Can You Sell a House with Encroachment?

Every house has property lines that identify the size of the lot. Most homeowners respect these property lines and stick to their own acreage. However, there are times when your neighbor might build on your property or try to take part of your land. This is known as encroachment. 

Encroachment can be annoying, but it can also disrupt the home sale process. This is a delicate topic that requires multiple parties to be involved in negotiations to resolve the issue. Use this guide to learn more about encroachment issues and answer the age-old question: can you sell a house with encroachment?

What is Property Encroachment?

Property encroachment occurs when your neighbor starts to use your land (or you start to use your neighbor’s land). This can occur naturally if one party forgets where the property line is, or it could be an intentional act to take someone else’s property.

Property encroachments can be major or minor depending on how one party affects the other. Here are a few examples of different types of property encroachment issues: 

• Your neighbor installs a fence between both properties but builds it on your acreage instead of theirs. Even though the fence is only a few inches off of your property, the encroachment adds up.  
• You repave your driveway and expand it a few inches on each side. You accidentally pave onto your neighbor’s property. 
• Your neighbor decides to build a guesthouse in their backyard. Only half of it fits in their yard and the rest falls on your property. 
• You become an avid gardener with vines, shrubs, and trees that grow quickly. Your plans completely take over your side yard and start to spread into your neighbor’s property. 

You can see how encroachment can be easy or difficult to solve. An overgrown garden can be pruned or a poorly-placed shed moved. These are small issues. However, bigger problems occur when one party invests in a significant home improvement project that permanently encroaches on your space.  

Can you sell a house with encroachment?

You can sell a house with encroachment issues if the buyer agrees to it, but you need to be transparent about the issue. If you know about the encroachment and try to hide it from buyers, then you are misleading them about the state of the house. 

For example, if the property is marketed as a third of an acre, but fence encroachment reduces the lot size to a quarter acre, the buyer might be getting less for their purchase than they think. They might be overpaying for the land or purchasing property they cannot use. 

Sellers need to disclose known encroachment along with any other issues with the house. This alerts buyers to potential problems before they make their offers. If a buyer doesn’t want to contend with encroachment issues, they deserve to walk away from the deal instead of discovering the problems during the appraisal and survey process. 

If you did not know about the encroachment and it is discovered during the sale process, you may need to adjust the title to reflect the current property lines. Your buyer may renegotiate the deal based on a fairer price for the adjusted lot size or walk away from the deal entirely.

Does Encroachment Affect Property Value?

Property encroachment issues will negatively affect your home value. However, the amount of value you lose and the challenges you face in the home sale will depend on the course of action you take. 

• If you accept the encroachment and adjust your property boundaries, then you will have a smaller parcel of land to sell. This will result in a lower listing price. 
• If you ignore the encroachment and your buyer discovers that your neighbor is going over your property line, they might offer a lower purchase price because they have to take on this problem.

Solving an encroachment issue isn’t easy because one property owner has to reach an agreement with another, and your potential buyer might not want to take this task on as soon as they close on the home.  

If your neighbor unknowingly encroached on your land and is unwilling to give up the stolen acreage, you may be able to reach a deal to sell them that part of that parcel. You will be compensated for the lost property value and can adjust the parcel boundaries based on the new agreement.

This is often the best course of action if there is structural encroachment, like an expansion onto your property, but it still requires your neighbor to agree to pay for your land.

Steps to Sell a House with an Encroachment

You don’t have to necessarily have to fix the encroachment problem before you sell your house, but you do have to disclose it if the issue is already known. Follow these steps if you are the property owner who was encroached upon and you are ready to move.

Hire a Real Estate Agent

The first step of any real estate transaction is to hire an agent. An experienced Realtor will guide you through each step and help you overcome any potential hurdles. You don’t have to be an encroachment expert to sell your house, that’s what your Realtor is for.  

Discuss the issues with your property line with any real estate agents you interview. We recommend meeting with at least three agents to get multiple opinions on your home. Each agent should go over your options and recommend a course of action. These discussions can empower you to move forward while helping you choose an ideal partner to help with the home sale. 

Your agent might also recommend a real estate attorney to schedule an appointment with if you want to take back your encroached property.

