Q: Is a seller liable after closing for misstatements made on disclosure statement.
After closing on my home, but before moving in, my neighbor had his property surveyed. Among other things, there is a semi permanent structure built by the sellers husband, who is deceased, that the survey shows is encroaching on his property. On the Disclosure Statement, the seller stated there were no encroachment issues with the property. The neighbor states he told the husband he was building over the property line before the husband died. The neighbor wants the encroaching fixtures, including the semi permanent structure, removed from his property due to liability issues. Best guess is this will cost me several thousand dollars. Does the seller have any liability? I also found out the finished basement apparently had no permits pulled as required even though seller stated no work was done without permits. This could also cost a fair amount of money due to possible fines, licensed contractors to fix possible violations, etc.. Does seller have any liability for costs on this issue.
The answer to this question is: maybe. There are two different issues. The first is the encroachment onto the neighbor's property. The second is the basement work done without proper permits.
As to the first (encroachment issue), the seller would not be liable to you for that unless the seller had represented to you in the purchase agreement that there were no encroachments onto neighboring property. Most purchase agreements include a provision to enable the buyer to have a stake survey done prior to close. Most buyers waiver this provision, for better or for worse. Failure to have a survey done prior to close that would've discovered the encroachment onto the neighboring property is a risk borne by the buyer. So unless the seller actually told you before closing that there were no problems with encroachments onto neighboring property, you're probably out of luck there.
As to the second (permits) issue, if the seller represented to you before close that all required permits were pulled but they were not, you may have a valid claim against the seller for that. The theories that could be pursued for that include fraud, misrepresentation, innocent representation, and possibly breach of warranty of title if you received a warranty deed for the property. In order to pursue this, I recommend you schedule an in-person consult with an experienced real estate attorney in your area.
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