Buying a house is a highly involved process, with many factors affecting a buyer’s ability to close on a purchase. Typically, prospective homebuyers focus on house features like square footage, room size, and yard space when searching for properties. However, factors on or adjacent to the property could directly affect your purchase agreement and cause stumbling blocks to ownership.
Most buyers order a home inspection so they can assess the condition of the main structure and living areas. However, surveying the land itself and the property lines gives a much clearer look at what you intend to purchase. Your dream home may include property encroachments that might affect your desire or ability to continue the home buying process.
Sometimes structures can extend beyond the confines of their property lines into the neighboring area. These encroachments have no physical connection, but their presence may affect certain conditions connected to the sale contract. You should research some important things regarding the legal implications that encroachments may pose on a buyer making an offer.
Table of Contents
- What Is Encroachment?
- How Do You Identify Encroachment?
- How Does Encroachment Affect the Purchase Process?
- What Steps Are Involved in Buying Under Encroachment?
- Who Handles the Encroachment Process?
- Possible Remedies to Encroachment
- Removing An Encroachment
- Related Questions
What Is Encroachment?
Encroachment is any intrusion from one property’s legal boundaries across a neighboring property’s legal boundaries. Encroachment is legally distinguished from trespass by focusing on property ownership rather than property use. Examples include a tree, shed, or home addition extending past the neighboring property line.
Because property lines are not as rigidly segmented in real space as they are on survey maps, encroachment can happen easily and unintentionally. This can lead to legal and financial burdens not anticipated by the homeowner or the potential buyer. A sizable encroachment could possibly render a property unmarketable and ultimately unsaleable.
Encroachments can be a personal nuisance, but more importantly, they can cause confusion about the true boundaries between land plots. They can infringe on any planned long-term renovations, allow unwanted intrusions, or prove to be an eyesore. Additionally, they can strain and compound amicable relations between the neighbors.
How Do You Identify Encroachment?
The first step in identifying encroachment on a given property is accessing any relative public records. Your local assessor’s office should have copies of property deeds or land surveys determining acreage, plot size, and boundary lines. These documents give a starting point, especially if the documentation is up to date.
Even armed with existing documentation, it’s a good idea to order a land survey for confirmation. A survey will determine where the boundaries lie between and around the land in question. They will also point out any easements, which are limited use encroachments of convenience between you and your neighbor.
Encroachments and easements are often mutually agreed upon between the neighboring property owners. Such “verbal only” agreements may cause legal conflicts for a potential buyer regarding fair market price and insurance costs. Having legally defined boundaries helps resolve any questions about ownership and property rights and clarifies the saleable land.
How Does Encroachment Affect the Purchase Process?
One big concern with an encroachment is how it will affect your insurance liability and costs. The neighbor’s looming orange tree might be a desirable feature you don’t mind having in your backyard. However, damage from a fallen limb could find you liable for their tree’s damages and burden your homeowners insurance policy.
An encroachment can also negatively affect the resale value of your property. A future buyer may not be as amenable as you about having a neighbor’s shed extend onto their property. Conversely, allowing the encroachment could greatly increase insurance costs, both for the title and the encroaching structure itself.
The financial burdens associated with encroachments can potentially dampen the property’s appeal to buyers. The additional costs of insurance on top of the seller’s price may discourage buyers from considering the sale. These associated headaches could prompt buyers to lower their purchase offer or rescind it altogether.
What Steps Are Involved in Buying Under Encroachment?
Depending on the state and its property laws, most of the burden regarding property encroachments rests with the property seller. The seller must disclose any encroachments to potential buyers and secure a stake survey to confirm them. Providing accurate legal boundaries is crucial, as it affects a buyer’s title insurance costs and mortgage eligibility with their lender.
The buyer can then allow the encroachments or ask the seller to correct them before agreeing to a contract. Allowing the encroachments accepts any associated costs, such as liability insurance on the encroachment or additional property taxes. It also means less property adjustment or renovation and an understanding with the neighbor regarding the encroaching property.
If the buyer doesn’t wish to take on the encroachment and its implications, the seller must correct it. They have to do the legwork contacting the neighboring owners to relocate or demolish the encroaching feature. Failure to satisfactorily rectify things can release the buyer from any obligation to continue negotiations with the seller.
Who Handles the Encroachment Process?
Resolving an encroachment issue will greatly depend on the severity of the encroachment. A simple conversation can solve something as minor as an overgrown garden or an overextended fence. However, a major encroachment could prove more complex and involve legal action through property reassessment and civil suits.
The primary figure in resolving an encroachment is the property surveyor. Since the land survey is key in determining where the boundaries lie, you will need an assessment by a professional. A stake survey on the property clearly delineates property boundaries and the extent of encroachment.
If you proceed with the buying process, several other experts need to weigh in. Your title insurance agent and mortgage lender influence your financing and liability coverage. You’ll also need a lawyer to draft property agreements or handle conflicts or negotiations surrounding encroachment removal or easement contracts.
Possible Remedies to Encroachment
The simplest solution regarding a property encroachment is to talk to your neighbor and agree on a solution. Simple encroachments like a tree, fence, or garden are easily corrected by moving or removing the protruding section. Fixed structures and add-ons can be more difficult to correct, but you can resolve the issues with calm, civil discussion.
If clearing the property line isn’t possible or amenable, the neighboring parties can enter a financial agreement for the encroached land. The encroaching party can rent or purchase that specific section of land from the property owner. This will allow both parties to participate in the financial responsibilities created by the encroachment.
In the event the neighboring parties cannot agree, a neutral third party can assist them in mediating the situation. The third-party negotiator can help establish terms to benefit both sides without involving legal channels. A costly and time-consuming estate trial is the last resort in the resolution process and could breed animosity between neighbors.
Removing An Encroachment
If the buyer insists, the seller must clear all encroachments before proceeding with the property sale negotiations. This can prove to be a lengthy and tedious process, but the seller can take steps to correct the situation. It is especially beneficial to the seller to offer the buyer a land contract agreement to facilitate the sale.
Once the seller obtains the staked boundary survey, the seller has the legal right to remove the infringing encroachment. As a courtesy, the seller should contact the neighborhood before any removal or demolition begins. In fact, some state laws may legally require it.
The seller also has the right to request that the neighbor raze or relocate the encroachment. With any luck, this process will go without any opposition, and the sale can proceed.
There is the likelihood that only a judge can resolve the encroachment dispute. If a seller has to take the case to court, waiting for a verdict could delay or stop the sale. Should the deal fall through, the seller still needs to resolve the encroachment and disclose all details to future prospects.
How close to a property line can I build?
Proximity requirements vary from state to state and depend on the building and fire code limitations. They also factor in the structure’s intended height and can include its intended use and zoning restrictions. A general guideline for side and rear yard builds is three feet from the property line, but always check first.
Do I need a permit for an encroachment?
An encroachment permit typically is for the use of the right-of-way between your property boundaries–in other words, the roadway. Road usage doesn’t generally apply to property sales, so a permit should not be necessary. However, it’s best to consult your state’s laws and property codes to confirm if you’ll need it for structure removal.
What does title insurance cover?
Basic title insurance protects the buyer from any title claims and secures the policyholder’s investment in the property. Additional endorsements can protect against any liens from prior renovation and boundary claims supported by a land survey. However, title insurance does not cover any future crooked schemes to unknowingly mortgage your property.