Utility easement derails dream home

DEAR BERNICE: We recently purchased an acre of property that has a mobile home on it, with plans to build a custom home on the property within the next few years. At the back of our lot we have some high-tension power lines, and the utility company has an easement for use. We cannot build in this area nor can we plant any trees.

When we first looked at the property our agent explained that there was a utility easement. Since we were planning on building, she told us to have the property surveyed. She made our approval of the survey a contingency in the transaction. We now know exactly where the easement is and we can still build the house we want.

The lot next door to us, which also has a mobile home on it, has the power lines running right through the middle of that property. A couple from Sweden recently sold the property to a couple who plan to build in the middle of the easement. They don't seem to have any idea that they cannot build there.

If we had met the buyers before they closed we would have told them to have the property surveyed like we did. Shouldn't their agent have told them to do this? Can they do anything about the problem now that they have closed on the property? --Susan F.

DEAR SUSAN: Although the process for purchasing varies dramatically from state to state, almost all transactions include a title insurance policy. The primary purpose of title insurance is to insure the chain of title. In cases where the buyer is obtaining a loan, there is usually a second policy that insures the lender. Lender policies are designed to "make the lender whole" in the event there is a title problem after closing.

While your question isn't exactly about the chain of title, it has everything to do with the legal description that is also included in the title report. Virtually all buyers receive a "preliminary title report" or "title survey" as part of their title approval process. This report outlines all the "exceptions" that have to do with the title. This can include utility easements, as in the case you describe, but it can also include deed restrictions and a host of other types of items. The normal process is for this report to be sent to the buyers. The buyers are supposed to read the report and approve it before the transaction closes. ...CONTINUED

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