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Derby, Connecticut – How does a house get built on the wrong lot? In 1987 Samuel and Judith built another duplex and rear garage on their middle lot, and First American insured a first mortgage against the property for $176,000. The couple's other lots were mortgaged to different lenders. Lately all of Samuel and Judith's loans defaulted and the various lenders foreclosed. The westernmost lot was purchased by Jeff, who commissioned a survey. |
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| The Insured Property: More or less |
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The surveyor found that improvements on the middle lot encroach by as much as 26 feet onto Jeff's property, involving most of the duplex and about 1/5 of the garage. The insured lender had listed the property for $135,000. Jeff offered to buy it for $60,000. Since Jeff threatens legal action, the property is unmarketable. First American now owns the property, having purchased it from our insured for $140,000, and we continue to negotiate with Jeff. |
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| Neighbors with a Lot in Common: The broken line indicates the boundary. |
Special title insurance coverage against encroachments is now available to lenders in most states without a survey. When in doubt, please inquire.
Even without "survey coverage" an encroachment as serious as this may be covered under marketability provisions contained in most standard title insurance policies.
Neither the attorney opinion letter nor other forms of title assurance are styled to deal with this risk.
