Choosing a Lawyer for Easements and Rights of Way

What kind of lawyer do you need if you have a dispute with a neighbor about easements, shared driveways or rights of way? Short answer: a good easement lawyer will have expertise in real property and who does civil litigation. In Maryland, all disputes about rights of way, boundaries, adverse possession and prescriptive easements are decided in the Circuit Court for the County in which the real estate is located. There are many real estate lawyers that primarily do closings and settlements. If you have dispute, however, you will need a lawyer that has a regular practice in the Circuit Court, so they are familiar with the rules of procedure; know the relevant experts and surveyors; and are familiar with the area in which the real property is located.

Maryland Easements and Rights of Way

What are the Maryland laws that apply to roads, trails, paths and rights of way? This is the law of easements: a right held by one person to use land owned by another. There can be “private” roads, shared driveways, paper roads and community alleys – the use of these can be based on long use, or plats and deeds – each circumstance is unique. How do we know if we can use a right of way if we don’t actually own it? What if a neighbor tries to block a path we believe we can use?

Public roads are a clear example – we all know we can use them, but who actually owns them? Where does the right to use them come from? It seems clear enough when we merge onto Route 50 through Annapolis; but what about a road that eventually reduces itself down to a path to the water’s edge?

I recently had a case that went all the way to Maryland’s Supreme Court which looked at a stretch of property that showed as a road on a State Highway Administration plat, but which had not been used for vehicle traffic in living memory. Neighbors took steps to block my clients’ access; the County passed a law to close it as a road, leaving my clients’ substantial waterfront parcel effectively landlocked from the road system. We sued and eventually succeeded in proving that there was a road as shown on the plat, even though there was no pavement or tire tracks or other hallmarks of a road in the real world.

The neighbors that owned property surrounding the strip argued that if the road ever existed, it was washed away by erosion, or lost to adverse possession, or was abandoned. My clients were steadfast that it remained a road, because it was created as a road by the filing of a plat by the State Highway Administration, and accepted as such by the County.

The Supreme Court determined that the deed to the State Highway Administration delivered ownership of the land (the “fee title”) – ““all the land, together with the appurtenances thereto belonging, or in any wise appertaining, lying between the lines designated ‘right of way line’ as shown and/or indicated on the aforesaid plat.” A public road was created when the then owner offered the property for use as a road, and the State Highway Administration accepted it for use as a road – thus finding offer and acceptance and thereby dedication as a road. Once it was a public road, people (including my clients) could use it for ingress and egress until such a time as it was officially closed by the County.

With the decision, the case now goes back to the County Circuit Court for trial on inverse condemnation. Inverse condemnation arises when a government takes action which is the equivalent of taking property by eminent domain. We will show that, by closing the road, the County has reduced the value of the parcel and caused damages to its owners.

Dirk Schwenk is a Maryland Real Estate, Property, Civil Litigation and Maritime Lawyer from Annapolis, Maryland.  He provides civil litigation services in real estate issues, contract disputes, environmental and zoning issues, adverse possession and boundary disputes.  He graduated cum laude from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.

1031 Exchanges and Boats

The 1031 Exchange – Rules of Thumb for Boats

Editor’s Note: The tax code has been changed and 1031 exchanges for boats are no longer allowed.  

IRS 1031 Exchange can be used to shield the proceeds of sale of a boat from income tax, when the plan is to use those proceeds to buy subsequent property.  This is a quick primer, not legal advice.  This is not an area that I recommend for DIYers.  

  1. What is it a 1031 Exchange?

The 1031 Exchange is a vehicle by which investment or business property (including that owned by an entity or individually) can exchange one kind of investment property for another while deferring some or all of the taxable gains on that property.     The simplest form of an exchange is a simple swap – my boat for your boat — which assuming no cash changes hands does not trigger tax. Things get increasingly complicated if there is a swap for property and cash, or especially if the property is sold for cash and that money is intended for later reinvestment.  This latter transaction is what is known as a “deferred exchange,” and is the kind of transaction that gets most people in trouble most of the time. All exchanges of investment property must be reported to the IRS on Form 8824, which is available on the IRS website:

  1. What Kind of Property Qualifies?

The property concerned cannot be primarily for personal use, so in boats, it is most likely to be either commercial stock or boats in charter.  Additionally, the property must be considered “like-kind” and so the property on both sides of the exchange must be of a similar nature. Real property cannot be exchanged for personal property, including boats.  A car cannot be exchanged for a truck. In all probability, a yacht could not be exchanged for a commercial fishing boat or cargo vessel, although this might be dependent on the specific circumstances.

