Investor · Mentor, OH · Member since 2015 · 19 posts · 12 votes
Working on a house flip, but have a bit of a concern. A wholesaler sold me the house-half of a double lot. Typical strategy, they hold and sell the empty lot separately, I didn't have a problem with it, as I got a good deal. However, after doing some more research, it appears that the house I am rehabbing is much too close or pretty much sitting on the property line between the two parcels.
First, get out of the way that I fell just a little short on the research end, because I knew about this before and I should have made the offer for both lots together, or at least figured out the ramifications of this situation in advance. I am not completely inexperienced and I certainly knew better. Let fly the chastising, but I'm hoping for more constructive input.
I'm wondering if anyone has any experience with this and how I am supposed to deal with this situation. Obviously the original owner of the lots was not concerned about the property lines, so they put the house where they wanted. I feel like there must be some laws or zoning regulations that would prevent the seller from doing this.
Who is really responsible here and what is the process to clear up this situation? I don't know if I believe the seller should be required to give me the other lot for nothing, but then again, I can't be required to "move the house", right? The seller tried to sell the parcels separately, thereby creating the violation, so shouldn't they be responsible?
To be clear, you created this violation, along with help from the seller. Forget about the seller being responsible. Are you really not going to get it surveyed, and try to correct it, and just wait for the buyer's survey, when they have to walk?
I just listened to a podcast where the guest had a similar situation. He said he had to aquire the other lot first but his house also sat on part of the second property. It was a pod cast in the 100 to 108 range. I don't remember the guests name sorry I can be more specific
Have you had it surveyed yet? Obviously, that's step one. I assume the two lots are two separate "parcels", each has their own tax ID/property control number-whatever it's called there? If so, this seems like a buyer beware situation, and I don't see any recourse against the seller. Short of negotiating the purchase of the other lot, I'd check on the possibility of a variance for the side set back requirement, assuming the house isn't over the line.
Interesting predicament. I've been involved with something similar, where the building being constructed was inadvertently expanded into the setback, and similar types of relief were required from the neighboring party.
Nope-- no laws (Well, none that I've ever heard of-- in any jurisdiction.) It's their property, they can put the structure anywhere they want within the current Zoning Ordinance... and "interior" setbacks (e.g., those that would theoretically be up the middle 'property line' that now runs through the house) are generally dissolved due to the fact that they're not relevant. (Again, I'll say in MOST Jurisdictions... just to put the disclaimer cherry on the cake one last time. Every area is different as we all know. )
My first bit of advice is to visit the County/Town. Speak to the Building Inspector-- or better if you're in a larger town, the Zoning Administrator. Come clean. Make it sound like you were duped... because in at least one sense, you were. The first thing you need to know is what you can & can't do to the property "as it currently sits." E.g., if you re-build a porch, and that new porch is one inch larger-- do you trigger setback issues? What do the local regs say about legal non-conforming use (because in my opinion that's the scenario that you've purchased yourself into.) Can you even re-blacktop the driveway? What can you do and not do? Forget a Zoning & Planning action for a moment-- can you even get a Building Permit?
After you figure out all of those things, now let's look at the property line, in concert with your intentions for the property-- DO you intend to add anything onto the footprint? Think about porches, decks, patios, drives, walks, pools, and sheds; answer the same questions about these. Does the driveway encroach on the now-neighboring land? Any fenceline added? Figure out what you intend to do, and ask your Town/county contact how much land-- and where on the property-- you would need to acquire in order to proceed with your plans. Then ask this question: If you receive a Perpetual Easement for that land from the Owner, instead of owning it outright, does that give you any form of Zoning relief or do the actual boundaries still rule? (In 99 out of 100 cases, the boundaries will rule, but it's still worth the question.)
Here's another issue: Does any of the now-neighboring land affect your access to the premises? I'm not saying this is your case, nor that your seller is this diabolical, but often you'd hear cases of exactly this happening and it's the (let's say "Front") of the Land that's retained by the Seller... the new property line goes right across the driveway, no "easement" is mentioned in the Deed, and now your access is cut off. Now you have to pay another fee, to own, use, lease, license, permit, grant, or manage/maintain-- your OWN Drive to your OWN house. Many states, however, have statutes that prevent land locked parcels-- in these states an Owner has a RIGHT to access his property-- the abutters must offer a reasonable access. in your situation, I'd argue that it's also the case that the parcel must be SOLD with same rights in a state like this. If this is your situation in any way, then figure that out and memorialize it with the neighbors; don't be surprised if you need to get the Courts involved for this, but it would be your right in those areas.
