Surveys and the case of Encroachments in Honolulu
April 7th, 2008 categories: For Buyers, For Sellers, Negotiating Contracts
One of the issues that can be shown on a perimeter survey is called a encroachment. In layman’s terms, an encroachment is when a wall, gate, pool or some other improvement crosses the property line. This can be an improvement from a neighboring property coming onto your property or from your property going onto a neighboring lot. What to do?
First, it needs to be determined if the encroachment is de minimus and in Honolulu residential real estate this means that it is six (6) inches or less (HRS 669). If it meets this standard (de minimus) then the Purchase Contract calls for no further action. If it is greater than six (6) inches, and C-42 and C-43 of the Purchase Contract apply, then the seller is obligated to do one of two things:
a. Remove the encroachment or;
b. Obtain an encroachment agreement.
If removal is an option, be sure that the buyer is consulted because the buyer may want the encroaching improvement the way it is. Once this hurdle is cleared, then go ahead and have the issue taken away (providing you own it).
If the buyer does not want the issue removed and, also, does not want the seller to obtain an encroachment agreement, then the title insurer is going to require the buyer to sign an indemnity. In lieu of this, the seller will have to attempt to get the neighbor to sign an encroachment agreement.
Encroachments agreements are written by attorneys and you should expect to pay $300, plus or minus $100 for the draft agreement. Further costs may include:
1. Preliminary title report for the neighboring property $300
2. Neighbors attorney’s fees for review of the agreement $1000
3. Recording fees $50
After all of this, there is no guarantee that the neighbor will sign the agreement. Neighbors have gone as far as asking for payment in order to sign the agreement ($2500 in a sale that I was involved in). At the end of the day, if the neighbor will not sign the agreement and the buyer will not move forward without the agreement, then the buyer has the right to cancel the sale.
Some planning ahead of time may help you to avoid problems with encroachments. By having your property surveyed prior to coming on the market for sale, you can see what encroachments may be present and then either have the encroachment agreements signed in advance, or disclose the encroachments early in the sale and have the buyer take them “AS IS”.
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In regards to encroachment if the wall is less then 6″ can the neighbor force you to remove the wall?