Two days prior to closing and I was at a final walk thru of a home with Buyer clients.  It was a sunny Saturday, and the clients were excited to be finally so close to getting their new home.  The interior looked great and all was as expected.  There was some trash left behind by the Seller but that would be remedied in one way or another.  A quick walk thru of the backyard and we would be all done.  Little did we realize that the whole transaction was about to become unraveled.

It seemed like an innocuous question while we stood looking up the steep wooded slope in the backyard.  “Where exactly is the back-lot line?”  I called up a survey map on my phone to ascertain the answer.  It was then that we noticed the side lot line on the map did not seem to correspond with the physical fence line.  A call to the title representative did not immediately answer the question but we got a commitment for an inspector to investigate first thing Monday morning.

I let the Listing Agent know what we found and that there may be a delay in the closing by a day or two until we got more information.  We all held our collective breath but none of us figured this to be a problem that couldn’t be resolved.

On Monday the inspector determined that yes there seemed to be an encroachment of the neighbor’s fence and estimated it to be at least 10 feet into the lot that my clients were buying.  This was no small encroachment and represented an area of about 10% of the overall lot size.  The Seller seemed to be indifferent about the matter and brushed it off.  “That is the way it has been since I bought it 10 years ago.”  The neighbor had purchased the property only a few years ago and was completely unaware of the encroachment.

My clients were faced with a decision:

1. Close on the property and take on the legal process to resolve the issue with the neighbor, which had the potential to cost them settlement and legal fees.

2. Delay the closing and have the Seller resolve the problem.

3. Rescind their offer and hope the Seller wouldn’t fight to keep their earnest money, since all contingencies had been waived.

The Seller was unwilling to resolve the issue or delay the closing.  After consultation with an attorney the Buyers decided they would rescind their offer.  The Seller however was unwilling to release their earnest money.  The Buyers attorney was proficient, and made the case that the encroachment was significant which affected the title of the property and thus the title was encumbered.   Eventually the Seller gave in without going in front of a court and the earnest money was returned. 

It was a stressful time for the Buyers as it was for me.  Never have I had a Buyer lose their earnest money and didn’t want this to be the first.  A few weeks later the Buyers got another home under contract and this time we found ourselves walking the property with a measuring tape to confirm what was on title.   All was good this time and the Buyers are now happily in their new home.   It was a valuable experience as a Broker, and lot boundaries will be something that will always get special attention in every future transaction!