Does a utility shed encroachment justify a higher mortgage interest rate?

UPDATED: Jul 19, 2012

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Does a utility shed encroachment justify a higher mortgage interest rate?

I am in the final steps of refinancing. I was just told I have to pay a higher interest rate than what we signed (Truth-in-Lending Disclosure and Good Faith Estimate) for because my utility shed is partially on my neighbor’s property. The shed was built there long before I bought the property and I had already years ago told the neighbor it was on his property and that I would move it if I ever moved. He said he could care less. Is it legitimate for the lender to use this reasoning to get me to pay a higher rate? Is this common practice by lenders?

Asked on July 19, 2012 under Real Estate Law, Ohio


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I have done real estate law for many years and I have never heard that a favorable encroachment benefitting one's property as you have written about justifies a higher interest rate on one's mortgage.

I suggest that you have the representative for the lender meet with you face to face to justify why your interest rate is going to be higher because of the encroachment and to put such reasoning in writing so you can provide such to a real estate attorney.

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