  1. What are the advantages?

For a boat owner with a boat in charter, the boat has been depreciated for tax purposes the boat has been depreciated over the time of ownership.  For this reason, a ten year old boat, from the depreciation perspective, may be considered by the IRS to have a value of zero dollars. If it is sold for a million dollars in 2018, normally the million dollars would be taxable income to the seller, taxed at the applicable capital gains rate, in the year of the sale.  If that money is going to be put back into another boat, then that tax can be deferred to some point in the indefinite future. Avoiding the capital gains on the funds will save the investor 15%-20% in tax, depending on their tax bracket. An investor can downsize in this manner by trading for a less expensive property and paying only the capital gains on any cash received above the trade.  

  1. Deferred Like-Kind Exchanges

As noted, simultaneous exchanges are pretty easy to manage and pretty easy to report.  A deferred exchange introduces a number of difficulties and restrictions, because the cash will be in the hands of the investor for a period of time.  The first issue is that a replacement property (or properties) must be identified within 45 days of the sale of the original property. Notice of this identification must go either to the seller of the property or to a “qualified intermediary.”  Qualified intermediaries have to be qualified to the IRS in advance and they can’t be an agent of the party such as an attorney, broker real estate agent, etc. Assuming that this notice is properly given, the transaction must then close within 180 days of the time that the original property was sold.  If either of these deadlines are not met, then the deferment is lost and the funds are taxable in the year obtained.

In sum — boats that have been depreciated for tax purposes – typically commercial or charter boats – can be the subject of a 1031 Exchange, so long as the exchange is carefully crafted, documented and reported to the IRS.  A private yacht (including one on which a second home deduction is being applied) is generally not property that can be exchanged. For a boat that has been significantly depreciated but retains a high present value, an exchange can represent a significant savings for the owner.  If it is anticipated that the current boat will sell, and then a substitute boat will be identified later, the new boat must be identified within 45 days and the proper notice must be provided either to the seller or to a qualified intermediary. The transaction must be completed in 180 days.  

Contribution and Profit: Farms and Rural Land

Contribution and Profit: Farms and Rural Land

For farm properties owned by more than one person, a common dispute is who is responsible for expenses and who is entitled to profits.  With family farms, it is common that one member of the family is primarily responsible for working the farm, while others may own but have moved away for other employment.  If profit is made on the harvest, who is entitled to a share? If expenses are incurred for equipment, who must pay the expense? If there is not agreement about the answer, litigation may be needed to sort out issues of contribution and profit.  

Disputes most often arise where there are joint tenants or tenants in common.  This often arises where a farm is passed down through more than one generation without a will.  The basic law is that if there is not a will, the property is passed intestate under statute. In such a case, the property goes to the spouse (50%) and any surviving children (50% total).   If there are no children, then the spouse and parents of the person that died, or to siblings if there are no children. If there are no living relatives, the property goes to the state.

So what happens if the uncle takes over the farm but the grandchildren receive a 1/16th interest?  This can cause resentment if the grandchildren think the uncle is “getting rich” on “their” farm. Or if the uncle is “losing money” paying to maintain the farm and the grandchildren think they should be receiving income.  

This is where two issues dealing with joint tenants or tenants in common come in to play.  The Uncle is entitled to contribution from the other owners for expenses for the betterment of the property such as buildings, fences, repairs, etc.  The other owners are entitled to a portion of profit if the farm makes money.  

If a dispute breaks out, it is common for the tenant in possession to seek partition and also contribution for the expenses he/she has put out to make the property economically viable.  The other owners may counterclaim for profit and seek a portion of the income from the farm.  This dispute can be resolved in the context of a suit for partition (

Bottom line: if a working farm property is owned by more than one party, eventually there will be a dispute about investments to the property or profits from the property.  Be prepared.

Dirk Schwenk is a Maryland Real Estate, Property, Civil Litigation and Maritime Lawyer from Annapolis, Maryland.  He provides civil litigation services in real estate issues, contract disputes, environmental and zoning issues, adverse possession and boundary disputes.  He graduated cum laude from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.

Partition Actions: Farms and Rural Land

Partition Actions: Farms and Rural Land

“My grandparents had a farm.  They died without a will and had four children.  I was the youngest, and two of my siblings died with children and without a will.  What do I do?” This is how a new client talk starts when the subject is partition actions about a farm in Maryland.  With rural properties, family farms are passed down generations without legal planning, leaving the next generation to unwind ownership without the benefit of proper probate.  It is easy to have dozens of heirs after two generations, with some working the property day to day, and some so not even be known if they are still alive.  Usually, this means a partition action is necessary.

