Expert: Matt Heisler - 4/1/2009

Question
QUESTION:     My wife and I have been under contract on a home for about a month and a half, we are very close to closing.  The home beside the home we are purchasing just recently went up for sell, and they paid to have a survey done which revealed that their fence and part of one of their storage buildings is on the land we are buying.  The current owner of "our" property just made some sort of deal with the neighbors, which included him giving them ownership of the land that the fence and building is on.  This caused us to have to wait for a survey to be done of the property to close the loan as well as wait on a new deed.  My question is, is it legal to knowingly make changes to the deed of a property while it is under contract?  Could the "profits" that were received by the seller be recouped by the buyer, since our contract was for the original deed?  Could this be considered breech of contract on their part, and would I be able to get my money from them for appraisals, insurance premiums, good faith, etc.?
         West Virginia

ANSWER: Hello:

Recognize that my license is in MA, but in short, the answer is NO you can not do that.  When you make an offer on a property, the seller must deliver it in the state it was in (or better) at the time of contract.  So if a tree falls on the garage, the seller has to pay to have the tree removed, and the garaged fixed before close.

There's pieces missing in your story.  Why did you have to wait for a survey? That's not a standard condition on a purchase contract. You should have closed before this all got started.  But don't confuse wrong doing with compensation.  The seller has done something that is against the law, but you don't get to determine what is "fair" compensation.  Doubtless, he has a different interpretation of things and you will end up doing what most people do:  Settling.  If he made 10K, you'll get 5K.  You can't (cost-effectively) sue him for breach of contract, so your choices are (practically speaking):  Walk away, and be out your expenses, b) force a settlement (you'll need an attorney)  c) deal with it as is.  

Your deposits should be safe, as the seller can no longer deliver what was promised, which is the original deed.   You are in the right, but any compensation you get will be hard earned, trust me on that.

Best of luck, and THIS IS NOT A SUBSTITUTE FOR LEGAL ADVICE. I HAVE NOT REVIEWED YOUR CONTRACT, I AM NOT AN ATTORNEY, and I do NOT practice in VA.  

Matt

---------- FOLLOW-UP ----------

QUESTION: I was just wanting to fill in the missing pieces of the puzzle for you.  Originally a survey was not needed, but since a piece of the property is missing it must be surveyed to get the meets and bounds for the new deed, which doesn't contain the property the neighbors fence and storage building sets on.

Answer

Hello:

That does change things.  It seems that you knowingly, at some point, acknowledged that you did not know what you were buying, and hence the survey was necessary. The question then becomes, at what point after the survey was it decided by both parties what you were buying, and what did you buy? You should look at your contract carefully, and examine the wording of any exchange of messages in regards to this element of the situation.  But this may absolve the seller of any wrong doing, since it seems the intent of the original purchase contract was not determined.

Matt