Property line fences that are not on the property line, and usage of roads and trails by property owners that are not entirely on the property owner’s property, lead to many real property disputes in California. Often these disputes are settled pursuant to an agreement whereby the encroaching party is granted a license to continue their use of the encroachment, road or trail.

Unlike covenants that run with the land, such as easements, a license is a personal right and confers no interest in land: It merely makes lawful an act that otherwise would constitute a trespass. A license may become irrevocable by the grantor if the licensee makes substantial expenditures of money or labor in the execution of the license. If the licensee makes such expenditures the license will be considered irrevocable for a period sufficient to enable the licensee to capitalize on his or her investment.

However, as illustrated in the recent Appellate Court opinion in Gamerberg v. 3000 E. 11th St., LLC, decided by the California Second Appellate District, an irrevocable license may be revoked by operation of law. In Gamerberg, a bona fide purchaser for value of the licensor’s property was never made aware of the irrevocable license that had been granted to his neighbor by his predecessor in interest to use two parking spaces on the property and the license agreement had not been recorded. The licensee also sold its property. However, the licensee did advise the purchaser of the existence of the license agreement. The licensor’s successor in interest refused to permit the licensee’s successor in interest to utilize the parking spaces as set forth in the license agreement. The Appellate Court held a subsequent purchaser with notice cannot revoke the license, but, a bona fide purchaser without notice receives the land free of the irrevocable license. To the extent an irrevocable license functions as an easement, it must be recorded to bind subsequent purchasers without actual notice.

Based on these holdings, the granting of an irrevocable license that is not recorded can be a significant tool to resolve real property disputes during the parties’ ownership of the properties and lifetimes. It may also permit a subsequent purchaser without knowledge of the license to take the property free of the license.

If you are involved in a property line or usage dispute, check with your legal counsel to see if an unrecorded irrevocable license is the right solution for resolution of your dispute.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.