What qualifies as a utility easement?
Utility easements are a common law concept that encourages neighborhoods to embrace innovation when it comes to the development of utility services. Utility easements allocate the costs and benefits of this innovation onto communities. By granting a utility easement to a utility company, a legal right is created that allows the utility to locate above or below ground facilities on private property. These facilities comprise what makes up a utility system. In Indiana there are a variety of uses for utility easements.
Utility easements are typically classified as "under roof" or "outside roof" easements. "Under Roof" easements permit a utility provider to use the space directly above or below buildings. Common uses of "under roof" easements are for communications and electric utilities. Conversely , "outside roof" easements are for traditional utilities such as water and sewer. Outside roof easements allow for underground facilities and other structures outside of buildings. Outside roof easements typically contain language that permits alterations and construction.
Other less common types of utility easements are "water supply", "drainage" and "temporary construction" easements. "Water Supply" easements grant a water supply business the right to enter and maintain the easement area, as well as the right to compel the land owner to connect. "Water Supply" utility easements are typically needed when a water supply business intends to run water lines across two or more properties. "Drainage" utility easements allow for stormwater runoff and the installation of drainage pipes. Temporary construction easements are used in connection with a project and are typically temporary but can sometimes be seen long after the easement has expired.
The laws pertaining to easements in Indiana
In Indiana, the legal foundations of utilty easements are principally present in two statutes: I.C. § 32-20, concerning general easement law governing utilities; and I.C. § 32-27, governing utility easements specifically granted for the construction and maintenance of powerlines, pipelines, and underground resources, colloquially referred to as the "Powerline Statute." For our discussion, we will focus primarily on I.C. § 32-20.
I.C. § 32-20 lays out basic rules and procedures applicable to utility easements generally. The statute can be divided into three parts: an Indiana-recording specific procedure for utility easements, a general enforcement provision, and substations in particular. Each is discussed briefly below.
Pursuant to I.C. § 32-20-2-1, any utility easement granted or conveyed for a term greater than one (1) year must be recorded in the county recorder of the county where the real property is located. This is mandatory so long as the term of the easement is longer than one year – even if the easement does not result in actual use of the property. Easements of less than one year need not be recorded, but may be recorded at the request of either party.
I.C. § 32-20-3 contains Indiana’s easement enforcement provisions. In general, this section allows easement owners to bring loss of use claims against the real property owner for "damages that result from…unreasonable interference" by the real property owner with the utility easement rights. The statute provides a good faith exception for the real property owner.
I.C. § 32-20-4 specifically addresses the construction and maintenance powerline substations on real property burdened by utility easements. It includes provisions allowing substation construction and maintenance on real property burdened by utility easements, and establishes the easement owner’s right to "reasonable compensation by agreement or judicial proceedings" in exchange for the property rights to be used for the substation. The purpose of I.C. § 32-20-4 is "to provide guidelines and procedures for the placement of substations upon property over which easements for transmission lines exist."
Property owners’ rights and obligations
A key aspect of any easement is the rights of the property owner. While a utility company has clear rights to use an easement for the purposes of the easement and for ingress and egress, a property owner remains the legal title owner of the underlying land. This means that the property owner has certain rights over the uses of the property as a whole, in addition to the easement rights of the utility company. These additional rights might include the right to construct a structure within the easement area, or to grant another party the right to do so. A property owner is not, however, entitled to the appropriation of rights that would infringe on the easement rights of the utility company.
Equally important are the responsibilities and duties of the property owner to the utility company with regard to the easement area. Without granting new easement rights to a utility company, a property owner may not erect fences, barriers or other objects over or across the easement area. Property owners also cannot construct buildings or other structures within the easement area to the extent they impede the uses granted to the utility company in the easement agreement. If an easement agreement is silent on the requirements of a property owner, the law in Indiana is that property owners must not unreasonably interfere with reasonable uses of the easement by the utility company. This means that a property owner may erect an object over an easement area as long as the utility company can still use the easement for its required activities.
The rights and obligations of the utility company
Utility companies holding easements on private property have both rights and duties that must be addressed. Utilities must avoid interfering with the landowner’s use and enjoyment of the land to the extent reasonable in the specific situation, and the exercise of a utility’s rights under the easement must be reasonable.
While no case law exists defining the duty utilities owe landowners with easements, although some other jurisdictions have defined those duties, courts in Indiana generally agree that utilities’ rights are defined as they are set forth in the express easement language, and they have no duty beyond what is in the easement. This means that utilities have no responsibility for damages or costs incurred by a landowner resulting from the easement, unless the utility has specifically contracted to be responsible, in writing, for the repair of that damage. Utilities are also not required to act as insurers against future events, and are not required to make sure future conditions do not affect the utility’s operations.
Some other jurisdictions have defined utilities’ duties as not only using only what they need, but also doing so in a reasonable manner in accordance with the purpose of the easement, and choosing the least destructive method of using the easement based on the circumstances. While this is not specifically the law in Indiana, it is a reasonable concept for general purposes.
How an easement impacts property value and uses
Beyond the legal rights and obligations that easement holders and property owners have with the burdened land, there are other relevant concerns such as how an easement might affect the value of a property. For example, an easement owner will pay less for land encumbered by a utility easement than land without the easement. Since public utility companies often operate in counties where they provide service, in order to benefit themselves, they will seek easements upon lands within that county to create a large, contiguous easement corridor. The larger the corridor, the less property value of the land within the easement.
