What encumbrances (easements, restrictions) affect the development of the property post-acquisition?

Encumbrances such as easements, restrictive covenants, and development limitations can significantly affect what a buyer can do with a property after acquisition, especially with foreclosed or auctioned commercial land. These encumbrances often “run with the land,” meaning they remain in effect regardless of ownership changes, and must be carefully evaluated during due diligence to avoid delays, cost overruns, or legal disputes during development.

1. Easements for Access, Utilities, and Shared Use

• Utility easements allow service providers (electric, water, sewer, telecom) to install and maintain infrastructure across part of the property.
  
• Ingress and egress easements give other property owners or the public a legal right to use designated paths or roads.
  
• Shared parking or common access agreements may bind the property to allow vehicle circulation for neighboring parcels.
  
• Development is restricted within easement zones, meaning no permanent structures, fencing, or grading can occur in those areas.
  
• Surveys and title reports are essential to identify he location and scope of existing easements.
  

2. Deed Restrictions and Private Use Limitations

• Restrictive covenants written into the property’s deed may limit how the land can be used (e.g., no industrial activity, no multifamily housing, no signage).
  
• These restrictions are often imposed by original developers, homeowners associations, or master-planned communities.
  
• Violating restrictions can result in legal action from adjacent landowners or associations.
  
• Some restrictions may expire after a set period, while others are perpetual unless formally released.
  
• Reading the full deed history and title commitment helps uncover these private encumbrances.
  

3. Zoning-Linked Encumbrances and Development Agreements

• A previous owner may have entered into a development agreement with the municipality that binds future owners to specific site plans, density limits, or timelines.
  
• Special permits, variances, or zoning conditions may limit building height, setbacks, FAR, or usage.
  
• Local governments may place conditional overlays on the land, such as requiring open space or preserving tree cover.
  
• Failure to comply can result in permit denial, fines, or loss of entitlements.
  
• Municipal planning departments or zoning files should be reviewed to identify these obligations.
  

4. Environmental and Conservation Easements

• Some land may be subject to wetland setbacks, floodplain restrictions, or environmental conservation easements.
  
• These encumbrances limit grading, construction, or vegetation removal to protect ecosystems or water quality.
  
• In some cases, parts of the parcel may be completely undevelopable or require mitigation credits.
  
• Reviewing FEMA flood maps, environmental overlays, and local watershed district rules is essential for accurate land planning.
  
• Phase I environmental site assessments can also help detect contamination that may impose future use restrictions.
  

5. Judicial or Financial Encumbrances Post-Foreclosure

• Though most financial liens are cleared during foreclosure, surviving legal judgments, mechanics’ liens, or court-imposed use restrictions may remain.
  
• Properties involved in past litigation may be subject to court orders or settlement agreements that affect development.
  
• In some cases, pending appeals or unresolved legal claims can temporarily cloud the title.
  
• Buyers should consult both the title report and any recorded litigation or lis pendens notices before proceeding with site work.