Finally-- no actually FIRST. First, seek legal counsel. If there's some way to compel the Seller to give you what you need to make you whole, whether it's access-- or an Easement-- or a boundary line adjustment around structure-- or a boundary line adjustment around structure PLUS setback-- and/or all of the aforementioned plus enough land to make it a legal lot on its own (e.g., if the acreage is shy from the zoning requirement in the neighborhood,) then a good lawyer will know it. Please, don't just go to "Bob the Conveyancer" for this-- find someone who does subdivision regs, development, HOA and/or land use for at least 50% of his or her business, and they'll likely be able to tell you your next steps in that juris immediately.
Whatever solution you ultimately wind up with, pay the money, get it surveyed, and get that survey recorded in the official records.
survey property to establish if you really have a problem if its just two city lots and the house faces them.. then I highly doubt access or easement to the property is an issue.
In most jurisictions the house is grandfathered in and unless your getting an Alta policy of title insurance.. a CLTA will suffice.. its the owner of the remaining lot that is fubared in this instance.. city will not make you move house or anything else like that.
I bought a tax sale parcel once in CA. and the neighboring house was half way on to my lot.. we did have to have a trier of fact make a ruling and all he made them do was pay me fair market value for the lot.. He did not have to move his house and the trier would not make him do that.. now he had the money to buy the lot from me.. I suppose if he did not it could have been a different outcome.
I am building in Charleston SC right now.. and we have encroachments all over the place on virtually every infill lot we are building. on.. usually fence 1 foot over... air conditioner sticking over the line etc.. we usually try to just get an easement.. because the burden is on us when we go to get the new building permit. Not on the exisiting structure.
One more example of why we ALWAYS get a survey on our flips. Some think it is a waste, but it has saved us on 2 separate occasions and actually made us money on one.
I would look at simply buying a few feet of land from the people that own the other lot. Since it is a flip, you don't want to give a future buyer any reason not to buy, so I would just make it simple and safe. I personally would not buy a house with an easement and I understand them very well. I would think a regular owner occupant would run from such a thing because of the unknown.
I'm not an attorney, but unless you can prove that the seller had knowledge of this issue, you likely have no recourse. It's your responsibility as the buyer to conduct appropriate due diligence.
My best recommendation is to attempt to acquire the other parcel, part of the other parcel or get an easement. Barring that, you have the issue that -- if you were to attempt to sell -- your buyer may find it difficult to get title insurance on the property. Additionally, if you're over the property line and your new neighbor isn't cooperative, you could find yourself on the wrong end of a lawsuit and having to make modifications to the structure.
The podcast that Adam referred to may have been with @Todd Whiddon. He dealt with this same issue a couple years back (I was nearly a partner on the deal), and he ultimately had to acquire the adjacent lot at a tax sale about a year after buying the first property. It wasn't a fun situation...
If you can't get a set back variance, or if the structure is over the line...I don't think an easement will suffice. I think you need to Own the extra required space, but local regulations/policy will dictate.
I am weighing the options here and also considering the decision to do nothing. From what I can tell, the house does not actually encroach upon the other parcel, it's just riding the line. That may itself be a violation of our local codes that supposedly require structures to have 10 foot spacing from property line, but again, that would be a violation that the seller created. My opinion is that nobody is ever going to buy that tiny sliver of land, perhaps I do wait it out or even let the future homeowner buy the lot at a steep discount because they can't sell it.
To be clear, you created this violation, along with help from the seller. Forget about the seller being responsible. Are you really not going to get it surveyed, and try to correct it, and just wait for the buyer's survey, when they have to walk?
To be clear, you created this violation, along with help from the seller. Forget about the seller being responsible. Are you really not going to get it surveyed, and try to correct it, and just wait for the buyer's survey, when they have to walk?
Agreed with this. If the seller didn't know about the situation, he has no culpability. If he knew about it and disclosed to you, then he certainly has no culpability. Regardless, unless you can prove he knew and didn't tell you, the seller is NOT on the hook here. You are.
