Acquiring Utility Property Interests and Reimbursing Utility Relocation Costs: A Guide (2023)

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2 This section includes definitions of key terms used in connection with the acquisition of utility property interests and utility relocations. The key terms and the corresponding definitions pro- vide a generic framework to help readers understand basic concepts. Definitions and usage of some terms might vary at individual state DOTs. Condemnation: Legal process by which an entity exercises its power of eminent domain. Deed: Legal instrument that conveys a property interest to another entity or individual. Deeds are recordable instruments. Records of deeds are usually kept at a designated office (e.g., county recorder or recorder of deeds). Commonly used deeds include the following: • Warranty deed: Type of deed in which the seller guarantees ownership of a clear title. • Special warranty deed: Type of deed in which the seller guarantees that the title is free and clear of encumbrances during the seller’s period of ownership of the property. • Quitclaim deed: Type of deed in which the seller conveys the interest described in the deed without a warranty that the title is valid. Easement: Right to use somebody else’s property for a specific purpose. An easement is a prop- erty interest that includes the right to use, but not possess or own, the property. An easement is a recordable instrument, and, as such, it is recorded as a distinct property interest in the deed. Sale of the fee title of a property does not automatically imply the termination or extinguishment of an easement. Eminent domain: Power of a governmental entity (or a corporation authorized to exercise func- tions of public character) to acquire private property for public use. The acquisition of real prop- erty interests at transportation agencies around the country is rooted in the Fifth Amendment to the U.S. Constitution, “nor shall private property be taken for public use, without just com- pensation.” This clause is often called the “takings” clause and applies to the federal government and, through the Fourteenth Amendment to the U.S. Constitution, to all 50 states. Extinguishment: Termination or cancellation of a property right through a recordable instru- ment. Extinguishment is different from subordination. Fee simple estate: Type of property interest that enables the owner to exclusively possess, use, and convey the property. The fee holder is the individual or entity that owns the fee simple estate. In most cases, state DOTs acquire adjacent property in fee simple for the highway right-of-way. State law might impose limits on what the state can acquire (e.g., by excluding mineral rights). Highway easement: Property interest a highway agency owns to build, operate, and maintain a highway on somebody else’s land. In this case, the terms and conditions of the easement deter- mine what the state DOT can do. For example, if the highway easement was created along fence Key Terms

Key Terms 3   lines using land from adjacent farms, usually its conditions are such that the state DOT is able to manage the highway right-of-way as if ownership of the right-of-way was in fee simple. However, if the fee holder is a government agency (typically, the federal government or a tribe), the terms and conditions of the highway easement are usually more stringent in favor of the fee holder. Lease: Property interest that enables the use of another’s property for a specific term (i.e., period of time), rent (i.e., periodic payments), and other terms and conditions. A lease is an agreement limited to the specific terms and conditions of the instrument. License: Authorization granted to a corporation or individual, typically for a fee, to conduct an activity or operate a business. As opposed to a permit, which is frequently granted for a specific duration, licenses are more permanent or have an expiration considerably longer than that of a permit. A license is not a property interest. Possession: Act of controlling property. Possession is one of the component rights of prop- erty ownership that enables the differentiation between a fee simple property interest (which involves possession) and lesser property interests such as easements or leases (which do not). A commonly used term in real property is adverse possession, the act of acquiring title to property through the exclusive, continuous, adverse use of the property for the number of years specified in state law. Prescriptive easement: Right to use somebody else’s property, acquired after using the property in a nonexclusive, continuous, frequently adverse manner for a period of time specified in state law. Prior right: A utility owner’s compensable interest at a location where a utility facility has existed since before the state DOT acquired that land for a highway project. The term prior right also applies to cases in which the state DOT acquired the utility property interest (or the utility prop- erty interest was extinguished, e.g., using a quitclaim deed), but through an agreement, the state DOT will pay for future relocations of the affected utility facility. Property: Real property or real estate. Strictly speaking, property can be real property (i.e., land and the improvements or structures permanently attached to it) or personal property (i.e., every- thing else). In this guide, the term property means real property. Property interest: Right or privilege that an individual or entity has on real property. Common types of property interest include the following: • Fee simple estate: Type of property interest that enables the owner to exclusively possess, use, and convey the property. • Life estate: Type of property interest that enables the owner to possess and use the property during the owner’s lifetime. After the owner dies, the property passes to whoever is named in the instrument. • Easement: Type of property interest that enables the use of somebody else’s property for a specific purpose. Shared (or permanent) utility easement: Dedicated area outside the highway right-of-way footprint where utility facilities are accommodated longitudinally. Contrary to a utility corridor, which is normally inside the right-of-way, shared (or permanent) utility easements are located outside the highway right-of-way footprint. Subordination: Legal status that establishes an inferior ranking of a property interest. In the con- text of utility accommodations within the right-of-way, a subordination agreement formalizes the agreement of a utility owner to subordinate to the state DOT its property right at a location within the highway right-of-way (typically an easement). A subordination agreement does not extinguish a property interest with respect to the dominant estate.

