WHAT IS Landlocked
“Landlocked” in the context of real estate refers to a piece of property that is inaccessible via public thoroughfare, except through an adjacent lot. A vacant lot that is located behind a strip mall and can only be reached by walking through the mall qualifies as this type of lot. Landlocked property is "locked up" all around by other property.
BREAKING DOWN Landlocked
Landlocked parcels are typically the result of subdivisions or the division of a larger parcel of land into smaller parcels which are sold off individually. Ideally, the smaller parcels would each have access to a public right-of-way, but sometimes that’s not possible. For example, a seller might wish to subdivide a large square parcel with a landscape feature in the center, such as a mountain, that’s unsuitable for development. Rather than carving out a gerrymandered parcel that gives road access to the mountain, he might leave it landlocked.
Pros and Cons of Landlocked Property
Landlocked property is ordinarily worth less than other surrounding properties, due to its inaccessibility. But that doesn't mean it’s worth nothing. State and federal laws protect the right of property owners to “productive use” of their land, which means, in general, the right to gain access to a public road. An easement, which grants the right to cross over neighboring land, is used to provide such access. There are various types of easements, some easier to acquire than others. But, savvy buyers who understand the rules can find good investments in landlocked property.
The stress-free way to get an easement is through a friendly negotiation with a neighboring landowner. They might be tempted to grant an oral promise which allows a landlocked owner to cross their land, but buyers are advised to get the promise in writing. A written easement created by a real estate lawyer, and registered with the local deed office provides security for the landlocked property owner. With a verbal arrangement, the neighbor could change their mind, or sell their land to a less hospitable owner. Finally, the neighbor's word won’t carry much weight when the landlocked parcel goes up for sale again. A permanent easement in writing avoids all these potential problems.
If a neighbor balks at signing a friendly easement or asks for unreasonable compensation, it may be necessary to use the nuclear option of an easement by necessity. An easement by necessity is a court order granting the landowner legally entitled access to their property. However, the landlocked owner must prove through a deed and title search that both the landlocked property and the neighboring property were at one time owned by the same person. The court is essentially ruling that when the property was subdivided, the owner neglected to provide the necessary road access.
Whether through amicable agreements or with court involvement, investors who do their homework can buy landlocked property cheap, gain road access and sell at a tidy profit without making any physical improvements.
It’s important to note that filing for an easement by necessity will entail legal costs. Also, it may leave the landlocked owner with an angry neighbor who can appeal the ruling. There are exceptions to an easement by necessity, such as land patents granted by the federal government, even those dating back hundreds of years. To avoid being a pig in a landlocked poke, buyers should consult an experienced real estate attorney.