Encroachment Survey Issue Mortgage 2026: How Title and Survey Conflicts Affect Closings

A survey encroachment means a structure from one parcel physically crosses onto an adjacent parcel. Common examples include a fence, garage, deck, or the dwelling itself. Fannie Mae, Freddie Mac, FHA, and VA all require that the legal description match the survey and that no material encroachments exist on the subject property.

Types of Encroachments

• ✦Improvement encroachment: subject's structure extends onto a neighbor's land
• ✦Neighbor encroachment onto subject: limits use or marketability of the subject property
• ✦Encroachment into easement: structure built within a utility or drainage easement
• ✦Setback violation: structure built inside a required setback that becomes apparent on survey

How Lenders Handle Encroachments

Minor encroachments may be acceptable with a boundary line agreement or recorded easement between the neighboring owners. Material encroachments typically require a lot line adjustment or removal of the encroaching structure before closing. Title insurers will often exclude the encroachment from coverage rather than insure over it, which means the lender is left with an uninsured title defect.

Practical Steps for MLOs

• ✦Order a survey early on any improved property built before 1985
• ✦Ask the title company whether a survey exception will appear on Schedule B
• ✦If an encroachment appears, get a boundary agreement in place before rate lock expiration
• ✦Confirm the lender will accept a boundary agreement in lieu of physical correction