Further, the use of the land may be restricted or limited, either by the nature of the grant (e.g. , a cable company only needing access to certain parts of the property) or by regulation. The most common example of regulation is subdivision controls. Many times, easements are located outside of the plat prescribed easement. This creates problems when subdivision control regulations require additional easement widths, as the easement width is too narrow to meet the requirements. This effectively prohibits development within the width of the easement. Other regulatory issues include zoning and tree trimming ordinances.
An easement can also inhibit development on the easement property because of the lack of rights to develop the property. Additionally, the easement will be ineffective on insufficient land because, if no construction has occurred within the easement, it is very difficult and expensive to remove an existing structure.
Resolving utility easement disputes
Most disputes involving utility easements arise from disagreement about interpretation of the easement, damage to property in the process of clearing and establishing the utility easement, or damage to crops on agricultural land cultivated for future harvest. Landowners challenging the validity of an easement on their land must show that the instrument granting the easement was invalid from its inception because of something in the document itself or marketable title status.
Property owners often sign contracts or deeds providing for utility easements over their land without realizing fully the scope of the agreement and the rights given to the utility company. For example, the easement may be drafted in such a way as to provide the utility with blanket authority to perform a wide variety of work or to permit work by anyone deemed appropriate by the utility. Certain easement grants afford the utility a right of entry over, under, and through property, and in some cases, in perpetuity. There is ample room for a dispute between a landowner and a utility over the scope of such an easement and whether the utility may perform certain work without seeking approval from the landowner.
An Indiana Court of Appeals case decided in August 2016 highlights the sort of language or conduct that may lead to an enforcement action. The language at issue in the deed granting an easement was limited to "constructing" sewer pipe. The landowner in this case discovered later that the utility contractor was not only constructing the pipe but also digging up a wide area of land to set it. The court found that the construction of the pipe was sufficiently narrow to exclude the actions of the contractor within the easement.
Disputes over damage to private property containing a utility easement are often the result of the failure of both the utility company and the landowner to heed notice requirements set forth in Indiana Code Section 32-24-1-34. This notice requirement provides guidelines such as: (1) the obligation of the utility company to notify the owner of the property affected by the easement of any intent to make physical changes to property containing the utility easement at least five days prior to beginning work; (2) the owner’s right to any damages caused by the utility work only if the owner objects to the nature and extent of such work prior to work; and (3) the right of the utility to first pay damages to the landowner and then bring a written action with the landowner to a jury if the public interest in the disruption of the project outweighs the inconvenience to the landowner or if the nature of the work is such that it cannot wait on the jury’s determination of damages to the landowner. The statutory notice provision is intended to strike a balance between the public interest in the completion of utility projects and the private interest in maintaining property free from injury or damage, but the balance tip in favor of the landowner when the utility company fails to meet the notice requirement.
Other examples of Indiana public utility easement litigation include:
Indiana courts recognize a general rule of construction that easements are to be given a liberal construction that advances their primary purpose of benefiting the easement holder. Courts will try to effectuate the intentions of the parties as expressed in the instrument granting the easement. However, private landowners also have rights with respect to easements on their property. A broad range of judicial remedies exist for landowners to seek resolution of any perceived or actual harm that might result from a utility easement on their property.
How to change or terminate a utility easement
As with many issues affecting real estate, modification and termination of a utility easement is in many instances subject to the terms of the utility easement. Pursuant to Indiana law, modification often is accomplished by agreement of the parties. Pursuant to Ind. Code § 24-7-3-12(e), such an agreement can be made orally, in writing, or by the "operation of the law" (which would implicate the possibility of automatic or implied termination of an easement). Contract principles apply to construing modifications to easements of utilities.
Termination of easements exists in two general forms: consensual and nonconsensual. Consensual termination (in the nature of a written or oral agreement) is governed by contract principles while nonconsensual termination (wherein a party has abandoned or has discontinuanced use of the easement such that the actual benefits of the easement cannot be enjoyed) must be established by evidence which will survive the statute of limitations for adverse possession of real estate (in Indiana, 10 years) at the time the nonconsensual termination is claimed. Generally, although there are exceptions, utility easements that have been in existence for more than 10 years are commonly considered indefeasible in Indiana because the period during which property has been held by a party for its own use and setting aside any other claims is sufficient to create itself a superior right to that which is derived from a claim of another. As a consequence, nonconsensual termination is often difficult to establish for a utility easement.
Getting help with easement problems
Seeking legal assistance with easement issues is crucial when it comes to Indiana utility easements. The interpretation of easement rights can be complex, and any utility easement that is granted over your property will have implications for you as the owner and possibly for future buyers. It is very important to get it right and not let the utility company make you feel intimidated. It is important to get legal help at the beginning of your analysis rather than waiting to figure it out when it is too late. There are too many "toothless" documents and agreements out there claiming to be easements that would not stand up in court after they have been in use for a while . While you may want to resolve a dispute between yourself and a utility company without litigation, the outcome is not always guaranteed to be right or equal between the two parties. The interpretation of easement generally requires knowledge of Indiana property law and contract law.
If the utility company is trying to place a utility pole on your property without receiving permission or compensation, then it’s time to call a lawyer. Your initial consultation with a lawyer is free at most firms, and your lawyer will certainly want to know all of the facts of your case before preparing any kind of legal strategy. You may need additional appraisals or opinions on how to approach the situation, and you may have other options besides litigation.