Love Thy Neighbor, but Don’t Ignore Your Property Rights

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From the Desk of Josh Hayward:

They say that good fences make good neighbors. If you share a common wall, however, pay attention to your neighbor. In Bo and Lia Holding LLC v. 2021 Morrison LLC, the Oregon Court of Appeals examined a situation where two neighbors had equal ownership rights to a common wall built on the boundary of their properties. One of the owners signed an exclusive contract to rent advertising space on the wall. The continuous exclusive use by one of the owners eventually led to the issue before the Oregon Appellate Court: By exclusively using the common wall for advertising, did one owner gain a prescriptive easement for future exclusive use?

Claims Pointer:

The Oregon Court of Appeals determined that Defendants gained a prescriptive easement over Plaintiff’s property through open, notorious, adverse, continuous, and uninterrupted use of the property.

Bo and Lia Holdings LLC, v. 2021 Morrison LLC, 315 Or App 372 (2021).

Facts:

This case involves two lots of land, lot 6 and lot 7, situated next to one another in downtown Portland. Plaintiffs (Lot 7 owners) owned lot 7 and the one-story building located on the lot. Defendants (Lot 6 owners) owned lot 6 and the three-story building located on that lot. In 1911, a common wall (the Wall) was constructed along the dividing line between lot 6 and lot 7. Because the Wall is located on the dividing line, the owners of both lots had rights related to the common Wall. Over time, the owners of the lots changed, but each new owner effectively retained the same rights to the Wall as the previous owners. For the sake of clarity, in this summary, we will simply refer to the various owners throughout as Lot 6 owners and Lot 7 owners.

In 1997, the Lot 6 owners entered into an agreement with an advertising company, Onsite, to lease the eastern side of the Wall for advertising (1997 Agreement). The 1997 Agreement was for a term of ten years. In 1998, Onsite entered into a separate agreement with the Lot 7 owners for the removal of a billboard on the roof of the one-story building and the Lot 7 owners’ agreement not to build on their existing property (1998 Agreement). The 1998 Agreement was also for ten years.

In 2009, the 1998 Agreement between Lot 7 owners and Onsite ended and was not renewed. Meanwhile, the Wall continued to be used for advertising purposes pursuant to the 1997 Agreement. In 2018 the Lot 7 owners attempted to grant an exclusive easement to a different advertising company despite the fact that the Lot 6 owners were already leasing the Wall to Onsite. The Lot 7 owners brought a claim against the Lot 6 owners for trespass. The Lot 6 owners made a counterclaim for a prescriptive easement. The issue before the Court was whether the Lot 6 owners had established a prescriptive easement to exclusively use the Wall for advertising purposes.

Law:

An easement is an interest in another’s land that entitles the holder of the easement to use the owner’s property for some particular purpose. A prescriptive easement allows for the creation of an easement by use over time and by the operation of law

To establish a prescriptive easement, a party must demonstrate the following: (1) open, (2) notorious, (3) adverse use of another’s property for a continuous and uninterrupted period of at least 10 years. Hisey v. Patrick, 309 Or App 625, 633 (2021). “An adverse use is a use made without the consent of the landowner, or holder of the property interest used and without other authorization.” Albany & Eastern Railroad Co. v. Martell, 366 Or 715, 722 (2020).

In Oregon, there is a presumption that the use of another’s land is adverse if the use is open and notorious and the person claiming the easement by prescription is a stranger to the landowner. The presumption does not apply when the nature of the land or the relationship between the parties is such that the use of the owner’s property would not put the owner on notice of the adverse nature of the use.

However, in Oregon, there are two long-standing exceptions to the presumption of adversity. The first exception occurs when the landowner gives the user permission to use the property. This requires some evidence of actual communicated permission. Second, the common road exception recognizes that when the landowner and the user make use of a road constructed by the landowner or by an unknown person, it is more reasonable to assume that the use was pursuant to a friendly arrangement between neighbors rather than to assume the user was making an adverse claim. Albany, 336 Or 722-23. 

Analysis:

The Court held that there was no dispute of material fact that the Lot 6 owners engaged in open and notorious use of the Wall for at least ten years. To gain a prescriptive easement, Lot 6 owners had to show that their use of the Wall was adverse and that none of the exceptions applied. The Court held that the presumption of adversity applied because the Lot 6 owners’ use of the Wall was open and obvious, and the Lot 6 owners leased the Wall for advertising for more than ten years

Since there was a presumption of adversity, the Lot 7 owners had to prove that they permitted the Lot 6 owners to use the Wall. The court looked at the 1998 Agreement between the Lot 7 owners and Onsite to see if the Lot 7 owners gave the Lot 6 owners actual communicated permission to use the Wall. The 1998 Agreement was between Onsite and the Lot 7 owners for the removal of the billboard and the agreement not to build on top of their property. The Court found that there was nothing in the 1998 Agreement giving the Lot 6 owner’s permission to exclusively use the wall for advertising. Additionally, the Court held that Lot 6 owners use of the wall did not fall under the common road exception because this was not a friendly arrangement but was an arms-length business transaction. Because the Court found that neither the permissive use nor the common road exception to the presumption of adversity applied, the Lot 6 owners use of the Wall was adverse

Since Lot 6 owners use of the Wall was open, notorious, adverse, and continuous for a period of 10 years, the Lot 6 owners gained a prescriptive easement to exclusively use the Wall for advertising purposes.

The Big Picture:

Property owners should be aware of their rights to utilize their land or structures and ensure that they protect those rights. A property owner’s failure to protect their rights in the past may prevent them from exercising those rights in the future.