And you are required to disclose this to any future buyer. Doing so would likely make it difficult/impossible for him to get title insurance. So, if you have any intention of selling this property at some point, you should attempt to get this taken care of.
That said, you probably won't have an issue with zoning assuming the building was approved at some point in the past and the subdivision of the parcels was also approved (in that case, it was a mistake by the building departments). You'd likely be grandfathered in. But, if you want to change anything about the exterior later, you'd probably run into issues.
I dealt with something similar on my personal residence last year. The house was built over the setbacks 50 years ago (not only were the setbacks different when it was built, but they were violated as well, so double whammy). We were grandfathered in (not required to change anything), but when we wanted to put an addition on the house, zoning said no way. We ended up knocking the house down and rebuilding it within the current setbacks.
I am weighing the options here and also considering the decision to do nothing. From what I can tell, the house does not actually encroach upon the other parcel, it's just riding the line. That may itself be a violation of our local codes that supposedly require structures to have 10 foot spacing from property line, but again, that would be a violation that the seller created. My opinion is that nobody is ever going to buy that tiny sliver of land, perhaps I do wait it out or even let the future homeowner buy the lot at a steep discount because they can't sell it.
As everyone else said......get a survey. Figure out if the house is actually over the line or just very close to it. I've bought tons of old houses that were built 2-5' from lot lines which doesn't meet the current zoning but are grandfathered in because they were legally constructed. You won't be able to tear it down and rebuild with those setbacks but as long as it was conforming when constructed there shouldn't be a setback issue.
If you're over the lot line then you need to look into your options. The seller is going to have a hard time selling the lot that's being encroached on without first resolving it so I would think a real lowball offer on the extra lot might be the first option. It would add value to your property by doubling the size of the yard and would save everyone in legal expenses trying to sort it out otherwise.
I really appreciate the continued input into this situation. There is one thing that is confusing me that maybe nobody commenting is considering when telling me that it is suddenly my problem, I will have to disclose to buyer, buyer won't get title insurance, etc.
Let me just point out the basic fact that the seller just sold me the property without any of these obstacles. I did review the disclosures, on which the seller indicated "unknown" on just about everything (but specifically pertaining to zoning or boundary issues, of course).
Can I specifically prove they did know about it? Well they certainly know more about it than I did as they are the one that bought the parcels together and made the specific decision to sell them separately (I did not mention that the seller was the listing agent, by the way). Now if they can play dumb, why can't I? And if I went and got the survey and uncovered that it is actually an issue, then I did the right thing so I am now accountable for it? I know that no good deed goes unpunished, but please!
This is Not a question of the problem arising with a buyer because you disclose it. A financed buyer, (and most cash buyers will do it anyway), will be Required to have a survey done to get financing. The condition would be "unknown" without a survey, since as you say, you don't even know if the house is over the line or not.
If it's a minor encroachment there's a better solution than having to buy the second lot. Just negotiate with the seller for an easement over the affected part of the other lot. He will get money from you for the easement and still be able to sell the lot.
If it's just a setback violation of zoning, your property should be grandfathered in.
I had a similar situation that I went to buy a lot and had it under agreement but when they went to subdivide it they could not because the house was on part of the vacant lot. What had to happen though is I had to give the owner an easement and if I did not then I could not get clean title to the property either.
You may have more leverage than you think on this and I would talk to the building official as when the lot was subdivided they should of had to have done a survey for the jurisdiction with all structures on it.
Now if they can play dumb, why can't I? And if I went and got the survey and uncovered that it is actually an issue, then I did the right thing so I am now accountable for it? I know that no good deed goes unpunished, but please!
If they knew about it and didn't disclose it, they broke the law. If you know about it and don't disclose it, you've broken the law. The big difference? They didn't post about it publicly on an Internet forum... :-)
If you want to play dumb, you can. But, just because they were (potentially) unethical and immoral doesn't give you the right to be.
What it boils down to is that you want to blame them for something that is your fault. Real estate is buyer beware -- you're responsible for doing your due diligence and ensuring that what you're buying is what you think you're buying. If someone commits fraud, you can go after them in court, but these days, unless you can supply proof that they intentionally deceived you, it's unlikely you're going to win. Especially when you tell the judge that you've bought and sold real estate before -- a professional house flipper isn't going to get much sympathy for not doing his due diligence.
Again, this is your fault. Accept it, learn from it, and don't make the same mistake again.
