VA Loan Answers to Reader Questions: Encroachment
A reader asks, “My husband & I are under contract for a VA loan for a home that has a barn in the back part of the land. About 2ft of the barn is crossing over as an encroachment onto the neighbors property. Will this be a problem closing with this encroachment? If so would there be a way to get around it?”
This is a situation where the answer to the question depends on the answer to another question: has the appraisal happened yet? If so, what did the VA appraiser say about the situation?
In this particular case, if the appraisal has not occurred yet, it’s important for the borrower to get information on the local or state regulations that govern these areas. VA loan rules don’t get terribly specific in all areas because the VA defers to building code and regulations defined by the local authority in many areas.
VA minimum property requirements address basic issues of safety, usability, and value. In areas such as encroachment, the local guidelines would apply.
The Department of Veterans Affairs does not keep copies of local and state building code on file, nor does it have the ability to advise a borrower as to the specifics of state or local code requirements. However, the VA Regional Loan Center with jurisdiction over a given area may have experience with certain recurring issues, in which case it’s good to contact them to learn what outcomes are typical in region-specific issues connected to VA loan approval.
A quick scan of the VA loan rules for minimum property standards (VA Pamphlet 26-7 Chapter 12) does not reveal any specific guidance about encroachments. The reader should contact the local authority, a contractor, real estate agent or other knowledgeable party who can advise the borrower on what the applicable rules might be.
If the VA appraisal has already occurred and the VA fee appraiser has made a recommendation in this area, it must be followed as stated in the appraisal. Borrowers who wish to appeal an appraisal must discuss the issue with the lender and contact the Department of Veterans Affairs for further assistance.
Do you have questions about VA home loans? Ask us in the comments section.