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Sunday, January 14, 2007

BEING HIS OWN NEIGHBOR

Five years ago a reader of mine bought a house in California. Before the purchase he did a title search to make sure that the seller had full, unrestricted title. The search came up clear and the purchase went through without complication.

Two years later, with interest rates dropping, my reader decided to refinance his mortgage. For that purpose he more carefully examined his title papers and found, much to his surprise, that he and his wife owned not only the lot on which their house stands, but also one-half of the lot next door ... on which their neighbor's house stands.

"I was stunned to learn this," my reader writes.

The house next door is a rental, owned by a woman who lives about 250 miles away. On the rare occasion when she stops by to check on her property, she complains to my reader about the difficulty of maintaining a rental from such a long distance. When he asks why she doesn't sell her place, however, she responds, "Oh, it's too complicated to explain."

Now that my reader realizes that he owns half the land on which her house sits, that complication suddenly seems clearer. What's not so clear is how a previous owner ended up with title to half the property next door, or what my reader should do about it now that he knows how things stand.

"It seems to me that we should offer our neighbor her property back," he writes, "perhaps for the cost of the paperwork, since we didn't know we bought it in the first place."

His lawyer advises him, however, that he'd be a fool not to extract some money from the owner of the neighboring property. The neighbor gave it up for some consideration she received, the lawyer reasons, and my reader simply got lucky when he purchased the property.

"If he found $250,000 buried in his back yard," his lawyer asks, "would he give it back to someone who claimed they had buried it there?"

My reader's lawyer makes a good point. If he's legally entitled to charge the neighbor for the half-lot he owns, upon which her house happens to sit, why not get what he can for it?

The simple answer is that simply being legally entitled to do something doesn't make it the right thing to do. The buried-treasure parallel is hardly persuasive, since he has known for certain who his neighbor is since he purchased his house. Even if he follows his lawyer's advice, his neighbor may refuse or be unable to buy the property back at any price, creating an awkward situation in which his neighbor can never sell a property she doesn't entirely own.

Even so, the neighbor has been collecting rent on a property not entirely hers. There would be nothing wrong with my reader offering to sell the property back to her at a reasonable price plus legal costs, the money to be paid as a portion of the rent she collects over time or, should she decide to sell, as a portion of the sales price.

But if my reader and his wife truly believe that they got their home for a fair price, regardless of whatever consideration the neighbor may have received from a previous owner, and if they want to offer the property back to their neighbor in exchange for nothing more than whatever legal costs may be involved, it's a gesture that any neighbor should appreciate as generous.

Given how they feel, the right thing for them to do is to sit down with their neighbor, explain the situation, extend the offer and then go about getting it done.

4 comments:

Anonymous said...

I read with interest the article about the rental property next door that appeared in the London Free Press. One other suggestion on doing the right thing is to offer to purchase the others 1/2 of the neighbours lot and take over the whole property and re-align the property boundary lines. The purchaser could now mortgage the newly severed property . Now it is over the good neighbour to do the right thing to be really face in the selling price for her half.! It would be something like two business owners breaking up a small company with a buy sell agreement you better be fair or it will come back to bite you

JimB
Canada
The Great White North

Anonymous said...

Dear Jeffrey,

I read your artlicle "What to do with a Half Lot Next Door". One sentence struck a cord. "Simply being legally entitled to do something doesn't make it the right thing to do." My 34 year old son suffered from bipolar disorder and took his own life in 2002. For some strange reason, he named a virtual stranger ( a young woman) as beneficiary for the death benefit from his job. The benefit was around $83,000 dollars. We contacted the young woman at the time to try to determine her connection with my son. She said that she had been in a play with him two years before his death and had not seen or spoken with him since then. When she learned of the death benefit, she contacted her family lawyer. The lawyer told her she was legally entitiled to the money. We asked her to help us pay for funeral expenses which were over $13,000 dollars and she declined to do so. She kept every
dime without any pangs of conscience. Her mother told us that my son chose her daughter and excluded his family for a reason. He was severely unbalanced and that was the only reason he did that. Doing the right thing becomes impossible for may people when money is involved. That includes money which comes from tragedy with full knowledge that family members are suffering.

bonanzajs@hotmail.com

Anonymous said...

I find bonanzajs' story interesting. I am at a loss to understand why a family claiming financial hardship would incur over $13,000 in funeral expenses and then be disturbed because someone else would not participate in defraying the expenses. The argument, which I have some trouble accepting, goes this way: Our son was mentally disturbed. But, for his mental illness, we would have received the $83,000 windfall and the young woman would have received nothing. Therefore, the young woman has an ethical obligation to pay for our extravagent funeral.

I think the young woman did the right thing and had no ethical obligation to pay any of the funeral expenses.

Whindy said...

I would not be quick to dismiss legal advice on the matter of the land boundary.

If someone falls on this land and is injured, the LEGAL owner could be sued. If there is toxic waste on the land, who is responsible?

If property taxes are uncollected, it might jeopardize not only the parcel he thought was his neighbors, but the parcel he lives on himself.

Not being an attorney, I'm not sure of all the details. But I'd find out before deciding to be too generous.

Wendy Hagmaier
Fullerton, CA