IMPACT OF RIGHTS OF WAY ACROSS RURAL LAND NEAR HOUSTON

THE GREATER HOUSTON METRO AREA HAS A POPULATION OF OVER 7 MILLION PEOPLE. AND THE REQUIREMENT FOR INFRASTRUCTURE IS ENORMOUS. UTILITIES FOR WATER, SEWER, ELECTRICITY, ROADS, NATURAL GAS, PETROLEUM, ETC ALL REQUIRE RIGHTS OF WAY TO CONNECT THEM TO PUBLIC USE. ACCORDINGLY, IT IS COMMON FOR RURAL LAND NEAR HOUSTON TO HAVE RIGHTS OF WAY ACROSS THEM.

WHAT IS A RIGHT OF WAY?

A right of way allows the public or a private entity to cross over an individual property.

Some examples would include; roads, power transmission lines and cross country pipelines. Rights of way often connect two or more points hundreds of miles apart. A natural gas pipeline originating in the Permian Basin of West Texas and terminating in the Mont Belvieu salt dome complex near the Houston Ship Channel would be situated within a right of way.

A right of way is basically the physical land or corridor in which the infrastructure (the pipeline, power line, road, and the like) is located. The right of way route referenced above (Permian Basin to Mont Belvieu) will cross thousands of individual parcels of land.

The ownership of rights of way are usually in the form of fee or easement. Most road rights of way are fee and most others are in the form of an easement. Each ownership parcel will have a particular easement across it. No two easements are exactly the same. Easements are basically a single building block of the entire right of way route.

HOW DO I KNOW IF MY LAND HAS A RIGHT OF WAY?

There are many types of rights of way and they can impact your property in a lot of different ways. The most important right of way could be the one that is proposed. Ask your land broker about plans for future infrastructure projects. Before you buy or sell rural land it is essential to know if there are any rights of way in place or planned.

Infrastructure rights of way are usually readily apparent by sight. Additionally, they are almost always recorded in the County Clerks office. The preliminary title report or title commitment generated at a closing will provide notification they exist and are excluded from coverage but will not include copies of the recorded easement. If there has not been a recent transaction a title review can be conducted by an abstractor or attorney which will indicate the rights of way on a particular property.

CAN A RIGHT OF WAY BE PLACED ACROSS YOUR LAND WITHOUT YOUR APPROVAL?

Yes, they can. In Texas if a government agency or a private entity has the right of eminent domain they can acquire an easement across your land and then build infrastructure within that area. You have the right to just compensation based on market value. You absolutely should consult with an attorney experienced in eminent domain matters. This is a separate area of legal specialization. If litigation is warranted, your attorney will arrange for an appraisal conducted by an appraiser experienced in right of way valuation and litigation support to include expert witness testimony. You should rely upon your attorney to select any witnesses to include appraisers.

PIPELINE EASEMENTS

Pipeline easements are commonplace in Texas. They are generally marked with a medallion (sign) on property lines and roadways. The easement will generally be easily identified because the area within the easement should be clear of trees, brush or improvements. Pipeline easements are recorded in the county court clerks office and are particular to the individual tract of land. Not all easements within a right of way system are the same. They vary by tract based on negotiation. The easement is the document conveying the right of way (land surface). The infrastructure (pipeline) is laid underground within the right of way. Pipelines carry various products to include; natural gas, petroleum products, jet fuel, etc. Widths of the right of way vary but 30 feet to 100 feet are typical. Generally speaking the land within a pipeline right of way is restricted against any improvements. The surface is usually available to the land owner for uses

POWER TRANSMISSION LINES

Unlike pipelines, power line infrastructure is above aground and in many cases are extremely large and unsightly. As with pipelines, there is the possibility of additional power lines following the same route. The easement area will be restricted against any improvements but as with pipeline easements, it is typical for surface use by the owner of the land to be allowed. Very often the analysis of comparable sales with power line easements will indicate a damage (reduction in value) to the remainder property.

