June 01, 2017

“Quasi-Easing” over the Merger Doctrine

Sidonie Becton

Sidonie Becton is a law clerk with Shulman, Rogers, Gandal, Pordy & Ecker, P.A. in Potomac, Maryland, and will graduate in May 2017 from the University of Maryland Francis King Carey School of Law.

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With the recession behind us, there is a renewal of real estate development. Developers and their counsel need to focus again on a traditional property concept: the merger doctrine. This doctrine creates an issue for developers when there is an easement over a servient estate and a subsequent party acquires title to both the dominant and servient estates. The concern is whether the applicable jurisdiction would apply the merger doctrine, commonly recognized in the context of the same party’s acquiring both a fee simple interest and a mortgage interest in the same property, if instead one party acquires both the servient and dominant estates. As with the mortgage, is the easement extinguished? A related issue is whether anti-merger language in the deed or even the easement itself would change the result in a state inclined to apply merger. Given the possible unintended adverse effect this doctrine could have on property rights, developers should know how to address this problem. With a concentration on the author’s local jurisdictions (Virginia, Maryland, and the District of Columbia), this article discusses how the law may provide solutions to real estate development problems caused by the merger doctrine.

Easements and the Merger Doctrine

Maryland and Virginia law have long held that “where one becomes the owner of the dominant and servient estates, and there was no one else entitled to either, they were merged and the easement was extinguished.” Kelly v. Nagle, 132 A. 587, 590 (Md. 1926) (citing Capron v. Greenway, 22 A. 269, 293 (Md. 1891)). In other words, when the owner of the dominant estate also becomes the owner of the servient estate, the property is subject to the merger doctrine and the easement no longer exists on the servient property.

Case law addressing whether or not an anti-merger clause in a deed (or easement) prevents the easement from becoming part of the dominant estate is very scarce. This scarcity needs to be recognized and addressed as further discussed below. For example, real estate developers can address the merger doctrine by re-creating the easement that was extinguished in a subsequent conveyance of the property. See Lindsay v. Annapolis Roads Prop. Owners Ass’n, 64 A.3d 916, 928 (Md. 2013).

Some courts have also allowed implied easements for real estate development processes and land transactions when they are explicitly listed in the deed as a boundary of the granted property. See James W. Ely Jr. & Jon W. Bruce, The Law of Easements and Licenses in Land § 4:30 (2011) (“[e]asements may be implied from deed descriptions that identify the parcel involved as bounded by a private alley, driveway, or street owned in fee by the grantor at the time of conveyance”). For example, the Supreme Judicial Court of Maine stated that “such an easement may be created only when the grantor owns the fee in the road at the time of the conveyance.” Frederick v. Consol. Waste Servs., Inc., 573 A.2d 387, 390 n.4 (Me. 1990). In addition, the easement must be included within the deed. The implied easement doctrine is inapplicable if the road is not included in the deed description. Kapp v. Norfolk S. Ry. Co., 350 F. Supp. 2d 597, 609–10 (M.D. Pa. 2004).

Implied easements should be distinguished from quasi-easements. If a single landowner uses one portion of its land to benefit another portion of its land, “such use does not constitute a true easement because a landowner cannot obtain an easement in the landowner’s own land. Rather, it is considered a quasi-easement, which may ripen into an easement on the landowner’s transfer of either the quasi-servient tenement or the quasi-dominant tenement.” Ely & Bruce, supra, § 4:15. See also id. § 4:4 (“[i]n addition to the traditional forms of implied easements, courts recognize that modern real estate development processes . . . call for the recognition of implied servitudes”).

Re-creation of the Easement

Express Easements

Maryland and Virginia law provide for re-creation of easements that have merged with the dominant estate. As demonstrated in a Maryland case, an easement appurtenant to the dominant estate merged in accordance with the well-maintained doctrine of merger when the same person became the owner of the dominant and servient estates. The court found, however, that “the revival of an easement extinguished by merger may be accomplished only by re-creation of the easement.” Lindsay, 64 A.3d at 927. “Transfer of a previously benefited or burdened parcel into separate ownership does not revive a servitude terminated under the rule of this section. Revival requires re-creation.” Restatement (Third) of Property: Servitudes § 7.5. “To re-establish an easement extinguished by merger, the grantor must re-create the easement as if for the first time by making specific reference to it. Simply providing the chain of title will not be enough to independently establish the existence of the easement.” Lindsay, 64 A.3d at 930. Further, “an easement once extinguished does not come into existence again merely by severance of the united estates. It must either be ‘newly created’ by an express stipulation in the conveyance by which the severance is made or from the implication of the circumstances of the severance.” Zanelli v. McGrath, 82 Cal. Rptr. 3d 835, 850 (Ct. App. 2008). As illustrated in Pergament v. Loring Properties, Ltd., once an easement is extinguished, the court looks to the original document for reference to it, not to a subsequent document or conveyance. 599 N.W.2d 146, 149 (Minn. 1999). This concept is further supported in United Parking Stations, Inc. v. Calvary Temple, 101 N.W.2d 208, 212 (Minn. 1960), which held that a recital in a new contract for deed does not reinstate or recreate an extinguished easement that has gone abandoned.

