Daily Development for Wednesday, February 3, 2010
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

EASEMENTS; RECORDING ACTS: If a recorded purchase contract calls for the seller to grant an easement to the buyer, it doesn't matter that the deed makes no reference to the easement and the general appurtenance clause in subsequent deeds is sufficient to convey the easement to subsequent purchasers of the dominant estate.

Franklin Park Plaza, LLC v. V & J National Enterprises, LLC, 870 N.Y.S.2d 193 (App. Div. 2008); December 31, 2008.

A small shopping center was accessible by way of three driveways and public roads. The improvements at the shopping center were served by a common parking area. Adjacent to the shopping center was an outparcel with a restaurant.

The outparcel had been created by a former owner of the shopping center. The deed to the outparcel made no reference to easement rights for the owner or users of the outparcel on or across the shopping center, but a rider to the purchase contract specifically provided as follows: "[s]eller ... covenants to grant or convey to [the b]uyer a perpetual, non-exclusive easement for automobile parking and automobile and pedestrian ingress and egress, to and from [the outparcel], appurtenant to [that outparcel] over, upon and across the parking areas ... driveways ... exits and entrances ... as said areas now exist on the property ... hereinafter referred to as [the shopping center]." The rider also stated that those rights and easements were to run with the land and to inure to, and be for the benefit of, the buyer, the seller, "their successors and assigns, and tenants, sub-tenants, licensees, concessionaires, mortgagors in possession, customers and business invitees."

Although the parcel had frontage on one of the streets bordering both it and the shopping center, the only access to the outparcel was by way of entrances through the adjacent shopping center. Further, the outparcel had a limited number of parking spaces and customers of the restaurant frequently parked at the shopping center.

The restaurant was operated by a tenant. The current shopping center owner sued the tenant for damages arising out of the tenant's alleged unauthorized use of the shopping center's driveway and parking spaces.

The shopping center owner argued that the court should have applied the general rule that "provisions of the contract for the sale of land are merged in the deed and, as a result, are extinguished upon the closing of title." The court, however, found that the merger rule does not apply "where the parties ... have expressed their intention that such provision shall survive delivery of the deed." The Court then looked at the contractual provisions and saw that they included the following: "[a]ll representations and warranties contained herein shall survive closing of this transaction."

Here, the contract and its rider, with an attached map, were properly recorded even before the deed was recorded. The Court, in this event found that this had the effect of binding the owner of the shopping center and all its successor owners, otherwise "there would have been no need to record the contract and rider unless the parties intended to ensure that the easement contained therein would survive the closing." Further, the court pointed out that the deed itself contained "a general appurtenance clause that is sufficient to convey the easement to a subsequent purchaser of the dominant estate ..., and that the easement is enforceable against [the shopping center owner] because it appears in [its] direct chain of title, thus establishing that [the shopping center owner] had actual notice of it." Thus, according to the court, even if the contract rider had not been recorded, the deed's general appurtenances clause would have given the owner and users of the outparcel all of the
rights stated in the contract to the extent those rights survived the closing.

Reporter’s Comment 1:  The court assumes that the contracting parties either "forgot" to memorialize the easement in the conveying deed or "thought" that it was sufficient to record the contract to create the express easement. That seems like a stretch because the parties could just as easily have agreed, at or before closing, that the outparcel should create its own, direct access to the public roads.

Reporter Comment 2:     Can one assume that the court really understood that the original parties must have intended to allow for an easement for access and parking over the shopping center because that was the natural consequence of creating a restaurant outparcel without its own paths directly to the highway and with (probably) inadequate on-parcel parking? That's what an experienced practitioner would have concluded.

Reporter Comment’s 3:  Had the court ruled otherwise, would the outparcel owner have had a valid title claim?

Editor’s Comment 1: Of course the editor agrees that the recording of the contract gave notice of its contents, and that it was not merged away, nor intended to be merged away.  That being sent, what’s left?  We have a non-exclusive general easement with no restrictions as to use or size over the entire balance of the shopping center.  If we don’t have that - in other words if the parties intended something more limited - we’ve got a Statute of Frauds problem, and maybe no easement at all.  The question is whether the parties really got what they intended.  Was the idea that the parties would reduce the easement to a second writing that reflected more limitations on its use?  Is this just an “agreement to agree?”  Well, it’s all moot, because the outparcel owner got a gigantic easement that will certainly interfere with changes in the size and shape of the center in the future. 

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The Reporter for this item was Ira Meislik of Meislik & Meislik, Montclair, New Jersey.