Expert: Todd C. Menard - 6/18/2008

Question
We purchased our home in Jan 2007.  Shortly after we moved in our next door neighbors began construction and added a second story addition over their casita in their backyard.  This addition is located directly adjacent to and overlooking our backyard entertainment area and pool.  We have uncovered documents that prove the seller signed off on the addition one month before the house was listed.  The addition was not disclosed to us in any of the disclosure documents.  One of the reasons we chose the house was because of the backyard and its privacy.  Now we have a huge new structure directly next to our pool.  We have also discovered that the neighbor who performed construction was asked by the seller's agent to hold off on construction until our home closed escrow.  

Should the seller's have disclosed the adjacent construction?  If so, can we also sue the agent along with the sellers?

Thank you,

Rob

Answer
Hello Rob - Lets begin with a disclosure that I am not a real estate attorney and you need to contact a real estate attorney in your area and discuss this situation. There are many potential HOA, local and state law, administrative code, common law, zoning and planning issues presented in your question. In addition, if the listing broker/agent, and your broker/agent, are members of the National Assoc. of REALTORS than they pledged, and are obligated, to uphold those tenets set forth in the code. The Preamble indicates that no inducement for profit and no instruction from the seller can ever allow departure from the ideals set forth in the code. Therefore, if the listing broker/agent was aware, or should have been aware of the neighbors addition, the failure to disclose 'may' have been a violation of the code and possible civil violation as well. If the MLS listing indicated remarks such as 'private' backyard or the wording would lead an individual to interpret the backyard was an oasis... or indicated that there is no two stories adjacent to the premises... it might mis-lead a reasonable person to believe there is 'privacy'. In AZ the seller has a common law responsibility to disclose to the buyer known information that would affect the consideration paid for the property. Also known as 'material' information. A real estate attorney would be able to assist you in this definition and whether any information in the listing, on flyers, or any advertising materials would be in conflict with the sellers, and listing brokers/agents knowledge of the neighbors addition. So what you are looking for is a misrepresentation or concealment of pertinent facts about the property and its surrounding area. On the other hand, as a buyer, you have a 'due diligence' responsibility. This may be interpreted as your duty to investigate all information contained in the MLS Listing, if any, and a duty to have inspections of the property to satisfy any personal concerns about the property, structural integrity, and surrounding area (such as crime, sex offenders, airport noise, planning and zoning with regard to unimproved areas (retail pads), etc). This is usually initiated by a visual sign ("red flag") or a verbal or written statement from the seller, listing broker/agent, neighbor, experience, etc. So, to answer your question in short would require a thorough and complete review of all the documentation contained in your transaction file, and possibly what information you relied upon at the time you committed to acquire the property. The best recommendation I can provide is to contact a "real estate" attorney as not all litigators are qualified to represent you in this endeavor. Usually you will receive an initial consultation at no charge. Then if the attorney feels there is a strong likelihood that there may be an award or settlement you will be instructed how to proceed. Of course, you may need to weigh the cost of litigation with the value of the expected outcome. They certainly can't remove the neighbors structure if it was done to code and permitted. Now, concerning whether you can "sue" the listing broker/agent or your broker/agent... you can alway file a lawsuit against anyone, for almost any reason as the duty to support the allegation is borne by the plaintiff. Another solution fro you may be mediation. Many contracts include a mediation clause where by signing the contract both parties have agreed to mediate before litigating. This also does not remove your ability to litigate unless an agreement is reached during mediation. You should begin by determining what outcome you "desire" to achieve as a result of a lawsuit or mediation. Then determine what you would "accept" from a negotiation as both avenues will most likely result in some concede something. I hope this has assisted you. Remember this is not to be considered legal advice as I am not an attorney, rather I am providing professional real estate advice. - Todd