Access to Landlocked Land: A Case for a Hybrid of Property and Liability Rules

Abstract

Access to landlocked land is a universal legal entanglement, but surprisingly no law and economic scholars have systematically analyzed this issue. The doctrines in the U.S., called “easements of necessity” and “statutory easements,” are similar to those in civil-law jurisdictions, and they have intuitive appeals: as for statutory easements, owners of servient land should be compensated; easements should be necessary; and the location of the passage should cause the least damage to the servient land. As for easements of necessity, the landlocked owners can only gain access over land held by the grantor at the time of the conveyance, and the easements are gratuitous. Using economic analysis, this article argues that these doctrines can be understood as an application of what I call “hybrid rule,” an unheralded mixture of the property rule and liability rule. This hybrid rule is more efficient than the two prototypical entitlement protection rules because it facilitates voluntary transactions between landlocked owners and owners of servient land and reduces cost externalization. More specifically, the hybrid rule stipulates that the extent of statutory easements should be set at where the marginal social benefit of prescribed passage is about to sharply decline, and passage locations should be determined following the least damage rule. As for easements of necessity, the limited access rule and the gratuity requirement make economic sense from an ex ante viewpoint.

Keywords: easement of necessity, statutory easement, legal servitude of passage, landlocked, bargaining power, transaction cost, economic value, fair market value

JEL Classification: K11