The issue of an easement can provide a headache for most property owners when you don’t understand the rules. Most are not aware that providing an easement today is mostly required by law, much like organising a fence with your neighbour.
Legislation is in place to ensure that easements that are deemed necessary are no longer provided by choice. That doesn’t however mean they are gifted. Importantly, how do we deal with the matter and what beneficial agreement can be reached.
Most Valuers assess easement values based on principles derived through court decisions. In many cases of easement negotiations there is rarely a willing seller. This generally creates a conflict, as a seller has little right to withhold an easement and the buyer must bear all the court costs of enforcing an easement.
Over the years, creation and purpose of an easement have provided valuers with a myriad of issues and arguments on valuation methods and compensation. When considering any methodology Valuers should always have regard to the past decisions made by the courts and in the matters that are pertinent.
What appears to be excluded in their consideration is the cost borne by the applicant in enforcing an easement through the court. Current legislation provides all cost to be carried by an applicant in the matter of securing easements.
In a “land mark” case, costs were awarded against the vendor and in appeal the Court found that the trial judge should not have awarded costs because s88K proceedings are not a claim for damages but rather a claim for an interest in property, for which appropriate compensation was required to be paid. As a result the disposed owner does not have to pay any of the costs associated.
The courts have been clear on their interpretation of the matter of value and mostly to the disappointment of the seller. They consider the practical application of the easement and generally determine a nominal amount as compensation.
Can compensatory value have a better relationship to market value? Does the court satisfy the principles of “willing buyer willing seller” (Spencer V The Commonwealth 1907) in considering the costs of enforcement? Is it appropriate that a Valuer better consider the difficulties in negotiating or enforcing through the Court to provide a possible better outcome for the disposed property owner.
“What would a willing buyer to avoid court costs, pay to a willing seller who is aware that a court assessment may lead to a lesser outcome.”
Under S88K of the Conveyancing Act, the right to an easement is clearly defined, unfortunately the value of such an easement is not as transparent.
S88K easements are the most common situations requiring a Valuers intervention. When faced with the issue of easement, understanding the relationships and costs can provide an opportunity to ensure that a willing buyer may negotiate a better result with a willing seller.
Karvon Partners and their experience, is always available.