Encroachment Agreements Explained
Encroachment Agreements are (mostly) useful instruments to deal with encroachments. That said, as with all agreements, one needs to understand the terms and ramifications thereof.
Simply stated, an Encroachment Agreement is a contract that allows one party to encroach on another party’s property. In the context of real property, this may involve a structure, tree, shrub, gutter or other physical object that crosses over into a neighboring property owner’s land. Encroachment Agreements are useful when the encroachment is not a major problem (unlike the photo, above), and where the parties are amenable to the plans for the relevant property.
Encroachment Agreements may also be used in the context of an easement, where an owner (the Grantor) has granted another property owner (the Grantee) a right to use a portion of its property, usually because Grantee wishes to build a structure onto either property. A common example of an Encroachment Agreement is one that permits the overhang of a section of roof from one property into the neighboring property (a problem, actually). Maybe there is a shared fence that a property owner would like to grant an easement for. And so on.
Both Encroachment Agreements and easements are recorded at the Registry of Deeds, thereby putting an onus on the Grantee to note the same and seek to obtain a proper easement.
An Encroachment Agreement is more formal, however, in the sense that the parties to the agreement maintain separate ownership of their parcels, but with a consensual agreement governing the issues presented in the relevant Encroachment Agreement. An easement is more formal in the sense that the Grantee gains the right to use a portion of the Grantor’s property. An Encroachment Agreement is a hybrid between a trespass and an easement.
It is also possible to have an Encroachment Agreement that allows for a future adverse possession claim by the encroaching property owner. In other words, the parties to the Encroachment Agreement wish to legitimize the encroachment , but not with an easement document yet. The idea is that the property owner would quietly enjoy and possess the property for 20 years or more, and then apply for a quiet title ignoring the Encroachment Agreement and easement. We should note that the application for quiet title would fail, since the statute of limitations to register an easement is 3 years, and an Encroachment Agreement could well be deemed an easement due to the facts of the case. In that case, the right to register the easement would be extinguished.
Also, there are cases where the parties are unsure whether they have an adverse possession claim, and the Encroachment Agreement could be used as a way to reserve the adverse possession claim (if it exists) via reversionary language. We should note that the existence of the Encroachment Agreement will itself invalidate adverse possession, since the adverse possession claim does not arise due to the permission given at the time of encroachment.
Encroachment Agreements are used to resolve neighbor disputes in many different situations. Perhaps a property owner wishes to build a fence, but finds out that the person the fence is being built for is encroaching upon the neighbor’s property. Or maybe a neighbor finds that it is rather unsightly to have a neighbor’s tree or shrub overhanging one’s property. There are many other reasons why Encroachment Agreements have an important role to play in resolving boundary disputes in Land Court and in the local Land Court in each community.
All of that said, Encroachment Agreements do not foreclose legal claims should neither party be able to live with the encroachment. The most common sort of case is one in which both parties are aware of the encroachment or dispute, and have agreed to resolve the issue amicably via an Encroachment Agreement. From a legal perspective, however, an Encroachment Agreement that purports to resolve future legal claims is unenforceable, as the parties cannot "agree" to violate Massachusetts law if a violation logically arises in the future.
The Significance of Encroachment Agreements
Encroachment agreements are useful when two neighboring property owners have been using a part of the others’ property for some time and now want to clarify what portion actually belongs to which owner, allowing both to plan for the future. They are also extremely useful in instances where boundary fences are made of multiple materials – for instance a chain link fence with metal or wood "privacy" fence completely closing in the rear yard between the fences, and one of the neighbors wants to install a pool or make some other change in yard use that will affect the area between the fences.
The situations are virtually limitless, but each can be alleviated by an encroachment agreement. Beyond simply knowing that a portion of your neighbor’s property is not truly permeable, or that there is no fence to cross, an encroachment agreement serves several fundamental purposes. First, the agreement permits a record of the understanding reached between the parties to be kept with the city or county Courthouse; this works to protect the subsequent buyer of either property from being surprised by either neighbor’s rights. Second, it permits the neighbors to agree to any terms they mutually desire; in particular, an owner may continue the long established use without fear of litigation, and the other owner may receive appropriate consideration for the use. The agreement should specify that the permission is non-exclusive (meaning that just because the neighbor has the right to use the property does not mean that it is their property); the agreement should permit or prohibit structures on the property as either party desires (the typical agreement merely continues the oral license for use of the property, but one party may want to put up a fence). Where the line is unclear, the agreement may specifically determine the location of the boundary (although this is usually settled by a survey). The agreement may set out how the use will be maintained, and by whom.
