Title Insurance May Solve Encroachment Issue

Q: We are thinking about buying a single family home in Chicago that was originally built over 100 years ago. Since then, the home was elevated (after the Chicago fire) to accommodate the change in the level of the streets, and also underwent a rehab about 10 years ago. Because of the raising of the home, the front door was elevated above street level and front steps were installed.

In evaluating this property for purchase we found that the front steps are over the property line and encroach on the sidewalk. At some point, however the city widened the sidewalk in front of this home and the neighboring home such that there is no obstruction to traffic flow.

The current owner/seller does not have any documentation from the city showing that the encroachment is allowed. Also, the rehab that occurred 10 years ago did include rebuilding the steps and building permits show the steps in the plans.

It is my understanding that the city, at any point in time, can ask that the stairs be torn down because of the encroachment. Is this true given that the encroachment has been in place for more than 50 years including two rehabs with city permits issued? Is there any way to protect ourselves from the city should they actually want us to remove the steps? Should we walk away from this purchase?

Of note, the neighboring home (a large Victorian from the same time period) has a bay window on the second floor that overhangs the sidewalk with equal encroachment.

A: For those without knowledge of Chicago history, Chicago suffered a massive fire in 1871 that destroyed much of the city. Up until that time, most of the city had been built with wood, and the area had suffered a drought which left most of these wood homes dried out.

While most of the city was devastated, some of these original wood homes survived. When reconstruction began in the city, the debris from the fire was thrown onto the streets and the city took the opportunity to install a sewer system under all that debris. New homes were constructed at the new, and significantly higher, street level.

Existing homes had no basements and their second floors were just above the new street level. Many of those homeowners built new entrances to their homes and used their existing second floors as their main entrances to their homes. Their old first floors effectively became basement levels, also called garden level floors.

If you drive around Chicago and find yourself in neighborhoods with sunken basement level apartments, those buildings are quite old and you can still see remnants of some of the old structural elements of the original main entrances that are now below grade.

With that intriguing history, you now find yourself with stairs that encroach over municipal property by a tad. In fact, your neighbor’s home has a bay window that encroaches over municipal property as well. Some municipalities will issue letters to homeowners approving of and permitting the encroachment. You may find that you can’t get that from the City of Chicago. However, you may be able to get the title company to give you some protection on this issue.

When you close on your home, you should obtain an owner’s title insurance commitment. The title insurance commitment is a document given to you by a title insurance company that details the ownership of the home, whether there are any taxes outstanding on the home, whether there are any liens against the home, including mortgages, and any other matter that affects title.

If you have received a survey of the property, the title company will review that survey and include any findings from the survey onto the title insurance commitment. In your case, the title insurance commitment should show that part of the stairs to your home encroaches over and onto municipal land.

In Illinois, and in many other states, the title company has the ability to insure you against any loss you may suffer as a result of the municipality coming to you and demanding that you remove the encroachment. In your case and with your information, you shouldn’t have much of a problem giving the title insurance company enough information to allow them to make the underwriting decision to issue the endorsement to your title insurance policy.

If, however, the encroachment were new, it would be unlikely that the title company would be willing to insure the encroachment. In states where surveys are not used in residential real estate closings, the title company will raise an exception any matter which would otherwise be revealed by an accurate survey.

If you lived in a state that did not use surveys in residential closings, you might have to obtain one and present it to the closing attorney or settlement agent well in advance of the closing for the attorney or agent to make the determination if the title company could issue a title insurance endorsement for your issue.

Otherwise, you would have to go to your municipality and see if there is documentation that expressly permits these types of encroachments and would allow you to keep them in their current location without having to incur the expense to remove them.

One last thought: You could always get a contractor to estimate what it would take to reconfigure the stairs that lead up to the entrance to your home in a manner that would fit the character of the home and would be acceptable to you. If you find that the cost is acceptable and worth it, you might decide to buy your home, knowing the cost of the risk you take.

If the cost to reconfigure the stairs is prohibitive or the forced removal of the encroachment would kill the design of the home and you can’t get satisfaction otherwise, then you should move on.

In your particular case, you’ll likely find that the risk of having the city force you to remove something that has been that way for over 100 years is extremely remote and that you will find the title insurance company will be willing to insure you against any loss you could sustain as a result of the forced removal of the stairs.


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