What is Appurtenances in Real Estate: Definition and Examples

It is not uncommon for property owners to need to make additions or change the floor plan of their property. This occurs in both commercial real estate as well as in residential properties. When those changes to the building are permanent, meaning they cannot be easily removed, they are referred to as appurtenances. Understanding this concept is critical for commercial real estate investors who may be purchasing properties with modifications like this or who may wish to make such changes at a later time.

What Does Appurtenances Mean in Real Estate?

A definition of appurtenance in real estate could be an addition to a property that is meant to be permanent. In some situations, it can also refer to rights that become a permanent component of the entity. They are a part of the property transaction when purchasing. When the property sells, these changes, rights, or other updates are passed to the next owner. They do not belong to any individual but instead to the property itself.

Appurtenances Examples

What Do Appurtenances Include?

Appurtenances can include a wide range of elements, including:

• Driveways or entrances to the property
• Cabinetry
• Fences
• Permanent garages
• Sheds
• Furnaces and air conditioners
• Septic tanks
• Fixed equipment
• Inground pools
• Trees
• Rights to oil or minerals

What are Excluded as Appurtenances?

Anything that is easily removable from the property is not considered an appurtenance. Similarly, anything that, if removed, would damage the property is not an appurtenance. This may include any type of trade fixture, such as an appliance that is plugged into the wall or a computer system. Other examples include shelving, signage, or equipment for a commercial operation.

What is an Easement Appurtenant?

In some situations, an appurtenance can be a form of an easement. This means that it is not an actual structure on the property but rather the right to use it. Easements provide people with the right to use another person’s property, such as a shared driveway.

There are two forms of appurtenance easements commonly found:

• Positive easements: These are also known as affirmative easements. They provide a person with the right to perform some action or have some right to use a component of the property. This could include allowing them to build a fence on the property, for example.
• Negative easements: Negative easements are less desirable overall. They include liens or other types of claims on the property. A lien may be put on a piece of property, for example, if a property owner fails to make payment on a loan that is secured by that property. Additionally, some negative easements will restrict what the holder can do, such as not being able to build a structure on the property that limits sunlight to the area.

Appurtenant easements typically refer to the right of way. This would mean the easement holder has the right to travel across to the other property owner’s land to use it as defined by the easement. There are various reasons why this may be done. For example, if property for one owner is divided, an easement may allow the owner to cross their neighbor’s land to access their property.

Most often, a new property owner will have the appurtenant easement transferred to them when they purchase the property. That does not always occur, though. In some cases, called in-gross easements, this does not automatically occur. Rather, the property buyer and the new owner must work together to create a new agreement, or they may terminate it at any time. This is often used when a property owner agrees to allow another party to use their property for business purposes. In recent years, this has been done significantly by adding cell phone towers to various properties.

What Role Do Appurtenances Play in Real Estate Investment?

When purchasing commercial real estate, or any real estate, understanding appurtenances as they relate to the property is critical. Ultimately, these can change the function of the property, creating opportunities or limitations for the new owner depending on what the apprentice is and how it is defined.

Since appurtenances are a part of the property transaction, the new property owner should do due diligence to understand the opportunities and restrictions these offer and create. Since these transfer to the new owner, the function and use of the building can be affected in some situations.

As such, the appurtenances can impact the property’s value (how much it may be worth now or later), the ownership, and the transfer of the property. All transactions should have clearly defined appurtenances before a property owner decides to invest.

3 Steps Investors Should Take to Examine Appurtenances

Commercial real estate investors must fully understand any applicable appurtenances on their real estate investment prior to making that purchase. Investors must consider several things when determining if the property is worthy of purchase and the role that any appurtenances may play in the function or value of that property. To do this, there are three key things investors should focus on.

1. The condition

The first step is to consider the condition of any permanent fixtures or appurtenances. If they are there but in poor condition, they may require repairs, which could add to the cost of managing the property overall. If they do need repair, when would that occur, and what type of repairs would be expected?

2. The cost

As with any other component of the property, investors must consider the cost not just to buy the structure but also to maintain it. For appurtenances, this includes the type of maintenance and upkeep needed for the property. Then, investors should consider if that added cost is a benefit or a limitation to the property investment. Does it add value or create a loss?

3. The risk

Finally, investors must also consider what the appurtenances mean in terms of loss to the property overall. If there is a structure like this on the property, what added liability does it provide to the property investor? A good example of this is an in-ground pool. While this may be a nice feature, it adds considerable liability to the property, and investors must consider the cost of that risk (including the purchase of liability insurance) before deciding to invest.

There are many types of appurtenances, and some are far more complex and challenging to understand than others in terms of value, risk, and condition. Consider all property features, including permanent fixtures, buildings, natural resources on the property, and property rights, when determining the value of appurtenances on any property. All of these factors should play a role in the overall appraised value of the property.

Wrapping Up

As with any other component of a commercial real estate transaction, investors must consider the value, risks, and opportunities that any appurtenances present to them when included in the property transaction. Though not a simple process, this is a core component of estimating the value and overall benefit of purchasing the property or any added cost that it may present to the new owner that may not be worthwhile. Consider, too, how the presence of the appurtenances impacts the expected use of the property.