Make no mistake, we live in an automobile/truck-centric society. Whether the property is industrial (where trucks must come and go), office (where employees and clients must come and go), retail (where suppliers and customers must come and go), or even your own home (where access to your driveway and garage are critical), all of these matter. I have seen enough unhappy surprises on deals in each category to know that stressing due diligence for access is an important message. Let me offer a few war stories, with “what happened” and “how can this be avoided next time” comments.

Helping an industrial user to buy his or her first office/warehouse is always a happy occasion. I enjoy helping start-ups and young businesses, and while there are certain challenges—newness, financing hurdles, etc.—the key here is to ask the user exactly what the need is: What vehicles will come and go from the property? Are there enough docks and doors? Is there adequate parking (indoors and out)? You know all of this. The surprise came later—after closing—when we found that a truck’s turning radius, as well as getting in and out of one of the docks, caused my clients’ trucks to cross a property boundary line.

The solution seemed simple enough, an easement over the boundary into vacant space on the adjoining landowner’s property. The unpleasant surprise we received from the neighbor was a shock. I expected a cost, but not a refusal. Although the neighbor really wasn’t inconvenienced by a truck or two crossing the line, the fact was we had no given property right to do so and the ensuing negotiation for an easement was not pleasant. Hindsight is 20/20, but unless you ask about specific use, specific truck size, and look closely at a site plan AND a survey, you might not pick up on a problem such as this one.

I usually ask for the owner’s existing survey, knowing that a newer one will come eventually, but perhaps only a few days before—or at worst, at—closing. DON’T wait until closing or even close to closing. Get the picture early and ask the hard questions while you are still determining/qualifying the property in question. Note this was not a title issue; there were no encroachments, no restrictions, nothing that would raise the issue unless we saw just how close the building was to one of the property lines, and knew how much room trucks needed to back out, turn around, and exit properly.

Many of you have done retail leases. There is no question that customer access and parking are essential to the success of a retail location. Arguably, there are implied easements of access—ingress and egress—when a retailer leases a store in a shopping center with parking in front of the stores. One of my clients leased a store in Chicago, with parking in front of the store. I feel compelled to tell you that I did not represent the tenant on the lease, so what we learned next was an absolute surprise to all concerned. In fact, it was shock! The shopping center where the stores stood was owned by my client’s landlord, but the adjacent parking lot was ground leased to the landlord from a third party; and during the term of my client’s lease, the ground lease of the parking lot expired. Negotiations for an extension of the ground lease stalled, and the ground lessor—in order to enforce his rights—fenced off the parking lot, denying vehicular access to all patrons of the strip center. Naturally, this concerned all retailers in the center, my client—a dry cleaner—included. If its patrons couldn’t park nearby—north side of Chicago—then likely the patrons would choose a different dry cleaner. No demand letter, threat, etc. could move the process along, but fortunately, ground lessor and ground lessee eventually came to terms, the fence came down, and business resumed as usual; but it was a very tense 14-day period. How might we have foreseen the problem and avoided it? Again, 20/20 hindsight kicks in, and a leasehold title policy, or at least a title commitment showing what encumbrances related to the entire shopping center would have flushed out the ground lease, and caused the tenant to inquire when that lease expired. If the ground lease was recorded, a copy could have been obtained, but perhaps there was only a memorandum of lease, so perfect information might not have been available.
 

Can you imagine how issues of access can impact your own home and castle? I represented a happy young couple buying a home in a northern Chicago suburb, and learned that the property was both benefited and burdened by easements for access. In fact, it was a shared driveway where each of the adjoining owners owned their “side” of a 10-foot driveway, along with an easement for another five feet across the neighbor’s property. Shared driveways are not uncommon, so we took appropriate action, getting title insurance for two parcels—both the fee and the easement appurtenant—so my clients had title insurance and access when they closed. Fifteen years passed, and relations between them and the neighbor were a bit rocky. The neighbor decided the shared driveway was an impediment to his own plans to sell, and wanted my clients to build a new driveway on the other side of the property; but by this time, my clients had their property under contract for sale, and weren’t about to spend tens of thousands of dollars on a new driveway simply to accommodate their angry neighbor. That brought out the spray paint, the no parking signs, and even a fence contractor, all in an effort to intimidate my clients into building a new driveway to save the sale. My clients had bought a property out of state, closing was subject to sale of their Illinois home, and each had new jobs out of state. There was a great deal riding on successfully closing this home sale. Accusations of vandalism, nuisance, even a call or two from the building department of the town where the property was located all came into play. I even drafted an easement agreement which would have clarified the parties’ rights and duties, but of course the neighbor refused to sign it. The neighbor finally retained counsel, and I explained that if the deal failed, a suit for tortious interference would follow, and that it would be my very great pleasure to pursue such a claim. All of this for a house closing! The neighbor backed down, stopped his foolish behavior, the buyers and their counsel accepted the risk of no access, and the deal closed. No, we did what we could have done 15 years ago on the front end; and no one could have anticipated the neighbor’s change of heart and position. All that could be recommended here would be an easement agreement—on the front end of the deal—binding on the parties and their heirs and assigns, more detail and teeth than the mere grant of the easements in the 1930’s. Perhaps an endorsement from the title company ensuring access based on the easement agreement, again, only with 20/20 hindsight.

A similar issue arose when I represented a client hoping to purchase a small shopping center, where we learned in due diligence from the municipality that the property was “under parked,” meaning that the property did not have a sufficient number of parking spaces for its tenants’ patrons, and technically did not comply with zoning for its use which included a place or public amusement. The present owner had, we learned, leased extra parking from the adjacent mall. The net effect was that the owner of this shopping center did not control all of its needed parking and depended on a lease, not only an extra expense, but a lease that was subject to termination on 90 days’ notice if the mall wanted the extra parking spaces for its own tenants’ use. This issue would have shown up in title and survey, and was one of several issues that killed the deal.

Today’s message: look at site plans and surveys very early on in a transaction, be it a purchase or a lease. Look at existing owner title policies—even for lease transactions. Get a clear understanding of the buyer/tenant’s proposed use of the property, as early in the process as you can. Surprises over access are never easily handled, and while there are title endorsements to be considered, rarely are they requested early in the deal, and in fact, access issues don’t always surface until closing is long in the past. You have heard me say this before, you have to skate to where the puck will be not where it is at the moment. Looking ahead toward a client’s safe and efficient use of the property will serve you and your clients well.