When ownership is split, two bad things happen.  First, no one feels responsible to pay the taxes on the property, and it is lost to tax sale and foreclosure.  Second, one person in the family sells their interest to a determined (and perhaps unscrupulous) investor, and that person uses their purchase to steamroll everyone else.  White and Brown Animals Near Fence

For me (Dirk Schwenk), it is always a thrill to represent a member of a farm family in reuniting the farm property, or at least locking down a part of the farm for themselves and future generations.   How is this done? A combination of negotiation and use of the partition process to compel owners to make difficult decisions. I previously wrote about partition of property in this article:  

Maryland law provides that one owner of a property can compel other owners to either split the property up, or to sell the property instead of dividing it.  Most rural and farm properties can be divided in a way that is fair to the parties. Under the law, “A circuit court may decree a partition of any property….  If it appears that the property cannot be divided without loss or injury to the parties interested, the court may decree its sale and divide the money” § 14-107.  


In partition, a Court divides the property (or the receipts of the sale) according to the interests of the parties.  For large families with several generations, one owner to have a 50% interest, while everyone else has a small fraction.  This creates possibilities for resolution. A suit for partition will bring everyone to the table, and smaller interests may find it beneficial to be bought out instead of fighting for a small part of the whole.  Alternatively, if there is a space for small lots to be carved out, those lots may be exchanged for resolution of ownership on the main farm property. Either result is better than questionable ownership with the possibility of a claim for profits or contribution.

Bottom line: someone has to take control of a farm property under split ownership.  If it isn’t a member of the family, it may be the State (after tax sale) or an outsider that purchased a minority interest.  The party that gets organized, knows their rights, and takes action will be the most likely to succeed.

Dirk Schwenk is a Maryland Real Estate and Property Lawyer from Annapolis, Maryland.  He provides civil litigation in real estate issues, contract disputes, environmental and zoning issues, adverse possession and boundary disputes.  He graduated cum laude from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.





PropTalk: November 2017

After the Hurricane: Navigating the Adjustment Process

After the Hurricane: Navigating the Adjustment Process
By: J. Dirk Schwenk


 Not surprisingly, we are receiving a lot of calls about boats lost in Hurricane Irma and the other disasters of 2017.  The number of boats lost to sinking, flooding and high winds in the Carribean and South Florida is extreme.  For boat owners (and property owners) that are trying to deal with the adjustment of their claims with the insurance companies, here are some of the things you should be considering.


1. Facts, Photographs and Documents are the key.  Far and away the most important thing that adjusters need to get you paid is evidence of what you lost.  If the boat is on land and still contains your personal effects, that proof is likely to come down to just questions that can be answered by survey or inspection of the boat itself.  If the boat is sunk or lost, you will need to provide evidence of what was aboard — photographs, receipts, etc. – whatever you can put your hands on in addition to proof of the value of the boat.  If you can reach your boat, it is almost always worthwhile to inspect it yourself so you can be sure that the surveyor on scene (who has to look at hundreds and hundreds of claims) has reasonably captured the damage.


2. Start a File and a Timeline.  Unless things go perfectly, you will need to keep track of who you talk to, who you sent things to, etc.  Start a file.  You should also track the timeline of events.  You will need to follow up, so use the timeline to set times to do that before too much time passes.  If there were conversations or events before the storm that may effect coverage, make a timeline of those events, including notes on any discussions that may matter in the future.


 3. Insurance Policies and Coverage Exclusions.  All marine insurance carries with it an obligation for an insured (you) to use utmost good faith in submitting an application for insurance.  All policies will also have a number of specific exclusions which may range from certain kinds of maintenance to the requirement that the boat be hauled during hurricane season or be brought North during hurricane season.  If you have a claim, it is highly recommended that you read your insurance policy focusing on the exclusions to coverage, and see if there is a likely exclusion that may be applied to your claim.  If so, you may need to consult with counsel or other professionals concerning how best to assure that coverage is available.


4. Identify Team Members.  For a major claim, particularly a disputed claim, there are number of people that may be needed to achieve success.  A competent, respected surveyor that does not also work for your insurance company is very valuable.  It is wise to identify an attorney to discuss the policy and to be sure that any reports on the loss are both accurate and unlikely to trigger a policy exclusion.  Your attorney will need to see both our policy and any report of claim you have made, at minimum.  Finally, a person who can be boots on the ground at the boat and at the yard to track repairs and make sure that the boat is secure while it awaits repairs is very valuable.


  J. Dirk Schwenk is a Maryland lawyer in Real Estate law, Waterfront Property, Civil Litigation and Maritime Law from Annapolis, Maryland.  He graduated cum laude (with honors) from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.

