What is Right of Way?
A right of way is a type of easement that grants the legal right to pass through or use a specific strip of land. In real estate, the term most commonly refers to the strip of land along public roads that is reserved for the road, sidewalks, utilities, and drainage infrastructure. This strip is owned by or dedicated to the local government and extends beyond the paved road surface into what many homeowners think of as their front yard.
Understanding right of way boundaries is important for investors because the actual property line is often several feet behind the curb or sidewalk. What appears to be part of the yard may actually be public right of way. Building a fence, planting trees, or constructing any permanent improvement within the right of way can result in a forced removal when the government needs access for road maintenance, utility work, or road widening.
Public vs. private rights of way
Public rights of way are owned by or dedicated to the government (city, county, or state) for public road and utility infrastructure. The government maintains the road and has the right to dig up the right of way for utility repairs, widen the road, or install new infrastructure without the adjacent property owner's permission. Property owners are typically responsible for maintaining the grass and appearance of the right of way but cannot build permanent structures on it.
Private rights of way grant specific individuals or entities the right to cross someone else's property. These are common in rural areas where one property is landlocked and must cross a neighboring parcel to reach a public road. Private rights of way are also found in shared driveways, common areas in planned developments, and private roads maintained by homeowners associations. A property with a private road right of way instead of public road frontage may be harder to finance because some lenders require public road access.
Right of way and property value
For most residential properties, the standard public road right of way has no negative impact on value because every comparable property has the same constraint. However, unusually wide rights of way or planned road expansions can significantly affect value. A planned highway widening that will take 15 feet of frontage from every lot on the street reduces usable lot area and brings traffic closer to the house -- both negative factors for residential properties.
Conversely, properties on heavily trafficked roads with wide rights of way may have higher value for commercial use. A zoning change to commercial combined with excellent road access and visibility can transform a residential lot into a premium commercial site. Understanding how right of way dimensions relate to highest and best use is part of thorough deal analysis.
When evaluating properties, always review the survey to see exactly where the right of way boundary falls relative to existing structures. Fences, driveways, porches, or other improvements that encroach into the right of way create potential problems for future owners and may need to be disclosed. The title search will typically note any right of way encumbrances.
Eminent domain and right of way acquisition
When governments need additional land for road expansion, utility infrastructure, or other public purposes, they can acquire private property through eminent domain. The government must provide "just compensation" for the taken land, but the property owner cannot refuse the taking. Properties in the path of planned transportation projects may face partial or full acquisition of their frontage for new or expanded rights of way.
For investors, pending eminent domain actions or planned road projects are important factors in deal evaluation. The compensation offered may be below market value for the taken land, and the construction period can negatively affect the remaining property's value and usability. Check with the local transportation planning department and review any capital improvement plans that might affect properties you're considering.