Anyone who has dealt with single family homes knows that most lots upon which such homes are constructed are subject to setback requirements and/or easements. A setback requirement is just what its name implies, a requirement that an improvement be set back from a road or lot line by a certain distance. An easement, in its most basic terms, is the right of another to use a specific portion of the property for a specified use. The most common examples of easements are utility easements, drainage easements, and access easements. If a portion of the lot is subject to an easement, generally speaking, the lot owner cannot construct something on or within it that might interfere with the right of that third party to use the easement.
Most reputable closing agents strongly suggest that a buyer obtain a survey of the property before they buy it. One of the most important reasons why they do so is to verify that there are no encroachments. An encroachment involves any situation in which an improvement either (a) violates a setback requirement and/or (b) extends into or upon an easement. The most common encroachments involve fences, air conditioning pads, walks, and driveways. In almost every instance, such encroachments are considered minor and rarely do they pose a significant challenge. In fact, it is almost impossible to avoid these types of encroachments in many cases.
The more significant encroachments involve the location of pools, pool decks, pool cages, or even the house itself into a setback, or worse yet, an easement. These are the types of encroachments that require much greater analysis and attention, and should never be dismissed out of hand. If an improvement encroaches into a setback, generally speaking, this can be resolved through what is called a variance (generally obtained from the homeowner’s association). However, if an improvement encroaches into an easement, that can be much more significant, as the result could involve securing (or attempting to secure) releases from multiple utility companies, a painful process to say the least.
If a survey reveals the existence of an encroachment (no matter how small), do not render an opinion as to its significance until you speak with an attorney. And if your closing agent says “don’t worry about it, the encroachment is small,” or more commonly, “don’t worry about it, we will insure over it,” your buyer still needs to consider the following:
- How likely is it that the easement might be used (if the encroachment involves an easement)?
- How likely is it that the improvement might need to be removed or relocated as a result of the encroachment?
- Can the encroachment be remedied? For example, driveways must encroach into an easement in many cases, so this type of encroachment cannot be resolved.
- How likely is it that a variance can be secured (if the encroachment involves a setback), and from whom?
- How important/significant are the improvements that encroach into a setback or easement? Will the property suffer significant loss of value if they were ever required to be removed?
- If the encroachment cannot be resolved, what will be the impact on the marketability of title when you go to sell the property down the road (just because one buyer is willing to close with an encroachment does not mean another buyer will do so)? We have had some buyers who have refused to close with less than a one inch encroachment. (Remember, if you are told that title insurance will protect you, all that means is that the title policy will protect you against forced removal of the encroachment. It does not resolve the encroachment and it certainly doesn’t make the property more or less marketable down the road.)
- What is the impact on the buyer’s ability to secure a permit to modify, alter, or repair improvements that encroach into an easement or setback. For example, some counties will not easily issue permits to repair improvements that lie in a utility easement, no matter how slight the encroachment.
The moral of the story, do not render an opinion about an encroachment, no matter how seemingly small or insignificant. Allow the buyer to reach their own conclusions, since there may be no definitive answer to these questions. And as always, if a survey reveals an encroachment, we strongly recommend that you encourage your buyers to speak with their real estate attorney, who can either provide counsel or try to resolve the encroachment. Do not assume it is minor or that title insurance will resolve the issue. In fact, title insurance (i.e., “don’t worry about it, your title policy will protect you”), in most cases only kicks the can down the road, so to speak.
Berlin Patten Ebling, PLLC
Article Authored by Evan Berlin firstname.lastname@example.org
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