Anne Arundel County Maritime Industry Advisory Board Member


Marina Purchase and Sale

pexels-photo-2There are many marinas in Maryland, ranging from large commercial ones the size of small towns to “informal” (or illegal) ones with a few slips and a ramp.  The purchase or sale of a marina property has all of the financial elements of a regular commercial property, but with highly specialized business, riparian rights, zoning, and environmental concerns.  There are many risks to purchasers, and they pose very interesting questions for the real estate lawyer that knows about waterfront and marine businesses.

I was recently hired by a cash buyer to review a potential marina purchase in Baltimore County.  Intellectually, this was an exciting opportunity, since it meant that it was up to me to do the due diligence that is often handled by the lending bank, and it gave me the freedom (and responsibility) to know all aspects of the deal.  Here are some of the things that I looked at.

Purchase/Sale Contract: No matter how familiar one might be with a property, the devil isn’t in the details – ITS THE DETAILS IN THE PAPERS.  If a judge has to later review and enforce a contract for purchase or sale of a marina, that judge is going to read the words on the page.  They may never even see the piers, slips, office or workshop.  The only thing that matters is whether you received what the paper says that you are due.  There are lots of attorneys that can read a purchase contract for a commercial property – there are a lot less than can determine whether the contract adequately describes the property and business that comprises a working marina.

Zoning and Development Restrictions: This property was in a very specialized and highly restrictive zoning category, and some face to face discussions with the zoning office revealed that prior sales had fallen through because the property had been considered as having the ability to convert to residential condominiums, when that was not possible under current zoning.  These restrictions limited the upside potential of the property significantly.

Piers and Riparian Rights: The possibility of expansion of the existing marina was an intriguing aspect of the purchase.  Careful review, however, revealed that the marina was already built out to the maximum side-lot restrictions and out to the harbor line, which prevented further expansion.  The slips could potentially be reconfigured, but expansion was not possible.

Lease Agreements and Tenant Relations: The seller provided all of the lease agreements with current tenants for review.  These were professionally done, transferable, and enforceable, but during the course of the review it came to light that one of the tenants was unlikely to continue at the expiration of the lease in a few months.  Even more concerning, the largest tenant (who made up nearly half the revenue) appeared to be teetering on the edge of default, and had recently requested that the rent be renegotiated.

Environmental Review and Survey: With marinas, it is crucially important to be sure that there are no significant environmental concerns — especially buried or leaking hazardous materials.  Also key is the question of whether there are easements across the property or other issues that might materially limit the access to and control of the waterfront.  With this property, those reviews did not reveal any issues.

Revenue and Business Concerns: The seller in this instance was a well established commercial business with a known history and other similar properties.  There were no concerns about its ability to deliver good title or to demonstrate that it had the authority to sell the property.  The business concerns in this case were with the revenues generated by the property and whether they supported the investment.  Secondarily, whether there might be future appreciation (or depreciation) with the property or upside from redevelopment.  In this case, current revenues were good, but deviated from historical norms, and were also highly dependent on the largest tenant, who did not look sustainable.  We ran numbers for return on investment based on historical norms and accounting for the possible loss of tenants — these made the property look riskier than it had initially appeared based on revenues.  The difficulty redeveloping the site, in light of the restrictive zoning in place, also limited upside potential and future appreciation.

J. Dirk Schwenk is a Maryland lawyer in Real Estate law, Waterfront Property, Civil Litigation and Maritime Law from Annapolis, Maryland.  He graduated cum laude (with honors) from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.

Baylaw Boat Closing and Settlement Services

Boat closing and settlement servicesBoat Closing and Settlement Services

You can save thousands of dollars over what a broker will charge with complete confidence that your purchase and sale documents and funds will be handled professionally and honestly.  Baylaw will close the deal for 2.5% of the purchase price ($10,000 minimum).  Funds will be held in our trust account; purchase documents will be reviewed by a lawyer; and no money will be released until all parties are fully satisfied that the deal is ready to close.

Baylaw, LLC will finalize your boat purchase or sale.  We:

1. Collect purchase funds in a trust account in preparation for closing.

2. Obtain and review ownership documents for completeness and accuracy.

3. Verify ownership status and publicly filed liens on the boat, yacht or ship.

4. Obtain lien pay-off information.

5. Prepare a settlement statement showing who is to be paid what funds from closing.

6. Pay off all known liens and mortgages.

7. Deliver closing funds to seller and lienholders.

8. Delivering good title to purchasers
In addition, we can also provide the following.

Documentation and registration services for all boats, yachts and ships.

Set up and transfer LLC and corporations and/or conduct asset sales for vessels held in LLCs or corporations.

Provide tax advice related to sales and use tax in any state in the United States.

Provide advice on related legal issues such as recommendations for where and how to title the boat; corporate ownership; chartering; maintaining anonymity, etc.