There are few certainties in the home-sale market. However, there’s one thing you can count on. If your neighbors have been harboring a concern about an issue affecting your property, you will surely hear about it when the for-sale sign goes up in front of your house.
Soon after a home in Oakland, Calif.’s Montclair district was listed, the seller’s agent received a call from a neighbor asking if she was aware of the pending lawsuit affecting the property. This was the first she’d heard about it. It turns out that the sellers and their neighbors were in dispute over a minor encroachment involving a deck. In addition, their relationship was so acrimonious that they had restraining orders against one another.
California home sellers are required by state law to disclose material facts that affect a property to prospective buyers. Given this law, the sellers in the above example were obligated to disclose the possible encroachment and legal problems they had with their neighbors.
Ducking such a responsibility could have serious consequences. Neighbors often know what’s going on in their neighborhood. Some neighbors enjoy getting to know new homeowners and bringing them up to date on the local gossip. So, it’s best to assume that the buyers will become aware of the problems. It’s far better to truthfully disclose problems before the closing than it is for the buyers to receive the news secondhand.
This is an extreme example and was sorted out only with the help of real estate attorneys. The sale was delayed a few weeks. However, a reasonable resolution to the problem was reached and the sale went through.
HOME SELLER TIP: Disclosure laws vary from state to state. Even so, it makes good sense to get any potentially bad news out in the open before a property is listed for sale, or at least before it hits the market. Most buyers would rather not buy into other people’s problems. Ideally, any lingering disputes should be resolved before selling. And, in fact, the buyers might insist on it.
In another situation, a homeowner blew the whistle on his neighbor who had installed an air-conditioning system in violation of building-code requirements. The condenser had been installed too close to the neighbor’s house, creating a noise nuisance. As soon as the seller’s house went on the market, the neighbor spoke up and demanded that the condenser be moved.
The seller had paid a licensed AC contractor to install the system. The company had not taken out a permit to do the work, unbeknownst to the seller. Fortunately, the negligent company corrected the violation before close of escrow, at no cost to the seller.
Common and sometimes serious problems between neighbors involve easements and encroachments. Unfortunately, sometimes these problems date from before the seller’s ownership of the property. However, that doesn’t mean that the new buyers will accept the situation “as is.”
For example, occasionally oversights occur when properties are subdivided. In more than one instance, a portion of a property through which the sewer line ran was split off and sold without reserving a sewer easement in favor of the seller’s property. In a worst-case scenario, a future owner of the property that’s left without a sewer easement could either have to pay to buy an easement from the adjacent homeowner or have to relocate his sewer line entirely.
THE CLOSING: Neighbor issues can often be resolved amicably between neighbors or with the help of the real estate agent involved. However, it’s wise to hire an attorney with expertise in residential real estate matters to assist with the resolution of more serious problems involving legal issues, property boundaries, encroachments and easements.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.