In commercial realty, reciprocal Easement Agreements (REAs) allow individual parcels to be combined into one contiguous property. This property is usually rezoned for a specific purpose or use. REAs allow all parties to have access to and to follow the rules regarding elements such as roads and parking lots, common areas, and signage. Adjacent property owners usually execute these REAs. They can be used for retail, office, or mixed-use projects.

A 50-acre property could have five separate land parcels. A different entity owns each one. These five owners could execute one or more REAs to enable roads and parking lots. Each entity still retains its parcel of land, but the infrastructure can be connected seamlessly and contiguously. The property will be visible to shoppers, retail tenants, and other stakeholders as an integrated project owned and managed by one entity.

Seven Typical REA provisions for commercial real estate

REAs are generally used to establish the conditions, covenants, and restrictions that will apply to large-scale development projects. They also govern the actions of the parties, whether they be developers, landlords, or tenants/operators. You will find provisions covering such topics as:

1. Access.

2. Parking.

3. Common areas

4. Maintenance, costs, insurance, taxes.

5. Architectural consistency.

6. Signage.

7. Modifications and terms

These provisions give property owners assurances that roads, parking lots, and common areas will be accessible and not blocked by a neighbor. This is important for their ability to run their business. In addition, the REA provides that owners can temporarily occupy or monopolize shared spaces provided they notify the appropriate authorities and that the proposed use has been approved or considered reasonable.

An owner may require several parking spaces to be used as a staging area during construction. An REA may require that they request the use of the space at least three months in advance and specify the construction dates and hours, as well as the type of equipment or vehicles that will be using the space.

These agreements go beyond access and circulation. They include hours of operation, architectural compatibility, and types of businesses that can be allowed or banned from the property. It is important that all parties understand what can and cannot happen on the property. Also, it will outline how common areas will be managed.

1. Access:

Reciprocal agreements specify the location and terms of easements between parcels. This ensures that all properties have easy access to driveways and parking lots, as well as roads that allow for entry and exit from the project. In addition, each party should be able to access the property of another party so that pedestrians and vehicles can circulate around it.

2. Parking:

Customers, tenants, and employees can be directed by REAs to where they can park their cars. They can also list prohibited and permitted types of vehicles, as well as the number of spaces that are available for each business or property.

3. Common Areas:

Other than vehicular areas, common areas are areas that all tenants and customers can use. These include outdoor green spaces and seating areas. Employees, visitors, customers, and others can also use hallways, elevators, spiralators, and lobbies. To enter, exit, and circulate through the property and/or building. Usually, elements such as their locations, dimensions, and permitted uses are defined.

4. Maintenance, Costs, Insurance, Taxes:

REAs outline the costs and responsibility for maintaining common areas. The management of communal spaces is generally managed by a managing partner or landlord. Based on the amount of land or space occupied, owners and/or tenants contribute to an annual maintenance fund. For example, a tenant or landowner who occupies 15% of the site could contribute 15% to the overall maintenance budget. Fees collected can be used to pay expenses like upkeep, insurance premiums, trash removal, cleaning, and lighting. Common areas are subject to taxes, and property owners must pay some taxes on their own property.

5. Architectural Consistency:

The REA will usually specify which owners will pay certain construction costs. Each party will be required to review and approve any design or construction plans submitted by other owners in order to ensure architectural compatibility throughout the project. Both parties in REAs must approve construction schedules.

6. Signage:

These are the most common elements of REAs. These can be used to specify the location, size, lighting, materials, and other details of signs, as well as access details for maintenance and repairs.

7. Modifications and Terms:

The REAs define what the parties can and cannot do with the property, who they should call in the event of a problem, and how they will resolve it. The agreement may also include instructions on how to amend the REA if needed. Restrictive easement agreements can be indefinitely effective and "run with the land," binding future owners. Although the REA may be for a shorter period of time, they are generally enforceable for a long time. You can change REAs by using legal remedies such as quieting the title, abandoning or releasing the easement. However, these approaches can be costly, time-consuming, and complex.