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 - 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.