Obtain a Property Survey

The next step is to have your property surveyed. A professional surveyor will evaluate your land and confirm that you have access to the exact amount of acreage that correlates to the parcel number in the county records. If your neighbor builds on your land or places their fence too far on your property line, the surveyor will make a note of the encroachment. 

You can use your survey if you plan to address the encroachment or disclose it to prospective buyers. It will make you more informed about how far over your land records your neighbor is encroaching. 

Even if you do not take this step, you can expect your buyer to conduct a property survey before closing. These surveys can affect future building plans and the ability of homeowners to get permits for certain types of work. The buyer needs to know the exact land boundaries before they take on the deed.

Address the Encroachment

Once you understand the extent of the encroachment over your property line, you can decide what you want to do about it. If your neighbor knowingly crossed your boundary line, they might not be willing to remediate the issue. However, if the encroachment was an accident, they might be more willing to work something it. The solution you agree to will also depend on whether there is minor encroachment (like the placement of flower beds) or structural encroachment like the expansion of a house. Here are a few options to consider: 

• Talk to your neighbor: if both parties are understanding about the situation and open to solutions, you might be able to reach an agreement with a quick conversation. 
• Hire a mediator: real estate mediators can help you both have healthy discussions while recording the conversation. This is a good step if your neighbor is unreasonable or unwilling to address the problem. 
• Take legal action: you can hire a real estate attorney to enforce your property line and get a court order for your neighbor to remove the encroaching structure. 
• Sell the encroached land: you can calculate how much land your neighbor encroached on and sell the acreage for a fair price. This gives your neighbor the legal right to the land and you are compensated for losing it. 

You can also draft an easement agreement that states your neighbor is allowed to use your property. However, when you list your house, you will need to find a new owner who either honors that easement or takes one of the above steps to reclaim the land.

Disclose the Encroachment

If you decide against addressing the encroachment issue, you will need to disclose it to any potential buyers. Be clear about where your property line is and how much the neighbor is taking from you. You can even print out a map that outlines your neighbor’s property line in comparison to what they have encroached on. 

This information will help buyers with the bidding process. They can make an offer based on the amount of property they have access to and whether or not they want to take on the project of removing the encroaching neighbor. 

Not only is transparency with buyers legally required in the home sale process, but it can also make closing the deal easier. You won’t have to worry about your buyers renegotiating or backing out when they are surprised to learn about the encroachment. You were clear about the issue from the first conversation.

Negotiate with Buyers

Real estate is a negotiation and your buyers might try to use the encroachment to their advantage. Even if they aren’t bothered by the neighboring property taking some of their land, they might try to offer a lower offer than you would expect because of this situation. 

Your Realtor should walk you through a pricing strategy that factors these things in mind. For example, they might recommend pricing your house at a normal level but keeping a realistic floor in mind for when buyers make lower offers. This will help you know when to accept a bid and when to walk away from the deal. 

Watch the behavior of buyers to see if they lowball your house because of the boundary dispute. If you aren’t getting the bids you want, you might decide to pull your house from the market. From there, you can resolve the issue yourself before relisting. This way potential buyers can’t use the unauthorized use of your land against you.

Make Other Repairs and Improvements 

If you are worried that an encroachment problem will deter buyers, avoid giving them other reasons to walk away from your house. Before you list your property for sale, make necessary improvements and repairs to increase the desirability of the home. You may even want to schedule a pre-inspection to evaluate the property and make repairs.

For example, if you have a dated kitchen and an aging water heater, your buyers might be able to overlook those problems if they love your home. However, those problems plus an encroachment dispute could be enough to drive them away.

If your neighbor is difficult and refuses to leave your property, you might feel like you have no control over the situation. The repairs and improvements you make to your home can give you back that control. You can decide how to present your house to buyers, even if the neighbor situation is less than desirable.

Tell a Realtor if There is Encroachment on Your Property Line

Encroachment doesn’t have to derail your real estate sale. You can be transparent about the violation of the boundary line or try to resolve the issue if your neighbor builds something on your turf. You have multiple options to protect your property values and acreage.

To sell your house, with or without encroachment, turn to the professionals at FastExpert. We can help you find experienced Realtors in your area who have dealt with these issues before. Seasoned agents have seen almost everything and can guide you through your encroachment options. They will make you aware of the easiest or most profitable options.

Try FastExpert today and hire a Realtor you can trust.