A dog that barks all night. The tree in the yard next door leaning on your fence. Your neighbor’s cat scratches your child’s arm in your yard. All of these are potential problems and can ruin your relationship with your neighbors. When you sell your house, isn’t it fair that the buyer knows about these potential problems?
Do you have to disclose bad neighbors when selling a house?
If you have neighbors who cause problems for you in any way, you could consider them to be ‘bad’ neighbors. You may have been able to resolve some disputes with them amicably, but you may also have been forced to make a formal complaint about them.
It isn’t required by law to disclose ‘bad’ behavior by your neighbors when you sell a house, but it is in your best interests to do so, as it may affect the sale. You do need to disclose if there have been any formal complaints against your neighbors.
If you fail to do so, not only will it be an illegal act, but you can open yourself up to a mis-sale or to being sued in the future.
What are ‘bad’ neighbors?
In one way, a ‘bad’ neighbor is one that you consider does not behave as a neighbor should. This is completely personal, though, and can be interpreted in many ways. More generally, and hopefully more objectively, a neighbor can be considered as bad when their behavior and habits impact on your house or property and on your ability to live your life in the way you would prefer.
What constitutes a dispute with a neighbor?
A dispute with a neighbor is a conflict over anything that affects their property and behavior in relation to yours. The most common issue between neighbors is over boundaries: if any part of the neighbor’s property, or anything on it, encroaches on your property over the legal boundary. This may be as significant as a tree leaning over your fence and damaging it, or a fence being put up onto your property.
Another common dispute is over pets: the noise they make, especially at night; the damage they may cause by digging under a fence; any threat they may hold, especially to kids and other pets, by getting into the other yard.
A result of a boundary issue or dispute over pests could be damage to property. Your neighbor’s tree may fall on your fence, for example, or their dog may get into your yard and attack your cat.
The last type of dispute you may have with a neighbor is over an easement. Simply, this is an agreement with your neighbor allowing them to use part of your property for something, like parking, or some kind of access.
If the arrangement is informal, then you should warn your neighbor that they will need to re-negotiate with the new owners. If the easement is legally agreed to, then you have to tell the buyer. Any dispute over this type of agreement has to be revealed to the buyer.
How do you disclose bad neighbors to a buyer?
The easiest way to warn whoever buys your house about bad neighbors is to speak to them.
You will be able to explain to the buyer why you find the neighbors to be a problem and to warn them what to look out for. You will also be able to discuss any disputes and how they have been resolved.
There are two basic problems with this approach. Firstly, your reaction to and opinion of your neighbors is subjective and what you report to the buyer is from your perspective, which means it may not be entirely fair or accurate.
Secondly, the buyer will be living with the neighbors and should have the opportunity to build their own relations and opinions. Your bias can color that.
The best and legal way to disclose bad neighbors is to do it formally, by filling in the ‘Sellers Property Information Form’ (SPIF).
This form has to accompany all the documents in the conveyancing process. It contains the necessary information, like your name and contact details, as the seller. It also contains information about the building and any applications for additions, including the plans that have been drawn.
The SPIF also has a section that asks for information about disputes with neighbors. Legally, you have to disclose all the necessary details about any formal complaints that you may have laid against your neighbor, which must be accompanied by any relevant formal documentation.
It is a relatively grey area whether you should disclose on this form any informal disputes you may have had with your neighbors.
The point of the SPIF is to give the buyer all the information they need to make a final decision about whether they want to buy. This is part of the conveyancing process.
What happens if you don’t disclose bad neighbors?
If you don’t report any disputes with your neighbors and the buyer finds out during the conveyancing process, they can declare a mis-sale and the deal will fall through. They may also simply retract their offer.
It is not only during the conveyancing process that this is important. If there have been disputes with neighbors that the buyer wasn’t told about, and they cause problems for the buyer, there is the threat of the buyer taking legal action against you.
The long and short of this question is: Yes, you do have to disclose bad neighbors to a seller. At least, it is a legal requirement to report any formal, documented disputes with neighbors to the buyer.
At best, it is in both your interests to disclose any informal disputes too. In this way, you protect yourself from possibly facing legal action in the future.