Real estate encroachments can not only be costly but also delay real estate transactions, cause challenges to repairs to property, and create issues with adjoining neighbors.
Therefore, it is best to research situations where neighboring properties are going “over the line” and take steps to clarify boundaries prior to purchases.
Below, we take a deep dive into how to handle real estate encroachments before they escalate.
Understanding Real Estate Encroachments
Real estate encroachment refers to a property owner building or extending features or structures on their property beyond property boundaries.
This violates property rights whether it is intentional or unintentional. Some common examples of encroachments include:
- Deliberately building a structure on someone’s property (such as a garage or shed)
- Using land for something such as a garden, or storing vehicles without the property owner’s knowledge
- Extending a fence over the boundary lines of a property
- Building a home addition extending onto a neighboring property
- Having an exit that would require an individual to step onto another’s property in order to leave a property
However, it can also be something less specific, such as a tree or garden causing overgrowth that disrupts or overtakes a neighbor’s landscaping. And, needing to go on to a neighbor’s property to do repairs to one’s own property can create significant issues.
Identifying and Addressing Encroachments Early
Pulling the survey during the due diligence period will reveal possible encroachments such as fences, hedges, walls, driveways, and additions.
If your client discovers an encroachment, they can take steps to approach the neighbor and see if there is a simple resolution such as creating a boundary-line agreement or recording an easement agreement. However, if the encroachment is interfering with the buyer’s use of the land, a more aggressive approach might be required, such as a suit for Declaratory Judgement, which would allow for a Court Order to take certain actions notwithstanding a trespass on the neighbor’s land.
Legal and Amicable Solutions
There are different ways to address encroachments prior to purchase using dispute resolution to avoid complex legal action. Common solutions include:
- Financial compensation: Negotiate financial compensation for the land used by the neighbor and include an agreement as to how that land can be used. Money damages represent payment similar to the rental value for lost use of the land, and an easement is granted for the life the structure remains on the property.
- Boundary-line agreement: In this case, your client isn’t overly concerned about the encroachment and agrees to allow the neighbor to continue using the land. The agreement makes it clear the title remains in the owner’s hand and specifies what structures the owner is agreeing to remain on their property.
- Injunction: This is the most aggressive approach and requires proof the neighbor did not act in good faith, i.e. they knowingly encroached on the land. Also, injunctions have a statute of limitations which can make it difficult to take this route. For injunctions, the limitation is in effect at the time the structure is built, not at the time the encroachment is discovered. If the statute of limitations has not run out, and it can be proven the act was intentional, the owner is entitled to an injunction that forces the removal of the encroachment.
- Entering into a Hold Harmless and Indemnification Agreement to assure that any damage to the property would be compensated and would be the responsibility of the encroaching party.
- Balancing equities/hardships: The owner does have a right to terminate or prevent encroachments even if the act was unintentional. However, in this case, should the neighbor’s cost of removal exceed the burden to the owner, there is a balancing of hardships based on the following:
- The encroachment must not cause irreparable injury to the property owner
- The neighbor must have acted in good faith
- The cost of encroachment removal must greatly exceed the damage to the owner
Escalation Prevention and Future Protection
The easiest way to prevent encroachments on smaller properties is to obtain a survey to confirm the boundaries and install a fence. Alternatively, the parties can agree to an easement that can be recorded and protect both sides. But if there can be no agreement, parties need to protect their property to prevent a claim of adverse possession some time in the future.
However, for larger properties, fences are quite costly and might not be as practical. In this case, surveillance cameras and ongoing property monitoring help provide a deterrent for real estate encroachments.
Proactively handling encroachments—through early detection and resolution strategies—is key to smooth real estate transactions. Brokers should guide clients in protecting their property rights while considering practical solutions, ensuring deals progress without disputes.
The Minchella & Associates Difference
With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords, and commercial and investment property owners. For more information, schedule a consultation today.