Why Reciprocal Easement Agreements Matter for Redevelopment
Thinking about redeveloping a commercial property? One overlooked document could change everything.
In this episode of "Property Pointers: Real Estate Law Simplified," Real Estate attorney Douglas Praw breaks down why it is essential to read the reciprocal easement agreement (REA) before moving forward with any redevelopment plan. He explains how this long‑standing, multi‑parcel governing document continues to shape major decisions across commercial projects and why it plays a pivotal role in determining what is possible on a site. This episode explores how an REA can influence redevelopment strategy, guide interactions with other property owners and tenants, and affect project timelines. Mr. Praw also emphasizes the importance of reviewing its terms early to avoid unexpected hurdles and keep plans on track.
Douglas Praw: Hi, I'm Doug Praw, a partner in Holland & Knight's West Coast Real Estate group. I want to talk to you today about reciprocal easement agreements. If you're a developer, an investor or an attorney involved in the redevelopment of commercial property, particularly a retail center, there's one document you absolutely must read before you finalize your plans and close escrow. That is the reciprocal easement agreement, commonly known as an REA. An REA is a foundational document in multi-parcel commercial development projects. It governs the rights and obligations of the various tenants and other owners within the project, and it covers everything from shared parking and access to signage, building setbacks, use restrictions and maintenance obligations. When a property was originally developed, the parties probably negotiated these covenants to protect their respective interests. Those covenants typically run with the land, binding all successors and assignors for decades.
So why does this matter for redevelopment? Because an REA can significantly constrain what you're able to do with the property. For example, the agreement may contain exclusive use provisions that prevent you from bringing in a competing tenant. It may impose minimum parking requirements, which would restrict the amount of buildable area you have because you have to keep parking available for existing tenants. It also may give an anchor tenant an approval right over what your redevelopment plan is. And it may also constrict building elevations or other permitted uses on your parcel. Ignoring these restrictions does not make them go away. It could invite litigation. Too often, developers acquire property with bold redeveloping visions, only to discover months into their process that the REA imposes restrictions they did not anticipate. As we talked about, perhaps the anchored tenant holds a consent right over material alterations to the project. Perhaps there's a prohibited use list that eliminates the very tenant category you want to bring in. Or there are common-area maintenance charges that create an economic burden on the property. These are not all hypothetical problems. They're issues that arise in real transactions that can delay or even kill your redevelopment project. The solution is straightforward: Read the REA. And if you have to, go talk to the other property owners, the other tenants and the anchor tenants about possible amendments to make your redevelopment happen.
In short, the REA is not just a legacy document in the title file. It is a living set of covenants that will shape what you can and cannot do with the property. Treat it with the same level of seriousness and diligence that you would land use, entitlements and financing.