounds like abandonment or obsolescence.
Providing Representation	In contested matters, the lawyer represents the client’s interests in court, presenting evidence and navigating the complexities of property law litigation to seek a favourable outcome.

Conclusion

For property developers, understanding easements is a crucial aspect of property law, as these rights can dictate a project’s design, costs, and ultimate viability. Successfully navigating the complexities of both creating an easement and achieving the removal of easements requires a strategic approach, whether through mutual agreement, proving abandonment, or obtaining a court order.

Given the significant legal and financial risks involved, securing expert guidance is essential to protect your development project. Contact the experienced conveyancing lawyers at LawBridge today to leverage our specialised knowledge in property law and ensure you successfully navigate the intricate processes of easement creation and removal.

Frequently Asked Questions