Previous owner failed to disclose an encroachment

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Previous owner failed to disclose an encroachment

We purchased a home in March, while the property was still
snow-covered. Once the snow melted we learned that the
previous owner had buried quite a bit of waste treated wood,
chicken wire fencing, plastic runners between our yard and
city property. We let the city know about this, and they made
us aware that we are liable for the encroachment. In reading
our disclosures document, however, the previous homeowner
specifically stated that there were no encroachments. I’m
wondering if we have any recourse here, to help with the
financial burden. Thank you

Asked on November 1, 2018 under Real Estate Law, Minnesota

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

You can sue the previous owner for fraud, which is the intentional misrepresentation or nondisclosure of a material fact made with knowledge of its falsity and with the intent to induce your reliance upon which you justifiably relied to your detriment.
In other words, you would not have purchased the house had you known of the encroachment.
Your damages (monetary compensation you are seeking in a lawsuit for fraud against the previous owner) would be either the benefit of the bargain or your out of pocket loss.
Benefit of the bargain means a defrauded purchaser may recover the difference between the real and represented value of the property regardless of the fact that actual loss suffered might have been less.
Out of pocket determination of damages for fraudulent misrepresentation permits recovery of the difference between the price paid  and actual value of the property acquired.


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