Easement

Easement is a legal right that allows a party other than the property owner to use a defined portion of the property for a specific purpose. Common examples include utility easements (allowing power, water, or sewer lines to cross the property), access easements (granting a neighbor the right to use a driveway or path), and drainage easements (permitting water runoff across the land). Easements are recorded against the property's title and typically transfer with ownership — they survive foreclosure, sale, and assignment.

For mortgage note investors, easements matter because they are encumbrances that can affect property value and usability. Most easements — particularly utility easements along property edges — are routine and have minimal impact on value. However, an easement that restricts building on a significant portion of the lot, or one that grants public access across the property, can materially reduce what the collateral is worth. Easements are identified during a title search and should be reviewed as part of standard due diligence when evaluating the property securing a note.