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SHHH: Don't Tell Them About The Neighbors!

Every so often, we face a situation that might impact the ability to sell a home, and today we'll look at the case of a homeowner who has a known felon living in the house next door.

If you were faced with this situation, where your immediate neighbor on one side of your home had been arrested for dealing drugs, would you have to disclose this to prospective buyers?

Now you might be thinking "that kind of thing does not go on in my neighborhood," but I assure you this is a very nice neighborhood in Tallahassee where homes sell for more than $300,000 on average. I suspect this very homeowner would have thought it couldn't happen in his neighborhood either, but here we are.

Johnson v. Davis - Does it apply to disclosing about the neighbors behavior?

Johnson v. Davis - The Duty To Disclose

This requirement has been around since Johnson v. Davis, 480 So. 2d 625 (Fla. 1985), when the Florida Supreme Court announced a new rule of law to replace the long-standing rule of "caveat emptor," when dealing with residential real estate transactions.

Simply put, sellers cannot lie to buyers about the condition of a property. They cannot hide known issues and in fact must report to buyers anything that they know regarding the property if it could impact the present or future value of the property. This relates to not only the physical condition of the property, but also to anything going on locally or in the neighborhood that might negatively impact property values.

How To Disclose Issues With Neighbors

When I was asked about this specific case recently, my concern was about the secondary issue of "slander." I knew it was important to disclose the issue about the neighbor, but I also was concerned with how that neighbor would react to my company "saying bad things" about him.

I spoke with a real estate attorney in Tallahassee to get advice on how to handle the disclosure, and he suggested that it be a simple addition to the Seller's Property Disclosure (SPD) with a link to an article online that revealed the arrest.

So that makes great sense, but what do you do when you have something that does not have an article online containing all the particulars?

Simple. Do what I did and contact a competent real estate attorney and get his/her advice.

When In Doubt, Disclose

The bottom line on issues that may (or may not) impact the sale of your home, you are always wiser to disclose. It has been my experience that almost nothing can stop a buyer when it has been disclosed prior to contract, but the opposite is true post-contract.

Buyers often times get skittish and the slightest issues can make them want to back out of a transaction, so it is imperative that any potential negative information be delivered before they go to contract.

When in doubt, put the information on the Seller's Property Disclosure.

Discussion

#1 By Pete at 7/11/2017 3:50 AM

There are two thoughts to this article that addresses legal issues.

1. the attorney as far as I ma concerned was wrong. There is nothing of a physical nature in the neighbourhood that directly affected the sale of the home. Like known sinkhole activity, sewer line problems, future street construction or city municipality issues.

2. We as agents are not law enforcement, we are not news reporters and we are not allowed to pass judgments on someone just because the seller disclosed that you. If asked you direct people to local law enforcement.

If the sellers decide to disclose such activity in writing then let them do so and take responsibility for what they said. We as agents do not pass on hearsay. If you can not find such an article in the newspaper or have direct access to public court records of the case to forward on the diclosure, then we have no proof and therefore have no right to report it period.

#2 By Joe Manausa at 7/11/2017 3:50 AM

Hey Pete, thanks for commenting. 2 quick thoughts ...



1. Does the requirement for disclosure exist solely for issues of a "physical nature?"



2. You use "we and us" a lot so I take it your a real estate professional. But the disclosure law is not truly about us, it's a requirement of the seller. If the seller called you (as a professional) and asked if this should be disclosed by (the seller), how would you respond?

#3 By Peter Dolci Jr at 7/11/2017 3:50 AM

My answer would be NO. The reason would be that if he had no direct knowledge of the case, how the case proceeded or if the man was even charged and so on. If the seller makes that disclosure without the proper documentation, as you mentioned in your long article, he could be receive a liable law suit.

Now here is my questions to you and all that read this

Do the following need to be disclosed even though there is no physical or direct relation to the value of the property, and the owners have direct or indirect knowledge of those facts with verifiable information:

1. House is Haunted and has been verified as such? or if it has not been?

2. If a relative dies fo naturals causes in the house?

3. If there was a violent crime committed in the house that resulted in the death of another person or persons?

#4 By Joe Manausa at 7/11/2017 3:50 AM

Thanks Peter, you make a solid argument. There is precedent for your 3 questions so the answer is an obvious NO, but I suspect the real estate attorney who advised YES in this case was making the point that it is always better to disclose when in doubt. The disclosure is going to have zero impact upon the sale-ability of the home, so why not simply put it in the SPD?

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