Failure to disclose information when selling a house

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Failure to disclose information when selling a house

When I was writing the disclosure to sell my house I neglected to mention that the next door neighbors had been allowed to use a corner of the garden to get to their garden. There is nothing in the deeds but the right of way has been

accepted for years. When the buyer discovered this it caused an argument with the neighbors. I am concerned now that the buyer will sue for compensation. The house sold for $81,500. Can you please tell me, am I right that a suit is likely? Can you please give me a rough idea of the compensation figure we might be talking about? What advice can you give please?

Asked on February 13, 2017 under Real Estate Law, Alaska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

There may not be grounds for a lawsuit, though certainly this is unfortunate and will cause strife. The reason there may be no grounds for legal action is that your permission to allow the neighbors to use a corner of the garden is not binding on the people who buy your house if it did not take the form of an easement or or other deed restriction (i.e. something on the deeds), so long as the neighbors have some other way, even a much-less convenient way to get to their garden. (If there is no other way way--if the garden is effectively "landlocked" by your property, so they must traverse your property to ge to it--that could give them grounds to get an easement from the courts.)
Assuming that, as you state, there is no deed restriction or easement and no necessity for one (the neighbors can get to their garden some some other way), then the fact that you gave the neighbors permission was just your personal choice, or at most, an agreement or license between you personally and them; it does not go with the property or bind the new owners. Thus, other than hurt relations with the neighbors, there is no effect on or loss to the buyers and so they would have effectively nothing to sue for.
If there had been a deed restriction or if the access over your property is the only way for the neighbors to get to their garden, so that they can likely get an easement granted by a court, then you failed to disclose a condition impairing the buyer's control over their property. In that case, a lawsuit is very likely. The amount of compensation will depend on how much the access impinges on the property and effectively what the difference in pricemight be in the home selling with and without the restriction--i.e. the degree to which the sales price of the home might have been lower had this been disclosed. If the total price is $81,500, you might be looking at, depending on how intrusive this is, a difference of $10,000 or so, plus possibily having to pick up the new owner's legal fees for having committed fraud (the failure to disclose the important or material issue), but this just a guess, based on the information you have provided.


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