Almost every real estate practitioner has had the experience of handling the closing whereby a survey reflected that a fence or other structure located on the subject property or an adjoining property was an encroachment upon the neighbor’s property. While title insurance companies are routinely giving the lender affirmative coverage for such encroachments, it is important to explain to the purchaser his or her obligations relating to such encroachment and in certain circumstances to draft an Encroachment Agreement to deal with the same. In considering whether an Encroachment Agreement is necessary or not, the real estate practitioner should consider the type of structure which is encroaching, the amount of the encroachment onto the neighbor’s property, the parties who are involved in the encroachment situation and the cost associated with remedying the situation should it become necessary.
In situations where a survey reveals that a young couple’s split rail wooden fence encroaches on their parent’s adjoining property by a distance of six inches, it is my office’s general practice to point out the encroachment to the young couple and have the couple sign an acknowledgment of the encroachment, but to otherwise take no further action. In reaching such a decision, i have considered each of the factors set froth in the paragraph above. A more difficult situation occurs when a stone and wrought iron fence encroaches upon a neighboring property a total of three feet and the adjacent property owners have yet to meet. In this situation, it is important to obtain an Encroachment Agreement or request in a sales transaction that the seller remedy the problem prior to the date of closing.
If the decision is made that the best remedy for the encroachment is the preparation and execution of an Encroachment Agreement, like in our previous discussions, the real estate practitioner must first determine the proper parties to the transaction. While at this stage of the transaction, the real estate practitioner can clearly identify the seller of the property, the same cannot be sad for the adjoining property owner. The prudent real estate attorney engages in a limited title examination for the purpose of determining current ownership and does not rely upon information provided by the seller in the current transaction. While the seller may not intentionally mislead the attorney, the seller may not be in a position to actually know who is the adjoining property owner. One might imagine a situation whereby a tenant is in possession of the adjoining property.
After determining the actual parties to sign the Encroachment Agreement, it is now important to properly identify the encroachment itself. Attached to this manuscript is an encroachment agreement which is typically used in my office. Note that not only are the owners identified, but the properties must also be identified by a legal description. In drafting the encroachment agreement, it is important to remember that the property may change hands numerous times and the Encroachment Agreement will run with the land and stay effective throughout subsequent transfers. Therefore, it is important to properly identify the property and the specifics of the encroachment so that future title examiners can clearly identify the problem and advise subsequent clients on the document which you prepared properly dealing with the issue.
If the encroachment has been detected by a survey of the subject properties, it is important to refer to the specifics of the survey including the date of its preparation, the surveying company and for whom the survey was prepared. In further identifying the encroachment, the real estate practitioner should identify the structure which is encroaching (i.e. stone fence, wooden fence, storage facility) and should state in the Encroachment Agreement the extent of the encroachment in either feet or inches.
It is also important in the body of the Encroachment Agreement to state the party on whose land the encroachment is occurring does agree to grant an easement for said encroachment to the other party and their successors in title. In our Encroachment Agreement, we state that the encroachment and subsequent easement is appurtenant to and runs with the land.
Our Encroachment Agreement also makes clear that the grant of this easement is not perpetual in time if the structure which is encroaching is ever destroyed or removed. If the encroaching structure is ever torn up or otherwise removed then the easement granted by our Encroachment Agreement becomes null and void. In such a circumstance, when the structure is reconstructed then the party rebuilding the structure is obligated to comply with the actual property line and cannot build the structure back in its encroaching position.
From a practical point of view, it is my office’s practice to have the Encroachment Agreement signed by the seller of the property and the adjoining property owners prior to the closing. In having the seller sign the document and having the Encroachment Agreement recorded prior to closing, you avoid a situation whereby you have conveyed property to your buyer with an expressed agreement that the adjoining property owner will sign the Encroachment Agreement only to have the adjoining property owner to decide the Encroachment Agreement is not in his or her best interest. In this situation your buyer has lost an important right against the seller to have the seller remedy the encroachment prior to the closing.