Weigh a few things before you sign, because your signature puts you on record accepting the encroachment. Start with how significant the structure is. A small, portable shed on a big lot is a very different question from a large building on a permanent foundation three feet off your wall. The closer and more substantial it is, the more it can matter for fire spread, access, drainage, and future disputes. Setback rules exist for exactly these reasons. On the insurance angle, be cautious. Insurers look for reasons to limit or deny claims, and if a neighbor's structure right on the line contributed to a loss at your property, having formally signed off on a known, non-conforming condition could complicate your claim. Given all that, we lean toward not signing off on something that sits too close and could raise your risk, especially at a rental you are responsible for. The time to raise concerns is while the structure is going up, and since they want your signature, it is fair to ask for the permit, the setback details, and how it affects your coverage first. Run it past your insurer, and possibly an attorney, before you agree.