How Does an Encroachment Get Cleared at Closing on a Real Estate Transaction?

Imagine you’ve found your dream home, but during the closing process, a surprise pops up: the neighbor’s fence is a few feet over your property line! This scenario, known as an encroachment, is more common than you might think—and it doesn’t have to derail your real estate deal.

Spotting the Problem Early

Most encroachments are discovered during the survey, when a professional maps out the property’s exact boundaries. Whether it’s a misplaced fence, a garden, or even part of a driveway, these findings can raise red flags for buyers, sellers, lenders, and title companies alike.

Open Communication and Negotiation

The first step is always a conversation. Buyers and sellers, sometimes with the help of their agents or attorneys, talk through the encroachment. Is it a minor issue everyone can live with, or does it need to be fixed before the sale can close?

• Encroachment Agreements: One common solution is for the parties to draft a written agreement. This might take the form of an encroachment agreement or an easement, which legally allows the structure to remain in place. These agreements are typically recorded with the county so that future owners are aware of the situation.
• Removal or Modification: If the encroachment is more serious—or if the neighbor objects—sometimes the offending structure is moved or removed before closing. This works best for things like fences or sheds, but is trickier with permanent buildings.
• Title Insurance: In some cases, the title company may offer special coverage to protect the buyer from future disputes about the encroachment. This can be a good safety net if the parties agree to let the structure stay.
• Seller Credits: If the buyer is willing to accept the encroachment but wants compensation, the seller might offer a credit at closing to cover potential costs or inconvenience down the road.

Why Clearing It Matters

Unresolved encroachments can complicate or even halt a sale. Lenders and title companies typically require a clear resolution before they’ll move forward. That’s why addressing the issue quickly, and with the right paperwork, is so important.

The Takeaway

While discovering an encroachment during closing can be stressful, it’s usually just another bump in the road. With early detection, open communication, and the right team on your side, most encroachments can be resolved smoothly—so you can focus on moving into your new home with peace of mind.