When One Word (“PROPOSED House”) Looms Large
Test your knowledge of encroachment issues, and see if you can detect a problem in the photo above.
The northeast corner of the home on the pie-shaped lot clearly encroaches on the lot immediately to the east.
Make that, the lot underneath the Minnetonka home my clients were imminently about to close on this past June.
Hold Everything (for about 2 months)
The problem came to light literally hours before closing, when I pulled an aerial map from county records to help my clients figure out who owned the (overgrown) trees on the west side of their soon-to-be lot (they wanted to trim them immediately after closing).
Step #2: notifying the Buyer’s lender, the listing agent, Seller and both title companies that the closing would have to be delayed while we investigated.
I then raced to Minnetonka City Hall, to see if they had a survey pre-dating the home’s construction that could resolve the issue (note: sometimes, when satellite photos aren’t taken directly overhead, the lot line can be distorted).
Two Lucky Breaks . . . and One Bad One
Luckily, there was a survey of the lot and home on file (on microfiche).
Even luckier, the surveyor who did the work almost three decades earlier was still in business — and, incredibly, answered on the first ring when I called from City Hall!
The surveyor then commenced to offer his instant analysis of the city survey (image at right) that I emailed him.
His take: while 90% of the time the home is located where the “Proposed House” indicates, 10% of the time . . . it isn’t.
Understandably, that wasn’t a risk my client was willing to take, and the closing was cancelled.
Next: Lots (and Lots of) Negotiation
Amidst the upset and disappointment, what came next is a bit of a blur.
However, the gist was that the Buyer and Seller agreed to share the costs of a survey to verify whether or not there truly was an encroachment issue.
One week later, the answer came back in the affirmative (all together: “Uggh!!”).
That set off another round of negotiation, spanning a week, that ultimately led to an Amendment stipulating that the Seller was to execute an easement with the neighbor; the Buyer’s legal fees to review the easement would be borne by the Seller; and the closing would take place — subject to the review of the Buyer’s lender — once all those things had happened.
Not So Fast . . .
That last, protective clause turned out to be stumbling block #2: six weeks after the cancelled closing, and two weeks after a final version of the easement had been agreed to by all parties, the lender delivered the shocking news that their underwriting department considered the easement a material impairment . . . and rejected the mortgage.
No mortgage, no deal.
After the requisite expletives and venting, my Buyer contacted several other lenders, one of whom expressed 100% confidence that they could fund the loan, notwithstanding the easement.
Less than three weeks later, the new lender blessedly did just that.
The home closed in mid-August, and my clients moved in with their kids the next week.
Their planned tree-trimming has been postponed till next Spring . . . 🙂
P.S.: Thanks to Edina Title’s Marty Henschel for expertly helping to navigate several of the above challenges. Not to mention my clients, their new lender, and the Seller and their advisors for their patience wading through everything.