In the realm of property acquisitions, there are several considerations to keep in mind. For those involved in the renewable and energy transition sectors, awareness of surface encumbrances is particularly crucial. Surface encumbrances from the 30,000-foot view are what you might think; they are legal and physical burdens on real property that affect the use of the surface. If you are trying to buy or lease property for a solar or wind farm, a battery storage system, or any number of burgeoning renewable and energy transition technologies, one of the most important things to understand is what surface encumbrances you should be looking for, namely, easements, rights-of-way, mortgages, and liens.

Beginning with easements and rights-of-way, easements are a right to use and enter onto the real property of another without having any legal possession of it. Easements can usually be divided into two categories: (i) express easements, which are agreed-to easements across the property, and (ii) implied easements, which are easements that are implied or created by law when certain conditions are met. Rights-of-way are a specific type of easement that expressly permits the grantee the right to cross, over or under, the property of another. It’s worth noting that all rights-of-way are easements, but not all easements are rights-of-way. If you own a house, your property is probably subject to easements allowing utility companies or cities access to your property for connections to water, wastewater, storm drainage, and electricity.

You are probably familiar with mortgages through traditional home ownership or business endeavors. A lien is a monetary claim against a piece of real property to secure a debt or obligation incurred by the property owner. If the debt is not paid under a mortgage or a lien, the creditors can foreclose on the property in order to recoup their debt.  

How could these encumbrances affect your project? If another company has an easement on a specific part of the property that you are developing, it’s important to understand the scope of the easement and what part of the property it affects. If the easement is exclusive to the other company, for example, you won’t be able to utilize that area without their permission.  If a lien gets foreclosed on the property that you are developing, the new owner may or may not be held to your agreements with the previous landowner, which could cause serious issues with your development.

RR&A specializes in everything related to title, including identifying those surface encumbrances you need to be aware of when choosing your renewable or energy transition project site. RR&A is your one-stop shop for any title needs and can help provide certainty to you when acquiring assets. Contact us today.