In addition, without an agreement, the use may be challenged by either party as a trespass at any time; under Virginia law, the owner of land in a trespass situation may "trespass" upon the land of another to abate the trespass at whatever reasonable cost is necessary. In addition, not having the agreement means that the side of the fence that is on the wrong property is neither maintained, nor held as a lien, adding costs to the party who wants to have the fence repaired or replaced.
The Essential Parts of an Encroachment Agreement
The essential components of an encroachment agreement should be a description of the boundaries of the encroachment, a clear statement of the rights granted to the landowner in respect of the encroachment, and as complete a review of the maintenance responsibilities of the parties to the encroachment agreement as may be possible.
Firstly, the description of the boundaries of the encroachment is critical. If the property owner has the right to construct an improvement over the boundaries of the property, this should be specifically described in the encroachment agreement. If the property owner encroachment strays over the boundaries of the property, such as with a fence, there is also a remedy called "boundary by acquiescence", which can in certain circumstances lead to adverse possession. Boundary by acquiescence occurs when property owners are not able to determine which improvements or structures belong to either one of them and, as a result, each property owner acquiesces to the other owning the disputed land. In certain cases, if the owner of the land develops the disputed area by removing any improvements that were made on the land the owner may acquire ownership of the land. The act of removing the improvement can be seen as exercising ownership over the land and, after 10 years, the title to the land may vest in the owner of the land that is encroached upon. Therefore, it is important for the property owner to create a clear boundary between the land that is being encroached upon by the improvement and the land that is not being encroached upon.
The second key component of an encroachment agreement is a clear statement of the rights granted to the landowner in respect of the encroachment. The rights granted to the landowner should clearly state the rights and duties of the landowner. It should also be clear whether the landowner has the right to rebuild or remove the encroachment. Furthermore, this section will address the payment obligations of the landowner, as well as whether the landowner has any restrictions on their use of the encroachment, such as a restriction against placing any additional buildings or fences on the encroachment without the written consent of the landowner.
The third key component of an encroachment agreement is a review of the maintenance responsibilities of the parties to the agreement. This section will grant the rights to repair, maintain, use and benefit from the encroachment. Further, this section of the agreement will also specify the duty of the property owner to maintain the encroachment so that it does not interfere with the right of access of the landowner.
Finally, the liability of the parties for all loss, damages, costs and expenses related to the encroachment should be excluded. This will serve to protect both parties from any liabilities that may arise as a result of damages or loss caused by the encroachment.
How to Draft an Encroachment Agreement
You will first want to consult with a legal expert in this area to address any specific needs in the context of your particular situation. The process begins with researching and compiling the legal basis for the agreement and assessing the specific risks involved due to the nature, size or location of the encroachment. It is then necessary to begin discussions with the affected parties. Those in support of the encroachment effort can be leveraged against those people who are resisting the application. If there is no identifiable consent, the position of the developer is strengthened through a process of persuasive negotiation. Having compiled sufficient evidence, the developer can proceed to draft an agreement. Development professionals should take the time to shape the parameters of their plans in advance. What exactly will be encroached upon is something to consider, as well as what type of encroachment would be suitable. You need to know how much you are able to allocate financially, and how long the agreement will need to last. Once agreed upon, the developer must then enforce this agreement to ensure it is being upheld. This may include further negotiations.
The Legal Side of Encroachment Agreements
A properly written encroachment agreement is legally enforceable and will be upheld by the Court unless it is found to be unconscionable or procured by fraud. For instance, if a landowner receives payment for an encroachment without the intention of using the property or fails to inform the neighboring property owner of any unintended changes to the quality or character of the encroached property, such payment may be rescinded.
Enforcement of an encroachment agreement will depend on the terms of the agreement as well as any applicable statues or case law. Courts are hesitant to enforce agreements that do not define the encroachment limits , the greater of which are the square footage of the encroachment or any permanent fixture, like a fence or wall, separating the two properties. Courts may not enforce an agreement if it would result in a permanent taking outside of the legal description of the property.
In the event of a breach of an encroachment agreement, the court may grant relief to the encroaching property owner in the form of equitable remedies like an award of money damages, requiring plaintiff to remove the encroachments, or requiring the plaintiff to modify the encroachment. If the encroachment resulted in damage to the adjoining landowner, the court may award complete compensation or partially compensate the aggrieved party.
Amending Agreements and Resolving Conflicts
In the unfortunate event of a dispute arising from an encroachment agreement, particularly one where there is an argument about whether the encroachment is becoming a permanent part of the land, what is the best way to resolve the dispute?
