A reciprocal easement agreement (REA) is a legal agreement that lets separately owned parcels in a shopping center, office park or mixed-use development operate as one property, sharing parking, driveways, utilities and common areas. It also sets rules for construction, cost-sharing and use. An REA stays with the land, so its terms bind future owners. A clause written when a center was first built can block a redevelopment plan decades later.
In Arizona, REAs are recorded with the county recorder and appear in the title commitment for every parcel they affect. For commercial buyers, lenders and developers, finding and reading the REA early is part of basic due diligence.
What is an REA?
An REA is a specific kind of commercial easement. It gives each owner in a development rights over the other owners’ land, and gives the other owners matching rights over theirs.
For example, imagine a 50-acre shopping center split into five parcels with five different owners. Without an agreement, a shopper parked on one owner’s lot has no legal right to walk to a store on the neighboring parcel. A utility line crossing a property line has no recorded right to be there. The REA solves this by granting shared rights to parking, drives, sidewalks and infrastructure, so the center works as one development.
REAs go by several names. Depending on the drafter, the same kind of document may be called an ECR (Declaration of Easements, Covenants and Restrictions), an OEA (Operation and Easement Agreement) or a COREA (Construction, Operation and Reciprocal Easement Agreement).
What does an REA typically cover?
Terms vary by development, but most REAs address five areas.
- Shared parking, access and utilities. Where customers, employees and delivery vehicles can park, drive and walk, and which parcels can share utility lines.
- Construction and design standards. Building placement, height, signage and how buildings must look. Some REAs require approval from other owners before structural or exterior changes.
- Maintenance and shared costs. Who maintains parking lots, sidewalks, lighting and landscaping, and how those costs and insurance are divided. Many REAs let an owner who covers another owner’s unpaid share record a lien against that owner’s parcel.
- Use restrictions. Limits on what businesses can operate. For example, a clause may bar leasing to a direct competitor of an anchor tenant.
- Transfers, amendments and lender protections. How ownership changes are handled, who must approve amendments, and what rights lenders have if an owner defaults.
How do REAs show up in a title search?
A recorded REA is usually listed as an exception in Schedule B of the title commitment. Being listed there means the title policy does not insure against the REA’s terms. The buyer takes the property subject to them.
For that reason, a commercial title review should cover:
- The full recorded REA and every amendment, assignment and supplement. Older centers may have several amendments, recorded years apart.
- The site plan exhibit and the ALTA survey. Together these show where parking areas, no-build zones and access drives sit on the ground.
- An REA estoppel certificate. This is a signed statement from the other parties confirming the agreement is in effect, no defaults exist and no shared-cost payments are past due. Buyers and lenders commonly request one before closing.
- Available title endorsements. Some endorsements cover violations of recorded restrictions, or encroachments onto easement areas, and lenders often require them.
How can an REA limit redevelopment?
Take a developer who plans to add a pad building to an existing center. The new building would sit on part of the parking field, but the REA requires the center to keep a minimum number of spaces for the other owners. The developer owns that land, and the project cannot go ahead as designed unless the other owners agree.
REA restrictions are private and sit on top of public zoning and land use rules. A project can meet city zoning and still break the REA. This matters most for adaptive reuse projects, where a new use may run into restrictions written for the original tenants. Missing these conflicts can lead to disputes, redesign costs and delays.
What should buyers and developers review before closing?
Before buying a parcel inside a shared development, or before starting redevelopment plans, buyers and developers should confirm:
- Parking requirements and any no-build areas
- Use restrictions and exclusive-use clauses that could limit future tenants
- How costs are shared, and whether any assessments are unpaid
- Who must approve changes, which may include other owners, anchor tenants or lenders
- Whether the REA has a set end date or lasts indefinitely
If a term conflicts with the plan, the buyer may need to negotiate an amendment. Depending on the agreement, that can require consent from several owners and their lenders, which takes time. A commercial real estate attorney can say whether the project is possible under the existing REA and how hard an amendment would be to get.
When is an REA necessary?
Not every commercial property needs one. When a single owner holds an entire center and leases space to tenants, the leases can set out parking, access and maintenance terms.
The need usually arises when ownership splits. A common case is a developer selling an outparcel to a retailer who prefers to buy rather than lease. Once two owners share a site, an REA or a similar recorded agreement sets up the access, construction and maintenance rights that a lease would otherwise have covered. Lenders financing a parcel that depends on shared parking or access often require one. The same applies to mixed-use developments, where retail, office and residential parts may each have different owners.
Frequently asked questions about REAs
Does an REA transfer when a property is sold?
Yes. A recorded REA stays with the land and binds future owners of every parcel it covers.
Can an REA be changed or ended?
Usually only as the agreement itself allows. That often means written consent from specified owners or anchor tenants, and sometimes their lenders, followed by a recorded amendment. Some REAs set an end date. Others last indefinitely.
Is an REA the same as CC&Rs?
They overlap; CC&Rs (covenants, conditions and restrictions) is a broad term often used for residential communities governed by an HOA. An REA is specific to commercial properties where separately owned parcels share use.
Does title insurance cover an REA?
A standard title policy typically lists the REA as an exception, meaning the buyer takes the property subject to its terms. Certain endorsements may add limited coverage, for example, for existing violations of recorded restrictions.
Who enforces an REA?
Usually the parcel owners and, in some centers, a designated operator or managing party.
Landmark Title Assurance Agency’s commercial title and escrow team works with developers, investors, brokers and lenders on all types of commercial transactions. If you are purchasing a property that is subject to an REA, reach out to our team of experts with any questions before closing.