Note: This is the 9th post in our series of real estate words that are sometimes misunderstood, what we call cases of “Mistaken Identity.” 

Encroachment vs. Encumbrance

An encroachment is an unauthorized intrusion of one property onto another, and it is an  encumbrance on both properties until court action or agrement resolves the issue.

Encroachment — An unauthorized invasion or intrusion of an improvement or other real property onto another’s property, thus reducing the size and value of the invaded property. Common examples of encroachments are the roof of a building that extends over the property line or the front of a building that extends over the building setback line or extends onto a neighbor’s property. Most encroachments are the result of carelessness or poor planning rather than bad intent, as in the case of a driveway or fence built without a survey to find the lot line.

Because an undisclosed encroachment could render a title unmarketable, its existence should be noted in the listing, and the contract of sale should be made subject to the existence of the particular encroachment.  An encroachment is a trespass if it encroaches on the land and a nuisance if it violates the neighbor’s airspace, as in the case of overhanging tree branches. The injured party can seek a judicial remedy in ejectment, quiet title, or injunction and damages.

A court can order removal of the encroachment. However, if the encroachment is insignificant, and the cost of its removal is great and its creation was unintentional, a court may decide to award money damages in lieu of ordering removal.   If there is any doubt as to possible encroachments, purchasers should obtain their own surveys when purchasing property, because an accurate land survey will disclose most encroachments. If a survey reveals encroachments not previously disclosed by the seller, the buyer may compel the seller to remove the encroachment (or to reduce the purchase price accordingly) and pay for the survey. In some cases, neighbors will sign an encroachment agreement, granting a license to continue the encroachment of a wall or fence onto a neighbor’s property.

Encroachments are not normally revealed in the chain of title and thus are not warranted against in a title insurance policy. Also, most standard title insurance policies do not insure against matters an accurate survey would reveal. An extended-coverage title policy usually insures against encroachments.

Encumbrance — Any claim, lien, charge, or liability attached to and binding on real property that may lessen its value or burden, obstruct, or impair the use of a property but not necessarily prevent transfer of title; a right or interest in a property held by one who is not the legal owner of the property. Also spelled incumbrance.

There are two general classifications of encumbrances: those that affect the title, such as judgments, mortgages, mechanics’ liens, and other liens, which are charges on property used to secure a debt or obligation; and those that affect the physical condition of the property, such as restrictions, encroachments, and easements.   A covenant against encumbrances guarantees that there are no encumbrances against the property except those specifically disclosed. If no encumbrances are disclosed as exceptions in the contract of sale, the buyer may proceed with the purchase on the assumption that none exist. Encumbrances should be noted on the deed following the property description.