DISCLOSURE DILEMMA – THE OBNOXIOUS NEIGHBOR
When selling a home in California, all Seller as well as their agents must make certain disclosures to prospective Buyers. The best known of these is the Transfer Disclosure Statement and the Seller Property Questionnaire. It is on these forms that Sellers disclose any adverse conditions on the property that might “materially affect it’s value” to a Buyer. Often, Sellers are hesitant about disclosing defects because they fear – often with good cause – that it may make their home unsellable unless the make expensive repairs. However, failure to disclose defects is a sure way to get sued by the Buyer after the sale closes. That’s when Sellers not only get to pay for repairs but also get to pay the Buyer’s legal fees. But how do you handle the issue you can’t fix… the obnoxious neighbor?
First, understand what we’re talking about legally…a Nuisance. California law defines two forms of Nuisance: (1) a Private Nuisance – when some one prevents or disturbs your use or enjoyment of your property such as the shouting or fighting neighbors or barking dog; or (2) a Public Nuisance – when the disturbance affects others as well such as operating a crack house, or the rock band practicing, or the retail home business with lots of traffic…. even Justin Bieber speeding down the street in his Ferrari. The obnoxious neighbor can be both… and if it is a nuisance, then you are required to disclose.
But like so many legal issues, this can be a gray area: Ask yourself these questions:
(1) Is the neighbor’s conduct personal to you? Maybe he thinks you’re the jerk and the problem is a personal one between the two of you. If so, then this might not materially affect the value of the Property for a Buyer and disclosure might not be required.
(2) Does he have the same problems with other people in the neighborhood? If so, then it’s probably not personal to you and it is likely that the Buyer would encounter the same issue. This should be disclosed and explained.
(3) Is this the reason you’re moving? Whether the neighbor problem is a private nuisance or a public nuisance or just a personal battle, if it is substantial enough that it is driving you from the neighborhood, this should be disclosed and explained.
As with all disclosure issues, the general rule remains: Disclose, Disclose, Disclose. The penalty for failing to disclose a nuisance which materially affects the value of your home to a Buyer can be very severe. In the 1998 California case of Shapiro v Sutherland (70 Cal.Rptr.2d 548) the Seller failed to disclose the disputes that he had with a neighbor over several years which had at times caused the Seller to call the police. After the sale, the Buyer had similar experiences, and learned about the Seller’s prior problems. Buyer sued Seller for rescission of the sale (give me my money back) plus attorney fees, court costs, and other damages… and Buyer won everything.
The key here is Disclosure. The Buyer may be so in love with your home and the neighborhood that they might not really care about problems you had. As with every disclosure item, it’s not just checking a box on the TDS stating there is a nuisance, it’s that plus providing an explanation as to why the box was checked. By meeting your Disclosure obligations, the Buyer will have the opportunity to determine whether to check this out more or not… it does not mean that your sale will die.
Lastly, be sure to tell your real estate agent about any such issues and get their input on how to handle this as a disclosure item.
BPE Law has been assisting our clients with their real estate, business, and other legal needs ever since we started doing business. We’re active in the communities in which we live and in protecting and expanding our clients’ opportunities for business and real estate ownership … and providing assistance when they’re challenged. If you have questions concerning real estate, business, or any other legal matter, give us a call at (916) 966-2260 or e-mail me at firstname.lastname@example.org. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.