Underlying Fee: Be aware!

by Jerry Moran on March 11, 2010

Lack of awareness of the underlying fee can create very expensive problems. What is the underlying fee? When you purchase a piece of real property you receive “fee title.” When you grant an easement over a portion of your property, the easement holder has a “non-possessory interest” in it and you still own the land, the “underlying fee.”

Following are some examples of problems that occurred because of the lack of awareness of just who owns the land a company or agency is crossing.

A few short years ago in Indiana, AT&T had a fiber Optic cable in railroad right of way. The AT&T right of way agent had acquired a permit from the railroad and AT&T was paying the railroad large annual fees for use of the property. Subsequently, the railroad decided that revenue from this stretch of track was not profitable and decided to abandon the right of way that included removing the track and ballast. The AT&T cable remained in place. AT&T was contacted by an attorney for one of the abutting property owners and was asked to remove its cable. AT&T countered that they had a permit to be there, granted by the railroad company. It turned out that the railroad only had an easement and the abutters owned the underlying fee. AT&T agreed to pay landowners $45,000 per mile in exchange for a permanent easement. The figure of $45,000 is the average payment per mile, which is net to the landowners. AT&T would also pay the landowners’ attorneys’ fees and all class action costs.

The next case occurred in San Diego County, California. State highway 76 (a two lane blacktop highway) crossed through the middle of a ten-acre parcel owned by the Pauma Band of Mission Indians. This was a satellite parcel of the main reservation and was used for agricultural purposes. It turned out that the state had acquired the roadway from the county in the 1920’s. The reservation was created by the Federal Government in 1886. Pacific Bell and San Diego
Gas & Electric shared a joint pole line within the right of way of the state highway. The utilities each received a Summons and Complaint from the U.S. Attorney demanding payment for the trespass. Each company paid a significant dollar amount in exchange for a license to remain in place. The ten-acre parcel was not receiving service from either company. The state also paid a large fee to keep the roadway open.

The issue in the above case was that when the county paved the road in the early 1900’s there was no awareness of who owned the underlying fee. Someone may ask why prescriptive rights were not attempted. A prescriptive right cannot be claimed against a governmental entity. Remember, Indian land is sovereign and the U.S. government is the trustee.

I welcome your comments.

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