Court Upholds HOA’s Right to Tiki Bar on Access Easement

Your clients and their owners probably think they understand the rights that so-called access easements convey. “It sounds pretty self-explanatory,” says David Wilson, who heads up the South Carolina community association department at the law firm Black, Slaughter & Black, P.A.

But, as a North Carolina court recently found, an access easement isn’t limited solely to ingress and egress across a property — it’s possible, the court said, for an easement to be expanded based on other conduct. Sea Watch at Kure Beach Homeowners Association v. Fiorentino (N.C. App. 2019).

The case holds valuable lessons that go beyond just the easement arena. “This is one of those diamonds in the rough that I send to managers to let them know it’s something they need to think about,” Wilson says. Keep reading to learn why.

The Easement Dispute

The HOA is an oceanfront residential subdivision. The association and its members enjoyed an access easement, owned by the community’s developer, across one of the lots in the subdivision. The developer referenced the easement in its recorded plat and subsequently built a tiki bar, bathrooms, and other improvements on it.

The developer sold the lot in 2001; a decade later, those purchasers sold it to new owners. The improvements already were in place and in use by then.

Five years later, when the HOA contemplated additional improvements to the easement, the owners objected. The HOA responded that the easement was a common element owned by the association, so the association didn’t require their permission to add improvements.

After continued resistance from the owners, the association filed a lawsuit against them, seeking judgment on ownership of the easement — and, in turn, its right to use the easement for more than ingress and egress. The owners counterclaimed but the trial court ruled in the HOA’s favor. The owners appealed.

The Easement’s Expansion

The court of appeals focused on the scope of the easement — that is, whether it allowed construction of the improvements or only ingress and egress.

The court acknowledged that the easement’s language explicitly granted a right of “access” but explained that certain conduct can add conditions or benefits to an easement. It found that public representations made by the developer in its marketing materials for the development expanded the easement to include the right to construct and maintain the improvements.

Notably, the appellate court also highlighted the issue of “estoppel,” which precludes a party that has acquiesced or accepted payment or benefits from later asserting a position inconsistent with that behavior.

So how did estoppel apply here? “The fact that the improvements had been there so long, and were there at the time of purchase, basically restricted the owners from trying to enforce the access easement,” says Zachary Moretz, founder of Moretz Law in Charlotte, N.C., and a board-certified specialist in commercial real estate law.

“They owned the lot and didn’t complain for five years,” Wilson says. “The owners basically manifested their intent to the rest of the world that they were OK with the improvements.”

Wilson emphasizes that this notion goes both ways between associations and owners — an owner facing enforcement can contend estoppel prevents it.

“Across the board,” he says, “every time you have an enforcement question, whether it’s architectural or nuisance or something else, the owner is going to say you don’t have the ability to enforce that restriction because you let it go for so long.” That’s yet another reason that timely enforcement is so critical.

Easement Advice

Easements are common in associations and can lead to litigation if not handled carefully. If an association is the beneficiary of an easement, Moretz says, “it needs to be very certain of what it allows before it starts expanding or improving it.”

The best way to ensure an easement allows desired expansion or improvements is to consider such additions at the very beginning. “When obtaining an easement, think through both what the association wants it for now and what it might want it for in the future to ensure the easement is broad enough,” Moretz says.

“For example, whenever I’m drafting an access easement, I always include that it also can be used for utilities to serve whatever is being accessed.”

Associations can be on the other end of the transaction, too, granting an easement to owners.

“If you’re granting an easement over a common area, you want to be very clear that it can’t be expanded for some other use that you don’t intend,” Moretz says.

“An easement should always specifically identify the property that’s encumbered, the beneficiary, the burdened party, and the intended use. The intended use is what often gets left out.”

Wilson agrees: “Be clear in how you define the easement, especially when you’re talking about how it’s going to be used so the use can’t be somehow expanded.”