Implied Easements

If an express grant is not provided, however, and the elements exist to establish a quasi-easement, the implied easement doctrine itself may re-create the easement on severance of the unity of title based on previous use. For instance, in Dalton v. Real Estate & Improvement Company of Baltimore City, there is creation of a valid easement:

When the owner of property has used one part for the benefit of another in such a manner that there would arise a presumption that an easement existed if the two parts had been held by different owners, then, upon conveyance of the part so used, there is a quasi-easement which will be granted by implication as an easement to the purchaser of the other or dominant part, provided the use has been such that the easement would be classed as continuous and apparent, and necessary to the reasonable enjoyment of the property conveyed.

92 A.2d 585, 591 (Md. 1952). Similarly, Virginia law provides:

While one cannot have an easement on land he owns, if, before severance, one part of the land was used for the benefit of another part, a “quasi-easement” exists over the “quasi-servient” portion of the land. That easement is conveyed by implication when the dominant tract is severed; the grantee of the dominant tract obtains an easement over the servient tract, based on the previous use.

Carter v. County of Hanover, 496 S.E.2d 42, 46 (Va. 1998) (quoting Russakiff v. Scruggs, 400 S.E.2d 529 (Va. 1991)). Further, establishment of the easement requires that (1) the dominant and servient tracts originate from a common grantor; (2) the use is in existence at the time of the severance; and (3) the use is apparent, continuous, and reasonably necessary for the enjoyment of the dominant tract. Brown v. Haley, 355 S.E.2d 563, 569 (Va. 1987). The idea behind giving credence to the existence of an implied easement, whether by pre-existing use or reservation, “is based on the theory that the grantor and grantee intend the easement to exist. The courts simply declare that the circumstances of a particular transaction create a presumption of this intention.” Orfanos Contractors, Inc. v. Schaefer, 582 A.2d 547, 533 (Md. Ct. Spec. App. 1990). Based on this case law, a land developer may have an implied easement from previous use if the easement was created in the original deed to the property and the owner of the dominant tract did not allow it to go abandoned.

District of Columbia law also recognizes implied easements “in those situations where it is manifestly clear that the dominant property will retain an easement over the purchaser’s land, i.e., situations where the easement is ‘strictly necessary’ to the use and enjoyment of the dominant estate.” Martin v. Bicknell, 99 A.3d 705, 709–10 (D.C. 2014). There are two types of implied easements: those implied by grant and those implied by reservation. An implied grant of an easement applies when a “property owner has subdivided and sold some or all of his property, but it is implied that he also granted to the purchaser of one parcel, the dominant estate, an easement over another.” Id. at 708. As for the implied reservation of an easement, “the owner has subdivided but retained possession of the dominant estate, impliedly reserving use of a portion of the servient estate for his benefit.” Id. The standards for demonstrating each of these easements in court is different because of related equitable concerns. For example, the court recognizes implied grants in order to “give value to the consideration given by a purchaser for all apparent and implied advantages attached to the property, while also balancing the burdens imposed by an easement on the servient estate”; whereas, the court imposes a higher standard for easements implied by reservation to ensure the owner does not take advantage of the servient estate purchaser. Id. at 709.

When the owner has created an implied grant, that is, an owner has sold the property to another party in whole or part, the owner of the dominant estate asserts the easement is “reasonably necessary” for the use of his or her property. Id. If the owner has created an implied reservation (that is, the owner has kept the dominant estate for himself), the owner must show the easement is strictly necessary. Id. In addition to the “strictly necessary” element, as mentioned above, “[t]here is no implied reservation of an easement in case one sells a part of his land over which he has previously exercised a privilege in favor of the land he retains, unless the burden is apparent [and] continuous.” Hefazi v. Stiglitz, 862 A.2d 901, 913 (D.C. 2004). As with Virginia and Maryland law, under District of Columbia law it would greatly help the grantor (or owner of the easement) for the easement to be preserved in writing in case the property becomes severed or there are future questions about its creation and use. Depending on who owns the dominant estate and who makes use of the easement, real estate developers would need to meet either the lower standard of “reasonably necessary” or higher standard of “strictly necessary” to establish the existence of an implied easement.

