THE PROBLEM NEIGHBOR

Quick Glimpse of this Case:

This posting deals with a case where the neighbors “over the fence” were openly hostile and abusive towards the sellers. Physical items as well as verbal insults were tossed back and forth. Police reports were filed. Such animosity might be based on pets, personal prejudices, or past disagreements. Good fences don’t always make good neighbors, unfortunately!

Agents Advisory:

First question, is this dispute a material fact about the property? Secondly, how do you satisfy your duty to disclose it? Third, might you be setting yourself up for trouble if you mention the neighbor’s behavior? The answers are Yes, Yes, and No.

Agents are responsible for disclosing anything which could influence the value or desirability of the property. We must disclose all material facts which are not already known to or readily observable by the buyer. The neighbor’s behavior fits this description.

How do you disclose these issues to a potential buyer? Well, in writing is best, and receipted by the buyer to prove they got it. Emails work, too. If that’s not practical, a verbal disclosure is acceptable as long as you can prove you did so. How to prove you disclosed? Notes to your communication log, done at the time you discussed the problem, will help all the parties recall that you did your duty. You may also use a witness to your conversation with the buyer. Just be ready to prove your disclosure if the buyer should come back months or years later to say you never told them.

Finally, are you setting yourself up for a personal lawsuit for slander by the neighbor? You are at risk if you state untruths; that’s slander. You can state what you personally observed, factually and without malice. If the neighbor caused you a ruckus when you held the house open, you can and should bring this up with potential buyers. If you personally didn’t experience any disturbance, disclose the problem issues as described by the seller. State that these observations came from the seller and have not been personally verified by you (unless they have). As a matter of fact, the police reports would also back up your obligation to mention the neighborhood disturbance.

Summary:

Disclose what you know, who gave you the information, and whether it has been verified by you or not. If the buyers don’t consider the neighborhood problems as important to them, they will buy. If the problems are of concern, the buyers are probably better off elsewhere. Give the buyers a contract contingency and sufficient time to meet the neighbors. Let the buyers determine if they will get along. Fully-informed buyers typically make a better decision whether to proceed with escrow or find something else.

Does this issue of problem neighbors reduce the value of the property? Yes, agents agree it would. The difficult question is by how much? If the neighbor problem is a personal one, likely to end when the seller moves out, the diminution in value is minimal. If the problem is expected to continue regardless of who moves in, the reduction in value is greater. Buyers are unlikely to choose a home with built-in problems if there are other homes available with no such issues. It takes a buyer incentive to sell a home with difficult neighbors.

Good luck!

Cari Pace