My House-Your Lot?

Morristown, TN

How does a house get built on the wrong lot?

It happens all the time. In 1979 Samuel and Judith owned three contiguous lots on this residential street. On the westernmost lot was a duplex apartment. The middle lot was vacant.

In 1987 Samuel and Judith built another duplex and rear garage on their middle lot, and a new first mortgage was insured of $176,000.00. The couple’s other lots were mortgaged to different lenders. Samuel and Judith’s got behind on their payments and finally defaulted. The various lenders foreclosed.

The westernmost lot was purchased by Jeff, who commissioned a survey. The surveyor found that improvements on the middle lot encroached by as much as 26 feet onto Jeff’s property, involving most of the duplex and about 1/3 of the garage. The insured lender had listed the property for $135,000.00. Jeff offered to buy it for $60,000.00. Since Jeff threatens legal action, the property is unmarketable.

The title insurance company now owns the property for $140,000.00, and they continue to negotiate with Jeff.

MORAL

Protect yourself! Most lenders no longer require surveys for their loans. Since there is no way to know if the original builder had a survey before he started building, purchasers can be exposed to a significant risk. The Enhanced Owner’s Policy gives survey coverage to the owner even without a survey.