Encroachment

[OSU Beavers]

I have a subject where the neighbors house encroaches 0.4 of a foot over the lot line as shown on a survey. The subject's improvements are all on its own lot. Is a conventional loan on this property acceptable for purchase by Fannie Mae?

The relevant section of the Selling Guide states; Title for a property that secures a conventional mortgage is acceptable even though it may be subject to the following conditions, which Fannie Mae considers minor impediments: encroachments of one foot or less on adjoining property by eaves or other overhanging projections or by driveways, as long as there is at least a ten-foot clearance between the buildings on the security property and the property line affected by the encroachment;

https://www.fanniemae.com/content/guide/selling/b7/2/05.html

I bolded the part which I see as relevant. The selling guide seems to only be concerned with the subject encroaching on an adjacent property, not the other way. In either case, these are 50' x 120' lots where all buildings are within 10' of each other so the last line is not an out.

Another thought is to have the subject owner give the encroached on area to the neighbor by a lot line adjustment.

 

[Mike Kennedy]

Source and date of the "survey" ?

A newer or revised survey on file (governing muni ?)

Is there a Recorded Easement on file? if so - does it transfer on sale to new owner?

 

[OSU Beavers]

A 51 year old survey by a registered land surveyor.

It is listed as an exception to the standard title policy on the preliminary title report.

Nothing newer. No easements mentioned on the prelim.

The development was all build before current zoning laws, so no chance of meeting modern setback requirements.

Purchased in 2002, selling due to divorce with the wife currently holding title.

 

[RSW]

I wouldn't think it would effect the value of the subject property, but it may effect the value of the other property. The Lender may require an easement be put into place before they would lend on it. I've had situations like this with VA appraisal and that is what has happened.

 

[Mike Kennedy]

A 51 year old survey by a registered land surveyor.

It is listed as an exception to the standard title policy on the preliminary title report.

Nothing newer. No easements mentioned on the prelim.

The development was all build before current zoning laws, so no chance of meeting modern setback requirements.

Purchased in 2002, selling due to divorce with the wife currently holding title.

before current zoning laws,

Likely a Legal, non-conforming, pre-existing use (lot area/dimensions) ( << CONFIRM W/MUNI.)
which does / does not
a. transfer on sale.
b. and has / has no negative impact on marketability or market value (research other similar and local lot sales (improved and unimproved).

 

[The Bob]

I have a subject where the neighbors house encroaches 0.4 of a foot over the lot line as shown on a survey. The subject's improvements are all on its own lot. Is a conventional loan on this property acceptable for purchase by Fannie Mae?

The relevant section of the Selling Guide states; Title for a property that secures a conventional mortgage is acceptable even though it may be subject to the following conditions, which Fannie Mae considers minor impediments: encroachments of one foot or less on adjoining property by eaves or other overhanging projections or by driveways, as long as there is at least a ten-foot clearance between the buildings on the security property and the property line affected by the encroachment;

https://www.fanniemae.com/content/guide/selling/b7/2/05.html

I bolded the part which I see as relevant. The selling guide seems to only be concerned with the subject encroaching on an adjacent property, not the other way. In either case, these are 50' x 120' lots where all buildings are within 10' of each other so the last line is not an out.

Another thought is to have the subject owner give the encroached on area to the neighbor by a lot line adjustment.

I think you are misreading it.

as long as there is at least a ten-foot clearance between the buildings on the security property and the property line affected by the encroachment;

How could there be a 10' clearance if the encroachment is from the subject to the adjoining property?

 

[jay trotta]

Source and date of the "survey" ?

A newer or revised survey on file (governing muni ?)

Is there a Recorded Easement on file? if so - does it transfer on sale to new owner?

Mike, if an Easement is recorded within the Deed, it would run with the Land forever and transfer accordingly (in my area)

 

[Carnivore]

I have a subject where the neighbors house encroaches 0.4 of a foot over the lot line as shown on a survey. The subject's improvements are all on its own lot. Is a conventional loan on this property acceptable for purchase by Fannie Mae?

The relevant section of the Selling Guide states; Title for a property that secures a conventional mortgage is acceptable even though it may be subject to the following conditions, which Fannie Mae considers minor impediments: encroachments of one foot or less on adjoining property by eaves or other overhanging projections or by driveways, as long as there is at least a ten-foot clearance between the buildings on the security property and the property line affected by the encroachment;

https://www.fanniemae.com/content/guide/selling/b7/2/05.html

I bolded the part which I see as relevant. The selling guide seems to only be concerned with the subject encroaching on an adjacent property, not the other way. In either case, these are 50' x 120' lots where all buildings are within 10' of each other so the last line is not an out.

Another thought is to have the subject owner give the encroached on area to the neighbor by a lot line adjustment.

Here is my take on your assignment and a known problem

1. Its not really your problem or responsibility to determine if the loan is eligible for FNMA Secureitization.
a. It is your responsibility to inform the Client of the issue.
b. If your client instructs you to continue, then reporting this situation in your URAR is your problem and easily done in your report.
(note: Insure you display this situation in a manner that it is not overlooked or not easily found. 1st page in Bold.)
c. I don't see this as your responsibility to determine the fix, correction, etc because that is a legal matter

3. Determining the impact on the Subjects market value is your problem and probably not very easy to do.

4. This could result in your original assingment being changed....Mo Money!

Hope that is helpful

Here is a story from an assignment I completed about a year ago. My Client was XXXX. The property was owned by them.(REO). Fortunately for me I have direct access/communications with XXXX on all of their properties. They are accustomed to problems that pop up on any of their properties. They expect me to alert them during assignments of any serious problems especially encroachments. They also as part of the engagement expect possible solutions.The subject driveway encroached on the adjoining property in a serious way. There were some other somewhat serious issues of the site pertaining to the subject and the property behind the subject. All were curable, either legally or physically.

So I gave them a complete run down of all the big issues Legal and and Physical a number of suggestions and solutions physical and legal, plus combination of the two. This is all part of my original assignment and for any assignment from them.

 

[Sid Holderly]

If something needs to be in writing or corrected an easement if far less costy than a lot line change. Local banks would likely not cringe severely since it is listed in past title work. For your situation ??
In one local town the lot lines vary based on which benchmark point the survey was made from. They have been going back and forth for years on which was correct. With new Satelite surveying, what should be correct can now be figures, but is everybody going to change their legal description, not likely.

Describe and let others decide.

 

[Carnivore]

If something needs to be in writing or corrected an easement if far less costy than a lot line change. Local banks would likely not cringe severely since it is listed in past title work. For your situation ??
In one local town the lot lines vary based on which benchmark point the survey was made from. They have been going back and forth for years on which was correct. With new Satelite surveying, what should be correct can now be figures, but is everybody going to change their legal description, not likely.

Describe and let others decide.

Sid, I don't disagree at all with your answer. Unfortunately we live in a world of "I want it, I want it now!!!" The days of providing excellent service are over. Client relationships have really changed especially Appraiser/Lenders. Throw in the middle the dominance of AMC's and it gets even worse.

Editorial NOTE: This is one of the reasons that I find it very troubling in regards to the growing use of BIFUR/Desktop Appraisals.