TRANSPORTATION CORRIDORS

There are many examples of transportation rights of way to include; County Roads, Farm to Market Roads. State Highways, Freeways and special use facilities such as the Texas High-Speed Train project proposed for linking Dallas and Houston. The value impact of a taking across a particular property will depend upon the nature of the infrastructure itself and the characteristics of the property. A large tract may benefit from gaining new frontage on a road. A small tract may be diminished in value because little land is left after the acquisition. Almost any property stands to be damaged if divided by a major High Speed facility with no access to the right of way.

HOW DOES A RIGHT OF WAY IMPACT PROPERTY?

By impact I mean change in value. Most people’s initial reaction to easements is negative. However, easements can impact property in both positive and negative ways. Easements are common in rural areas and rural land would have little value without them. Easements provide access to landlocked tracts and utilities to almost all properties. On the other hand, rights of way for cross country infrastructure bring no benefit to a specific property and often have a negative impact on value. We will discuss this below.

CAN RIGHTS OF WAY BE APPRAISED?

Right of way easements are not traded in the open market so they don’t have a market value in and of themselves. However the impact of a right of way on the value of a particular tract of land can be measured. Accordingly being able to appraise this impact is important. In Texas both the property code and case law support the take plus damage rule. Basically this rule says that the underlying market value of the land is used to estimate the take (acquisition) and the damage (diminution) to the remaining land as a result of the imposition of the right of way.

An example would be if a 50 acre tract has a market value of $10,000 per acre before the easement and the easement area contains 3 acres the taking is $30,000. If the land remaining outside the acquisition now has a value of $9,000 per acre as a result of the easement, then there is a damage of $47,000 (loss of $1,000 per acre). The total compensation would be $77,000. The formula would be take ($30,000) plus damage ($47,000).

The impact on the remainder as a result of a right of way taking could result in an increase, no change or a decrease in value to the land. Even if there is a decrease (damage) to the remaining property, it may not be legally compensable. Examples of non compensable items include; sentiment, legacy, emotional attachment and the like. An appraisal of the impact of an easement must be supported with comparable sales of properties with and properties without similar easements.

When appraising the impact of a right of way for public acquisition, the impact is always the loss in value of the property, not the value of the right of way to the acquiring (taking) entity acquiring.

I mentioned several appraisal terms above which you may or may not be interested in reading about at this point. They are very briefly defined as follows;

• Whole Property. The entire parent property before the easement or right of way is extended across it. For example a 60 acre tract which a pipeline easement containing 7 acres will cross.

• Partial Acquisition. The land within the easement itself as contrasted with the whole property. This is the 7 acres referenced above. Compensation is based on market value of the Whole Property before imposition of the easement.

• Remainder Property. The acreage located outside of the easement. In the above example the 53 acres outside of the 7 acre easement area is the remainder. Damages are based on whether or not the remainder value is affected by the easement. That is referred to as before and after.

• Highest and Best Use. The most likely use of the property which yields the greatest value. Must meet the test of legally permissible, physically possible, financially feasible and resulting in highest value.

• Market Value. The most probable selling price of a property. Market value assumes the property is being used at its highest and best use.

For additional information, please see The Appraisal of Easements an article I wrote for the Right of Way magazine dealing with this topic in considerable detail.

CONCLUSIONS

Rights of way are a common facet of rural land. In terms of impact they can be positive or negative. By impact I mean change in value. Whether you are buying, selling or an owner of rural property you would be well served to be knowledgeable about the existence of any rights of way already situated on the property. If someone approaches you about placing a right of way across your property always contact an attorney who specializes in eminent domain.

LET US HEAR FROM YOU

If you have been involved with rights of way please share your experiences with us. If you are faced with having a right of way placed on your property for the first time, (or any time) feel free to send us your questions. We have decades of experience with all types of easements and rights of way and are more than glad to discuss your situation.

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Allen Realty Advisors represents buyers and sellers of fine quality rural land near Houston. We specialize in weekend retreats, country estates, farms and ranches, recreational property and investment land. Our market area is generally within 100 miles (two hours) of Houston.