Neighborhood Nuisance Disclosure
Question: In a recent column you said that a seller of a home had to disclose a “nasty neighbor” next door. Why? Some neighbors are nice, and some are not; and some neighbors are nice now and nasty later, and vice versa.
Answer: You minimize the importance of neighbors. There was major litigation a few years ago in the Show Low area between a cattle rancher and part-time residents from Phoenix. These part-time residents from Phoenix were very nasty, and they yelled obscenities and threw trash in the front yard of the cattle rancher’s home. In emotional testimony at trial from the cattle rancher’s wife, she said “after your friends and your family, all you have is your neighbors.”
Arizona courts would probably find that if the cattle rancher and his wife were to sell their property they would have to disclose their neighbors’ nasty behavior.
Note: The vast majority of cases brought by buyers concerning a seller’s nondisclosure relate to material defects in building or property, such as a leaking roof, cracked foundation, or a scorpion hotbed. A defect is material if it objectively affects the value or desirability of the property. However, in some instances a property’s material, off-site defects also must be disclosed. A property’s material off-site defects must be disclosed when they are i) known by the seller, and ii) not easily discoverable by a buyer using ordinary diligence in the inspection of the property. For example, an existing freeway on an adjacent property would not need to be disclosed because a buyer should be able to easily discover this existing freeway. On the other hand, a proposed local dump site that a seller was told would be built nearby would need to be disclosed because only the seller would be privy to information about this dump site.
Neighbor as Nuisance – Alexander v. McKnight (1992)
Although not binding in Arizona, a California court determined that a seller must disclose “neighborhood noise problems or other nuisances” when a neighbor displays a “pattern of offensive and noxious activities.” Alexander v. McKnight, 7 Cal. App. 4th 973, 978 (1992). The court notes the McKnights and their actions as “an overtly hostile family who delights in tormenting their neighbors with unexpected noises or unending parties.” Id. at 977. The homeowner, Alexander, filed a complaint about the nuisance the McKnights brought to the neighborhood and the court deemed the existence of the neighboring McKnights to be material, and not a matter which will ordinarily come to the attention of a buyer viewing the property “at a time carefully selected by the seller to correspond with an anticipated lull in the festivities.” Id. The California court arrived at the conclusion that if Alexander were to sell the property, Alexander would then be required to disclose to a buyer the history with the McKnights as neighbors.
The Alexander case is an extreme example of a neighborhood nuisance; having the McKnights as neighbors would be like being neighbors with Johnny Knoxville from TV show “Jackass” fame. However, the Alexander case reflects a greater trend regarding buyers of real property and their nondisclosure claims against sellers in states across the country, including Arizona. That is, a general moving away from the “let the buyer beware” motto of yesteryear towards a seller’s disclosure to “tell all.”