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11/24/08: Surveys Are Critical Before Settlement

Housing Counsel

By Benny L. Kass

Q. We bought a home last year from a real estate agent/owner who had been renting out the house. Beyond the back yard was a large vacant lot, with a fence bordering the properties that was old and falling down. The fence extended across the rear and joined to a shed on my property.

Last week a man came to our door stating the fence was on his property (the vacant lot) and that his property extended approximately 10 feet into our yard. We were told to take down the fence within a week or he would do it at our expense.

We contacted the previous owner about the property and the fence. He said he remembered the old fence, but it wasn’t part of our property. He never said anything about this when we were looking at the house, nor is it written in any disclosure. We bought the home partly because of the large back yard. On checking with survey plots, apparently the owner of the lot is correct. Do we have any recourse? To the best of our recollection, we never saw a survey before we went to settlement.

A: You – and the settlement attorney who conducted the closing – made a big mistake in not obtaining and reviewing a property survey before you took title to your house.

Prior to closing, whether the buyer is paying all cash or obtaining a mortgage, a title search is performed. This is generally arranged by the title attorney (or company) that has been asked to conduct the settlement. The title search will disclose matters of public record, such as: who currently owns the house? Is there a mortgage (or mortgages) that have to be paid off? Are there any tax liens filed on the land records which create “clouds” on the legal title?

But the title examination does not give a potential buyer a complete legal picture of the property. Public records do not disclose unrecorded easements, such as a right of way to get to the main road or to the lake. Nor will a title search reveal problems regarding the location of the boundary lines, which is the issue you are facing.

Are you sure that you did not get a survey when you went to settlement. Review the settlement statement (the HUD-1) which you received, and there should be a line-item charge for a survey (line #1301).

If you did receive – or at least pay for — a survey, then you should contact the person who conducted your settlement, and discuss the situation with him/her. Settlement attorneys (and title companies) have the obligation to alert potential buyers to any problems regarding the property they are about to buy.

Who is this gentleman who just knocked on your door? Have you confirmed that he in fact owns the property behind your house? You should politely ask him for identification, so that you can check him out. For all you know, he is a scam artist that wants to take advantage of you.

You should also consult an attorney, because you may have some defenses that would enable you to keep the entire back yard. For example, you should find out from your seller how long he lived in the house, and how long that old fence was there. There is a concept in law called “adverse possession” – also known as “squatter’s rights”. In the District of Columbia and in Virginia, if the fence has been on your neighbor’s property for at least 15 years, and you and your prior owners have used the portion of the lot that your neighbor is claiming, you may be able to get a Judge to order that you now own the land. (In Maryland, the statutory period is 20 years.)

To prove adverse possession, you must show that your use (and that of prior owners) has been “open, notorious and hostile”. These are the three legal buzz words that courts look for to determine whether to take property away from one person and vest it in another.

If your neighbor has given permission for someone to use the property in question, the court will not rule in your favor, because the use was not “hostile”. But the fence will be very helpful to you, since it is clearly open for all to see.

Litigation is time consuming, expensive and always uncertain. If you are satisfied that your neighbor is legitimate, you or your attorney may be able to negotiate a price so that you can buy the property – instead of taking your chances in a court of law.

Do you have a case against the seller? You have to read the sales contract very carefully. The typical contact used in this area merely states that “title is to be good of record ” and insurable by a recognized title insurance company. I presume that you were able to get title insurance when you went to closing.

However, Sellers in all three jurisdictions are required to provide some form of disclosure to their potential buyers, although Virginia and Maryland allow a seller to disclaim most items regarding their house instead of providing a full disclosure. In the District of Columbia, for example, a seller must answer this question: “Does the seller have actual knowledge of any zoning violations, nonconforming uses, violation of building restrictions or setback requirements, or any recorded or unrecorded easement, except for utilities, on or affecting the property?

Review all of the legal documents you received at settlement. If your seller checked off “no”, you may have a case against him, since he has now admitted that he knew about the fence problem before you bought it. But that won’t help you get your land back. Keep in mind that your seller may be your best witness should you plan to sue for adverse possession, and suing him will not help your cause or your case.