Another option for real estate developers is to employ specific contractual terms agreed on by the parties. Contract law provides that if the deed is unambiguous in its terms, then it is looked at as the final agreement of the parties. Taylor v. McConchie, 569 S.E.2d 35, 38 (Va. 2002). Courts look for specific language that qualifies as “unambiguous.” For example, the language “subject to” is not enough to convey the easement. It merely serves as an acknowledgment of the right. In the past, courts have stated that the “intention to grant must be so manifest on the face of the instrument that no other consideration could be put upon it.” Burdette v. Brush Mountain Estates, LLC, 682 S.E.2d 549, 533 (Va. 2009). The Supreme Court of Virginia also stated, “In construing deeds, it is the duty of the court to ascertain the intention of the parties, gathered from the language used, and the general purpose and scope of the instrument in light of surrounding circumstances. When such intention appears by giving the words their natural and ordinary meaning, technical rules of construction will not be invoked.” Davis v. Henning, 462 S.E.2d 106, 108 (Va. 1995). Courts in Texas have also found in favor of a grantor creating an implied reservation of an easement when language is included in the deed. Mitchell v. Castellaw, 246 S.W.2d 163, 167 (Tex. 1952) (“[t]he basis of the doctrine is that the law reads into the instrument that which the circumstances show both grantor and grantee have intended, had they given the obvious facts of the transaction proper consideration”). Thus, one can argue that an anti-merger clause in a deed should be upheld as an unambiguous term.

In addition, even if no anti-merger clause is included in the actual deed, parties should include easement language in collateral agreements and provide that the agreements survive execution of the deed. This language may help the easement fall within the “collateral agreement” exception to merger. See Beck v. Smith, 538 S.E.2d 312, 314 (Va. 2000) (contract language stating that representations and warranties shall not survive settlement did not apply to collateral agreements). Collateral agreements are found when (1) a distinct agreement is made in connection with the property; (2) the agreement does not affect the title of the property; (3) the agreement is not addressed in the deed; and (4) the agreement is not in conflict with the deed. Id. at 314. Other jurisdictions have also found “the merger doctrine does not apply to collateral agreements,” Drees Co. v. Osburg, 144 S.W.3d 831, 833 (Ky. Ct. App. 2003) (no merger of agreements with covenants not commonly incorporated in deeds and which parties do not intend to be so incorporated).

Mortgage Exception

Some jurisdictions recognize a mortgage exception to the easement merger doctrine. Cowan v Carnevale, 752 N.Y.S.2d 737 (App. Div. 2002) (“[t]hat exception provides that the mortgagee of the dominant estate is protected from losing its interest in an easement otherwise extinguished when fee title to the dominant estate and fee title to the servient estate have been united in one fee owner”). When an outstanding security interest in the property is benefited or burdened, this exception “suspends” the easement interest until it becomes possessory. Lewitz v. Porath Family Trust, 36 P.3d 120, 124 (Colo. Ct. App. 2001).

Conclusion

Real estate developers concerned with the merger doctrine applying to a servient estate with an existing easement and the dominant estate being acquired by the same owner need to rely on a strategy or doctrine such as the theory of maintaining an easement by prior use or reservation or the ripening of a quasi-easement into an implied easement.

Developers should also ensure there is language in deeds specifically referencing the existence and use of the easement by the grantor. They should include anti-merger language clauses in the deed or easement to permit interpretation consistent with the principle of objective interpretation of contracts, and to evidence the intention of the parties signing the deed or easement. If the developer retains ownership of the servient estate but conveys the dominant estate, the developer should include language creating the easement in the deed conveying the dominant estate, explaining the purpose and use of the easement explicitly (for example, use of a common driveway for both parties exists over the servient estate). Finally, if the developer retains ownership of the dominant estate but conveys the servient estate, the developer should include language in the deed conveying the servient estate reserving the easement over the servient property for the benefit of the dominant estate. The expression of purpose and need is beneficial.

Sidonie Becton

Sidonie Becton is a law clerk with Shulman, Rogers, Gandal, Pordy & Ecker, P.A. in Potomac, Maryland, and will graduate in May 2017 from the University of Maryland Francis King Carey School of Law.