4 Acquiring Utility Property Interests and Reimbursing Utility Relocation Costs: A Guide Utility corridor: Dedicated area within the highway right-of-way footprint where utility facili- ties are accommodated longitudinally, normally via permit, as opposed to a shared or permanent utility easement that is normally outside the right-of-way. Most state DOTs do not have the legal authority to establish a formal utility corridor based on the premise that the entire right-of-way exists to satisfy a transportation need and purpose. Under these conditions, utility accommoda- tion typically occurs along the outer edges of the right-of-way (e.g., within 5 ft of the right-of- way line). However, it is not common to refer to this narrow strip of land as a utility corridor. In practice, depending on the specific characteristics of a project, designers might use that strip of land to address both a transportation need and the need to accommodate utility facilities. A typical example is the use of sidewalks, bike trails, and other similar features with underground accommodation of utility facilities. Utility facility: Component of a utility system used to gather, store, transmit, distribute, moni- tor, or manage utility products or services. The terms utility feature and utility plant are also used to indicate a utility facility. Utility facilities include linear features (e.g., pipes, cables, ducts) and structures that connect linear utility features (e.g., manholes, junction boxes, poles). Utility facilities also include support structures such as guy wires and thrust blocks. Utility facilities can be grouped in a variety of ways, including, but not limited to, the following: • Type: Type of utility service that a utility facility carries (e.g., communication, electric, water, oil and gas, nonpotable water, wastewater, stormwater). • Conveyance: Primary purpose of the utility facility (e.g., distribution, transmission, service, gathering). • Operational status: Operational status of the utility facility (e.g., proposed, in service, out of service, abandoned, under construction). • Ownership: Type of ownership of the utility facility (e.g., privately owned, publicly owned, cooperatively owned). Utility franchise: Authorization granted to a corporation or individual to provide a utility ser- vice such as water, gas, or electricity within the jurisdiction of the franchisor. Utility joint use agreement: Agreement in which a state DOT and a utility owner agree to jointly use the right-of-way for highway and utility purposes. This type of agreement is commonly used when a state DOT acquires adjacent land for a highway project and a utility facility occupies that property by easement, but the utility facility is not in conflict with project features and does not need to be relocated. The agreement stipulates that the state DOT can develop and operate the project, and the utility owner can continue to use and access the right-of-way without losing its property interest. It is sometimes said that with these agreements the state DOT and the utility owner have similar rights. In practice, the rights of the state DOT within the right-of-way are superior to those of the utility owner. Other similar terms include common use agreements, joint occupancy agreements, and consent to common use agreement. Utility owner: Privately, publicly, or cooperatively owned entity that owns and manages a utility system. In this guide, a utility owner is also the entity that operates the utility system. Utility permit: Authorization by a DOT for a utility owner to install, operate, and maintain a utility facility within the highway right-of-way. At most state DOTs, a utility permit serves a dual purpose: (a) to document the authorization for the utility owner and its contractor to install a utility facility within the right-of-way, and (b) to document the authorization for the utility owner to operate and maintain the utility facility within the highway right-of-way. A utility per- mit does not constitute a property interest. In most cases, utility owners are responsible for the cost to relocate utility facilities that occupy the right-of-way by permit. Terms such as use and occupancy agreement and encroachment permit are also used to indicate a utility permit.