Encroachment: "To advance beyond established limits, to trespass upon the property of another"…or in plain English improvements built onto someone else's property, instead of where it belongs.
Easement: "A right created by grant, reservation, agreement, prescription or necessary implication, which one has in the land of another. It is either for the benefit of land (appurtenant), such as the right to cross A to get to B, or "in gross" such as a public utility easement…In other words… "A right held by one property owner to make use of the land of another, for a limited purpose."
How do we find out about encroachments?
If one of the policies to be issued is EXTENDED coverage, the Title Company may pay an outside service to inspect the property, in order to look specifically for potential encroachment issues, as well as other matters.
There may be an existing recorded survey affecting the property - statutes require that if a survey discloses an encroachment, the survey must be recorded. If so, it will appear as an exception on the title commitment and policies.
If the seller or the seller's neighbors mention a potential problem, make a phone call to the Title Company and alert them, so they can request the inspection shown above.
If the policy to issue does NOT cover encroachments, and the Title Company is requested to answer a question or obtain information by inspection, the Title Company may pass along the expense of the inspection.
How do we correct the problem if there are encroachments?
Remove the encroachment:
Depending on the nature of the encroachment, if the purchaser is unwilling to purchase subject to the problem, it may be possible to remove the encroaching improvement. Be sure this is done with the consent of ALL parties (including the owners of adjoining property, as necessary).
Letter of Awareness: If the purchaser is willing to accept title to the property without correction of the problem, and the encroachment is fairly minor, the Title Company may be willing to accept a "Letter of Awareness" from the purchaser, in which they hold the Title Company and lender harmless from any loss arising from the encroachment (for example, the forced removal of the encroachment by a neighbor).
Easement: Create an easement by reaching an agreement with the neighbor, and have said easement agreement put in writing, and recorded, which corrects the encroachment for all time, and gives notice to the future owners of the involved properties as to the terms of the agreement.
Lot Line Adjustment: If the encroachment is substantial, such as a building onto adjoining property, it may be necessary to purchase a portion of the property and permanently adjust the lot lines. This involves an application process through the municipality, a survey of the properties involved, and approval of the assessor's office. In addition, that portion of property must be conveyed by deed, and partial releases for any monetary liens must be obtained.
Quiet Title Action: If you can't reach an agreement the last option would be to discuss the situation with a real estate attorney, in order to determine the potential of winning a "Quiet Title Action" in which the superior court enters a ruling allowing the encroachment, or at times, awarding ownership of the underlying property to the plaintiff. If the attorney agrees, then the court action would need to be filed and processed (minimum of 90-day process, longer if dispute goes to trial).
Aren't encroachments automatically covered by title insurance, anyway?
Maybe. it depends upon the TYPE of policy being issued, and whether or not the Title Company has previously disclosed the problem.
If the Title Company discloses an encroachment on the title commitment or supplemental title report, and no easement is granted to correct the problem, the encroachment remains as an exception to the title.
If the Title Company neglects to disclose an encroachment, and the type of policy issued includes coverage for that type of encroachment, then the owner is insured against suffering a financial loss due to the encroachment.
Owner's Standard: No coverage regarding encroachments
Owners Extended: Gives coverage against either type of encroachments: improvements belonging to our property encroaching onto the adjoining property and against improvements belonging to adjoining fences, detached garages, driveways, docks, etc. (An ALTA survey may be required and extra surcharge required).
