When the for-sale sign goes up, it’s not uncommon for a neighbor to come forth with a complaint — perhaps about an issue that has never been mentioned to the seller before.

The complaint is often addressed to the seller’s agent, either in the form of a letter or phone call. In one instance, a seller’s next-door neighbor contacted the listing agent to find out if she knew there was a lawsuit pending against the listing.

The listing agent knew nothing about this. But she was sure, given California’s mandatory seller disclosure requirements, that if there was a lawsuit involving the property, it needed to be disclosed to buyers — there were already several buyers who wanted to make offers.

The dispute centered on a possible encroachment involving a sliver of land. The seller’s and neighbor’s attorneys worked out a resolution regarding the encroachment. The seller’s attorney prepared a detailed disclosure package explaining the issues involved for prospective buyers to review before they made offers.

The offer date was postponed to give time for the issues to be cleared up and for interested buyers to have the opportunity to review the attorney’s disclosures. A couple of buyers dropped out of the competition. However, the seller received multiple offers and the listing sold in excess of the asking price.

HOUSE HUNTING TIP: If an issue with a neighbor arises during the course of a home sale or transaction, it’s best to deal with it promptly. In the example above, the seller lost a little time getting his home under contract, but wasn’t damaged in terms of the sale price. It could have been a different story if the dispute hadn’t been revealed to the buyers until after an offer was accepted. It could have killed the deal.

More recently, a neighbor walked into a Sunday open house of a listing in the hills above Oakland, Calif., and presented the agent hosting the open house with a letter. The letter was addressed to the listing agent and referenced a possible drainage problem that might involve the listed property. …CONTINUED

The listing agent informed the sellers immediately. They had no knowledge of any such problem. The agent and sellers quickly developed a game plan. The listing agent wrote to the neighbor who complained and acknowledged receipt of the letter.

The neighbor’s letter arrived just after the sellers accepted an offer. The listing agent immediately forwarded a copy of the letter to the buyers’ agent. Without delay, the buyers, sellers and their agents investigated to see if there was a water problem at the neighboring property that might emanate from the listed property.

The house and yard of the listed property were tested for leaks, but none were found. The sellers checked with the local water company to see if their consumption was out of line. It was not. The buyer talked directly with the neighbor and consulted with his home inspector. It was concluded that the yard of the listed property was being overwatered, which was easy to correct.

Not all neighbor complaints are legitimate, and some that are can be difficult to resolve. A Piedmont, Calif., seller had to pay $20,000 to a neighbor for a drainage easement that had never been recorded. If there is a problem that needs to be corrected in order for the buyer to feel comfortable moving forward with the transaction, consult with knowledgeable professionals and get several estimates.

THE CLOSING: Be sure to consult with a top-notch real estate attorney — preferably one who specialized in residential real estate — if you have any questions about your rights and responsibilities.

Dian Hymer is a nationally syndicated real estate columnist and author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide," Chronicle Books.


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