Just like any other agreement, there can be misunderstandings or arguments from time to time and with each party having a different idea or opinion on the best way to move forward. First, it would be wise to read the encroachment agreement from top to bottom to ensure there isn’t any terms that address the specific issue at hand. For example, is it addressed in the beginning portion of the encroachment agreement that the encroachment is a one time thing, that there shall be no attachment or that there is to be no permanent fixture without the written consent of the other party? If so, it is just a simple situation of following the encroachment agreement and ensuring the terms are observed.
If there is no language addressing the issue at hand, then every party should sit down and try to work out the disagreement. Once a conclusion has been reached, ensure the solution is put into writing and signed by all parties. Even if there is no change to the encroachment agreement, an agreed upon addition or alteration to the original encroachment agreement would be far more admissible in a court of law should the disagreement eventually end up in a court proceeding.
Another option for conflict resolution would be mediation, which is a voluntary process to settle disputes with the assistance of a professional mediator who has been trained and certified by the province to help resolve disputes. There is no pressure on either party as they are there because they want to be and it is not binding, but it can legally go to court should the process fail to solve the dispute. This process would be the next step up if the parties are unable to resolve the disagreement amongst themselves, or if they feel there is a need for someone with experience and knowledge to help settle the dispute. One alternative option is arbitration which is more like a trial; a neutral third party listens to all sides of the issue and then renders a decision and it’s binding, therefore if they don’t like the decision there is nothing they can do. Mediation on the other hand is just a recommendation that is not binding should the process fail to work out. In both cases however, if they take too long or the conflict cannot be resolved mediation or arbitration can be taken to court.
If a resolution is agreed upon and satisfied by all parties however, there is now the need to deal with the legal paperwork. In British Columbia, this means filing for a modification of the title at Land Titles. Even if there is an existing encroachment agreement on title, the original encroachment agreement is still required by Land Titles followed by a statutory declaration signed by both property owners stating that they have agreed to modify title without any further encumbrances (in other words, without any further legal documents attached to the title affecting their property other than the primary registered encroachment agreement). A statutory declaration prepared by a lawyer must comply with the requirements set out in sections 30 of the Evidence Act (B.C.) and includes all manner of declarations such as: being of legal age, being of sound mind, all parties are in agreement and free of coercion, and the original encroachment agreement has been removed from title.
Once the paperwork is filed with Land Titles, the encroachment agreement and statement of adjustments will then become the only two things showing on title for that particular piece of land.
Should the parties have a disagreement in the first place, it may be time to ask yourselves if the encroachment is worth continuing. Perhaps you have lived with the encroachment for many years, and neither party has had an issue. Or perhaps it’s become an eyesore over the years and no one wants it on their property anymore. Strategically, the results of a court case could be a permanent fixture on the property which neither party intends to do in the first place, so why spend the time and money on both sides when mediation or the good old-fashioned way of sitting down to discuss the problem may save everyone a lot of stress and money. Once you realize that being amicable can save you both a lot of grief, you may even decide to talk it out as neighbors and not bother with a third-party mediator, recognizing that your future is based on harmonious interactions on a daily basis. And thus an encroachment can often act as a reminder to all to keep talking and keep listening because in the end, it’s your relationship as neighbors that will win out.
Case Studies and Practical Examples
From a legal perspective, although drafting an encroachment agreement may seem like a straightforward task, the terms of such agreements are often negotiated over a long period of time with both parties (and their respective lawyers) very cautious about their particular needs, rights and obligations.
For example, in 2011, the Real Estate Council of Ontario (RECO) published a case study which highlighted a transaction where a condominium unit owner had built a fence on the common elements of the condominium property. When the condominium corporation learned of the fence, it ordered the unit owner to remove the fence, as it was an encroachment on the common elements without permission.
The condominium corporation then consulted with the unit owner and made arrangements to have the fence removed. After the fence was removed , the common elements where the fence had been was reseeded with grass and a few months later the fence was reconstructed – this time, with the consent of the condominium corporation. In the RECO case study, the fence was originally built by the unit owner without the consent of the condominium corporation. While the condominium corporation is responsible to enforce its bylaws and rules that prohibit or restrict encroachments on the common elements, prior to having a related encroachment agreement registered on title, the unit owner is subject to the risk that the condominium corporation may require the unit owner to remedy the non-compliance with its bylaws and rules. In other words, consent may be revoked if the conditions of a former consent are not satisfied.