I sold a house on land contract in March 2010.The buyers are suing me because I had given consent for a contractor to lay a new sewage line, a new community project approved in 2008. They were verbally told of the easement,as the flags were laid out on the property before they too over the property, but had not yet been recorded at the courthouse because the project did not get in motion until April 2010 and was not recorded until March 2011. They stopped making payments in July 2011 and are still living in my house and haventt had to pay a water or sewer bill for a year, pending on our day in court. Is this even legal?

...The buyers are suing me ...
they stopped making payments in July 2011 and are still living in my house and haventt had to pay a water or sewer bill for a year, pending on our day in court. is this even legal?

Is what legal? Anyone can sue anybody for anything. Doesn't mean they will win the suit.

They are suing you because you had given an easement before you contracted to sel the land to them? Depends, I suppose, on the terms of the contract. And the measure of damages would, in any case, only be how much the value of the property has been reduced by virtue of the easement. Can't be very much, if anything. How much did the community pay you for the easement?

But why aren't you suing to evict them, if they haven't been paying you?

If they filed a lawsuit, it might have included a stay preventing you from evicting them. If it did not then you should be enforcing whatever default clause is included in the contract.

If the court did issue a stay, did the court mention that they did not have to pay? Its legal if the court said it was.