What do I need to do to get my money back?

Question

I purchased a home from Wright LLC, and Gary McNally handled the title work and closing. After the purchase, the owners of the adjoining property had a survey completed, which revealed that part of my house sits on their land. I then obtained my own survey, which confirmed the encroachment.

When I contacted Mr. McNally, he suggested that I try to sell the property, obtain a quitclaim deed, or have the house moved. He also stated that I should have obtained a survey before purchasing the property. I have since learned that the adjoining land is heirs’ property, which may complicate obtaining a quitclaim deed or resolving the boundary issue.

Given these circumstances, what options do I have to legally sell the home or resolve the encroachment? What steps should I take to determine whether I can recover my purchase money or other losses from Wright LLC or the attorney who handled the title work and closing?

Ashish Acharya · Answer

David, I would not try to solve this through a quitclaim deed or moving the house before getting a real estate attorney and the title company involved. I’d start by having an attorney review the original purchase documents, title commitment, survey situation, closing file, and title insurance policy. The key question is whether the title company or another party should have identified the encroachment before closing and whether you have coverage for the resulting loss.

I’d also get a written opinion on exactly what would be required to cure the encroachment. Depending on the facts, that could involve an easement, boundary agreement, purchase of the affected portion of land, removal or relocation of the structure, or another title solution.

I would not assume that selling the property will simply transfer the problem to the next buyer. You want to know exactly what the title company will insure and what a future buyer and lender will require.

From the tax side, if you ultimately sell the property at a loss or incur costs to resolve the issue, keep all of the documentation. The tax treatment can depend on how the property was held and what actually happens with the transaction.

Given the amount of money involved, I’d get the legal and title position established before spending money on a major physical solution. Happy to connect!

Jay Hinrichs · Answer

depends if you got an ALTA title policy instead of a CLTA policy.. generally ALTA will cover these types of issues.. Not always of course.

my experience is I bought a property at tax sale only to find out the neighbor was half on my lot . This was CA so jurisdiction matters. So for me I had to actually sue the neighbor and the judge ruled that he had to buy my lot at fair market value or move the house which was not feasible.

For now you have a clouded title and you can just rent the house and see how it all plays out.. you can file a title claim that is free and see what you title insurer will do.

Divin Kanyama · Answer

@David Wise This is a significant title and boundary issue, and I would avoid trying to sell the property or negotiating directly with the adjoining owners until a real estate attorney has reviewed the complete file. Gather both surveys, the deed, purchase agreement, title commitment and policy, closing documents, seller disclosures, and all communications with Wright LLC and Mr. McNally.

Possible solutions may include a boundary agreement, easement, purchase or quitclaim of the affected land, a title-insurance claim, reformation or rescission of the sale, or—if no negotiated solution is available—court action to determine ownership and boundary rights. Because the adjoining parcel is heirs’ property, identifying everyone with a valid ownership interest may be complicated, which makes experienced local counsel especially important.

An attorney should also evaluate whether the seller knew of the encroachment, whether required disclosures were inaccurate or omitted, what the title search and policy covered, and whether the closing attorney owed and breached any duty. Give prompt written notice to the title insurer and preserve all evidence, since policy deadlines and statutes of limitation may apply. Because the available remedies will depend heavily on the deed, title policy, closing documents, and applicable state law, the next step should be a review by a licensed real estate attorney in the property’s jurisdiction.

What do I need to do to get my money back?

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