Easement Agreement Voided Due to Lack of Authority in Parking Lot Entrance Case

Written by: Alan Nochumson

In Pennsylvania, a principal may empower an agent “to engage in real property transactions” by including such language in the power of attorney. It is imperative that parties dealing with an agent, known to be acting only under an express grant of authority (such as a power of attorney), verify the nature and extent of the authority conferred upon the agent.

In Sehrawat v. Rite Aid, 2020 Pa. Super. Unpub. LEXIS 3537 (Pa. Super. Ct. Nov. 13, 2020), the Pennsylvania Superior Court recently declared void ab initio an easement agreement as a result of the grantor’s failure to properly execute the document, pursuant to a power of attorney.

In Sehrawat, Rattan Real Estate Trust and Rite Aid shared a parking lot between their commercial properties. The parking lot had a single entrance from the street, the opinion said.

The entrance driveway and most of the lot was located on property owned by Rattan, the opinion said.

Rite Aid claimed that it was granted an express easement via a written easement agreement that was executed in 2001 but not recorded until 2017.

The written easement agreement was signed twice by Charles Beckman, as grantor—once as himself and once on behalf of his wife, Jean Beckman, pursuant to a power of attorney, the opinion said.

According to the opinion, Jean Beckman’s signature does not appear on the document.

At the time the written easement agreement was executed, Jean Beckman was the sole record owner of the property.

The notary seal on the written easement agreement states that “the foregoing instrument was acknowledged before the notary this 14th day of August, 2001, by Charles E. Beckman.”

There was no reference to or acknowledgment of a power of attorney in the notary seal, or any indication that Charles Beckman signed on behalf of Jean Beckman, the opinion said.

Rattan claimed that it had no notice, actual or constructive, of the existence of the written easement agreement in favor of Rite Aid for access from the street to its parking lot when it purchased the property.

The trial court in Sehrawat ruled in favor of Rattan and declared the written easement agreement void ab initio because the document was not properly executed.

In addition, the trial court in Sehrawat found that the evidence established constructive notice only of Rite Aid’s use of a portion of the parking lot, and that there was no evidence that Rattan had actual notice of the written easement agreement.

On appeal, the key issue was whether Rattan had sufficient notice, constructive or actual, of an easement in favor of Rite Aid at the time of the closing on its properties, and whether the written easement agreement should be stricken.

The Superior Court in Sehrawat noted that the written easement agreement was recorded after Rattan purchased the property.

Citing to 21 P.S. Section 351, the Superior Court in Sehrawat, acknowledged there is no mandatory requirement to record a conveyance of real property; however, the consequence for the failure to do so is that the conveyance will be rendered void as to any subsequent bona fide purchaser.

Referring to its prior ruling in Long John Silver’s v. Fiore, 255 Pa. Super. 183, 386 A.2d 569, 573 (Pa. Super. 1978), the Superior Court in Sehrawat reiterated that, in order to qualify as a bona fide purchaser, the subsequent buyer must be without notice of the prior equitable interests of others … Either the actual or constructive notice is sufficient to prevent the subsequent purchaser from acquiring the status of a bona fide purchaser.

Rite Aid averred that Rattan was not a bona fide purchaser, because it had actual and constructive knowledge of the written easement agreement at the time of purchase of its property.

The Superior Court in Sehrawat, concluded regardless of whether Rattan had noticed—actual or constructive—of the purported written easement agreement, such notice was irrelevant because the written easement agreement was void ab initio.

The Superior Court in Sehrawat, emphasized that at the time the written easement agreement was executed, Charles Beckman had no ownership interest in the subject property and, consequently, no authority to convey a right-of-way across the parking lot.

When considering whether Charles Beckman had the authority to convey an interest in the real estate on Jean Beckman’s behalf, the Superior Court in Sehrawat, pointed out that the applicable principles of law pertaining to agency and powers of attorney in Wisler v. Manor Care of Lancaster, 2015 PA Super 189, 124 A.3d 317, 323-24 (Pa. Super. 2015).

“Agency is a relationship whereby the principal manifests assent that another person (the agent) will act on the principal’s behalf subject to the principal’s control, and the agent agrees to do so. An agency relationship may be created by any of the following: express authority, implied authority, apparent authority, or authority by estoppel. Agency cannot be inferred from mere relationships or family ties, and we do not assume the agency merely because one person acts on behalf of another. Rather, we look to facts to determine whether the principal expressly or impliedly intended to create an agency relationship … Finally, the party asserting the agency relationship bears the burden of proving it by a preponderance of the evidence.”

The Superior Court in Sehrawat, went on to address the merits of Rite Aid’s argument that. on its face, the written easement agreement shows it was signed by Charles Beckman on behalf of Jean Beckman, pursuant to a power of attorney and the notary certification on the written easement agreement stands as prima facie evidence that a valid, written power of attorney existed at the time the document was executed.

Both of Rite Aid’s arguments were rejected by the Superior Court in Sehrawat, because the notary seal on the written easement agreement certified only that “the foregoing instrument was acknowledged before the notary this 14th day of August, 2001, by Charles E. Beckman.”

The Superior Court also relied on its previous decision in Bell v. Anderson, 17 A.2d 647 (Pa. Super. Ct. 1941), which stated that the notary’s certificate must be read and received in all suits in evidence of the facts therein certified; not of facts not certified but attempted to be inferred from those facts.

Accordingly, the Superior Court in Sehrawat determined they could not assume from the notary certificate that Charles Beckman produced a copy of a durable power of attorney at the time of signing.

Lessons Learned

The Superior Court’s ruling in Sehrawat encourages parties seeking an agreement to determine the source of an agent’s authority before allowing the agent to sign a written easement agreement on the principal’s behalf.

As the Superior Court has highlighted in its ruling, if a third party relies on an agent’s authority, it must ascertain the scope of that authority at the time of reliance. If not, the third party that fails to do so runs the risk of having the written agreement voided.

Clementa Amazan, an associate at Nochumson P.C., is the co-author of this article.

Reprinted with permission from the November 11, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.