Tuesday, January 28, 2020

EASEMENTS VS. LICENSE AGREEMENTS


              In 1994 an entity owned by Steve Soroudi purchased commercial property. Steve’s visual inspection revealed no indication that anyone other than the then-owner’s employees were parking at the target property.

            Neither the title report nor the vesting deed revealed parking issues, reservations, or exceptions. However, in 1950 the property owner had agreed to provide eight parking spaces to the owner of a neighboring warehouse. A notarized parking affidavit was signed and filed with the municipal Department of Building and Safety.

            The parking affidavit was never recorded, and there is no evidence that the parking spaces were ever used by the neighbor’s employees, vendors, or guests.

            From 1994 to 2013 Soroudi allocated the parking spaces on his property to his tenants. He had no knowledge of any adverse parking claims; no one told him that eight of his parking spaces were reserved for his neighbor’s benefit.

            In 2007, Ruben Gamerberg purchased the neighboring warehouse property that was, 57 years earlier, benefited by the parking affidavit. He, too, was unaware of the 1950 parking arrangement when he closed the deal. However in 2013 when Gamerberg began asking questions of the city regarding expansion and remodeling, the city’s plan reviewer informed Gamerberg of the 1950 parking affidavit.

            One can speculate there was excitement at the Gamerberg manse in the middle months of 2013.

            In October 2013 Gamerberg’s architect sent Soroudi a certified letter enclosing the parking affidavit. Soroudi’s first response, after consulting his attorney, was to make a claim on his title insurance policy.

            Meanwhile, the city issued a building permit for the expansion in 2014.

            Nearing completion of the expansion in March 2015, Gamerberg again contacted Soroudi to confirm the exact location of the parking spaces. Soroudi offered no meaningful response other than to say that his attorney was reviewing the matter.

            Gamerberg filed his lawsuit in December 2015, and proceeded to trial claiming an irrevocable parking license. The trial court held the parking license was still in existence, having been properly created in 65 years earlier. This was so even through both property owners took title with no knowledge of the parking affidavit.

            Soroudi appealed.

            The Court of Appeals determined that unlike leases, covenants, and easements that “run with the land” (and bind successors and assigns), licenses are personal rights and confer no interest in land. A license “. . . merely makes lawful an act that otherwise would be a trespass.”

            So assuming the 1950 parking affidavit created an irrevocable license between two parties 65 years ago, the true issue is to determine whether that license bound Soroudi and burdened his property, who had no notice of its existence until receipt of Gamerberg’s architect’s letter.

            This Court of Appeals unearthed a Supreme Court case from 1905 which stated that irrevocable licenses do not survive property transfers to buyers who had no notice of its existence. And further, even easements are likewise unenforceable against purchasers without notice.

            The conclusion is that the 1950 parking affidavit, while binding on those that signed it as well as those who knew of its existence, did not bind Soroudi or benefit Gamerberg since neither knew of it. As such, neither could honestly say they relied on it to their benefit or detriment when they independently decided to purchase neighboring properties.

            Soroudi wins; Gamerberg loses; the unrecorded license fails. See Gamerberg v. 3000 E. 11th St., LLC, California Court of Appeals; 2nd Appellate District; Case No. B290755; January 21, 2020: https://cases.justia.com/california/court-of-appeal/2020-b290755.pdf?ts=1579644068.
    
            Lessons Learned / Questions Asked:
  1. Lesson: Have a land or title document that provides a meaningful benefit to someone like a right of access, repair, parking, use, or similar? Call it an Easement, be sure it “runs with the land” and binds all parties’ “heirs, successors and assigns,” notarize it and then record it in the Official Public Records of the local County.
     
  2. Lesson: There are third-party due diligence companies that, for a reasonable fee, will conduct searches of semi-public records like municipal permits, licenses, fines, and letters. I do not know that such a search would have uncovered this affidavit. Then again, I see the possibility that this 1950 parking affidavit might have been revealed.
     
  3. Question: Does your title insurance policy protect you from this obligation or insure your rights to use the benefit of the agreement? Estates in land are insurable, including easements, leases, covenants, and possibly even licenses. Typically there are no further charges for this added coverage, provided you are buying title insurance to support your property acquisition or real estate mortgage. Otherwise, you’re not going to be pleased to later determine that the contractual benefits could have been insured for free . . . if only you had asked.

                                                                                                                    Stuart A. Lautin, Esq.*

* Board Certified, Commercial (1989) and Residential (1988) Real Estate Law,
Texas Board of Legal Specialization

Licensed in the States of Texas and New York

Higier Allen & Lautin, PC
2711 N. Haskell Avenue, Suite 2400
Dallas Texas 75204
P: 972.716.1888




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