United States: California Supreme Court Addresses Law Of Implied Easements

Earlier this month the California Supreme Court issued its opinion in Romero v. Shih (Feb. 1, 2024, No. S275023), holding courts must recognize implied easements where there is "clear evidence" the parties to a real estate transaction intended to grant or reserve easements, even when "the nature of the easement effectively precludes the property owners from making most practical uses of the easement area." Thus, if evidence clearly demonstrates the transacting parties' intent to create an easement, "the law obligates courts to give effect to that intent" notwithstanding the easement's potentially onerous impact on future uses of the servient property.

Easements are intangible interests conferring rights to use, or to restrict the uses of, another's property. Romero v. Shih concerns an easement created by implication—a disfavored method conferring circumscribed rights. But California recognizes several alternative methods for creating easements, including express easements created by deeds or recorded covenants; easements by dedication or condemnation; prescriptive easements created by continuous, obvious and adverse uses of land; and equitable easements fashioned by courts weighing parties' relative hardships.

This case represents a rare example of California's high court wading into the arcane world of easement law, and it reaffirms the ongoing vitality and breadth of circumstances that can give rise to enforceable easements. It also comments on the qualities distinguishing exclusive easements from fee interests requiring Subdivision Map Act (SMA)¹ compliance.

The opinion provides existing property owners with some measure of assurance that imperfectly documented easements will not disrupt longstanding encroachments or other burdens on adjacent lots where it can be shown that earlier owners intended to preserve those arrangements. Parties to real property transactions should be mindful of the possibility that easements may exist beyond those expressly identified in a title report.

Factual Background

Romero v. Shih involved adjacent parcels that had been commonly owned by the Cutlers. The Cutlers developed the parcels, building a home on the eastern parcel (the dominant parcel) bordered by a driveway and fence that encroached onto the western parcel (the servient parcel) by roughly eight feet. The Cutlers then wanted to sell the servient parcel and applied to the city to adjust the parcels' adjoining lot lines to the encroaching fence. They never completed the lot line adjustment, but the parties to the initial sale of the servient lot proceeded as if they had, and all subsequent owners of the dominant parcel (the parcel with the originally constructed home) made use of the encroaching driveway for three decades until the Romeros, who purchased the servient parcel in 2014, sued the then-owners of the dominant parcel (the Shih-Kos) to compel removal of the encroaching driveway.

Lower Court Rulings

Following a bench trial, the trial court found the Shih-Kos possessed an implied easement over the disputed strip of servient parcel land. The court reasoned that "the focus of the [implied easement] analysis is what the parties intended at the time of the division or conveyance" and found it was "clear under the circumstances" that, when the Cutlers separated the properties and sold the servient parcel, "the parties to the transaction intended the [dominant parcel's] encroachment on the [servient parcel] would continue after the division."

The Court of Appeal reversed, holding California law prohibits courts from recognizing easements that are effectively exclusive—easements that exclude the servient owner "from making most practical uses of the easement's surface area"—created by implication. The appellate court relied on a line of prescriptive easements cases holding that recognition of "exclusive" prescriptive easements would enable claimants "to obtain the fruits of adverse possession' without satisfying that doctrine's statutory requirements." The Court of Appeal had found this rationale "'equally applicable to exclusive implied easements."

Supreme Court Opinion

In its unanimous reversal, the California Supreme Court holds the court's "primary duty" in cases involving express or implied easements, unlike in prescriptive easement cases, "is to give effect to the intent of the parties to the relevant land transaction." While prescriptive easement cases "are grounded in a concern for maintaining the integrity of the adverse possession statute and its demanding standard for the acquisition of another's property through occupation," implied easement cases do not raise similar statutory nullification concerns.

The Supreme Court's opinion acknowledges "the law of implied easements is broader than [Civil Code] section 1104 [codifying the doctrine of implied easements], read in isolation, might suggest." Moreover, the doctrine of implied easements is a settled exception to "the Statute of Frauds, which requires a contract 'for the sale of real property, or of an interest therein,' to be made in writing."

The Supreme Court thus concludes, that where the circumstances of a land transaction clearly evince an intent to continue the dominant parcel owner's preexisting uses of the servient parcel, and where the circumstances also clearly evince an intent that the easement be comprehensive in scope, the relevant legal requirements of an implied easement have been satisfied. The court reversed and remanded for the appellate court to consider whether substantial evidence supports the trial court's implied driveway easement finding.

The Supreme Court also dispels the notion that easements cannot confer what is effectively exclusive use of a servient property. While easements are recognized as less than owning fee title to the land, the terms of an express (or implied) easement can confer what amounts to nearly exclusive use. The court notes that "exclusive" is a more nuanced term than it might appear—there are degrees of exclusivity, and it will not be enough to challenge an easement by claiming it effectively precludes the servient landowner from making use of the land burdened by the easement.

The court further notes that a servient parcel owner's right to use the easement area when calculating property line setbacks and maximum floor area ratio demonstrates the restricted scope of the easement, distinguishing the easement interest from one in fee. The court reaffirms that an exclusive easement "does not rise to fee ownership" when the rights it accords are limited, and the element of exclusivity is necessary to protect such restricted rights. But the court also warns that its decision "does not assist attempts to evade the [SMA]. . . . an interest in land, however styled, sufficiently unrestricted to be 'developable'—as that term is ordinarily understood—would be a possessory interest, not an easement."

When acquiring real property, buyers should carefully explore not only the easements that are directly reflected in the record of title, but should also evaluate circumstances or conditions on the property that might give rise to implied, prescriptive, or equitable easements. Assessing the enforceability of easements can be complicated. Please contact Andrew Sabey and Stacy Freeman at Cox Castle with any questions about implied easements.

Footnote

1. The SMA is the primary regulatory control governing subdivision of real property in California.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.