Hello everybody.  Block walls, fences and other physical barriers which are not constructed precisely on the boundary line between two properties, but instead encroach on someone else’s land, are frequently problematic and sometimes result in litigation.

Over the years I have authored many articles advising AOA members how to best protect their land from easements and other rights claimed against their property due to encroachments by adjoining land owners.

This month’s column discusses the topic from the opposite perspective, namely, how one owner might permanently perfect his right to use a neighbor’s property arising out of an encroaching wall (or other barrier) which is situated solely on the neighbor’s land.

This discussion is set in the context of an actual case which I litigated and won on behalf of the encroaching party.

Disclose the Encroachment!

The lawsuit involved two side by side properties situated beneath the prominent hilltop “Hollywood” sign rising above Hollywood, California.  A cinder block wall separated the properties.

The basic problem was that the wall did not touch or straddle the boundary line.  Instead, it encroached on the other owner’s land by about six feet along its entire 122-foot length.

The practical effect of that was that the wall provided my clients with an extra six feet of width of their property, but conversely narrowed the neighbor’s land by six feet.

Several weeks after my clients closed escrow and purchased their property, the neighbor (a former “Miss Europe” beauty contestant) approached my clients to discuss the encroaching wall and the fact that she had advised the seller’s agent listing my clients’ new home that the wall might encroach on her land.

The listing salesperson, who represented the seller and was employed by one of the most prominent real estate brokerage companies in the United States, did not disclose to the buyers (my clients) the fact of the potential encroachment or that the owner next door (i.e., Miss Europe) believed there might be a problem with the location of the wall.

Soon thereafter, Miss Europe had a survey prepared which confirmed that my clients’ wall encroached on the beauty queen’s property.  Not long after that, Ms. Europe filed suit against my clients to compel removal of the cinder block structure.

My clients then filed a cross-complaint against their seller, the listing agent, and that agent’s brokerage company for fraud and indemnity in connection with their alleged concealment from my clients of the beauty queen’s potential claim, based on the fact that Miss Europe addressed the issue with the seller’s agent well before escrow closed.

 

The Settlement

Concerned about their potential liability for fraudulent nondisclosure plus punitive damages, the real estate licensees and the seller settled my clients’ cross-complaint against them by collectively paying $65,000.00 to my clients to dismiss the case.

Thus, while denying any wrongdoing or liability in connection with the settlement, the real estate licensees and the seller paid a substantial sum of money due to the fact that they withheld material information from the buyers.  (Presumably their insurance carriers actually footed the bill.)

In addition, and most importantly, my office successfully negotiated with Miss Europe’s attorneys to deed to my clients an exclusive easement on the beauty queen’s property to the entire area situated between the true boundary and the block wall.

California’s Law of Disclosure

Concealing material information in connection with the sale of real estate is contrary to the rule of law in this State.  California requires a seller and his licensee to disclose to a buyer all material facts which are known to them that may affect the value or desirability of the property and which the concealing parties would have reason to believe are not known to or readily observable by the buyer.

Had the Miss Europe case gone to trial, it is probable that the jury or judge would have found the licensee and the seller to be liable for their concealment and have awarded substantial damages against them.  It is also probable that the court would have found that my clients had acquired an equitable easement or other type of property right on the land situated between the true boundary and the wall.

The Miss Europe litigation illustrates that the historic doctrine of “Caveat Emptor” (i.e., Let the buyer beware) generally does not apply in California.  Instead, AOA members should be guided by a new principle, “Let the seller disclose.”

Case Strategy

One other important aspect of the Miss Europe case, and a lesson that can be learned, is that by settling, a litigant may be able to obtain a more advantageous result than if he won at trial.  Here, the beauty queen agreed that after the easement was recorded, my clients could apply to the City for a lot line adjustment.

She also agreed that upon the completion of the lot line adjustment, my clients would then actually become the new owners of the land in issue.  The easement would thereupon be extinguished because a party cannot (and need not) have an easement on property he/she owns.

Had the case proceeded to trial, the Court would not have had the jurisdiction to change the location of the boundary line.  However, by settling, my clients and Miss Europe had the power to relocate the boundary line, subject to the City’s approval.

Concluding Comments

The take away point for AOA members is well illustrated by this case.  That is, when AOA members sell their apartment buildings, or for that matter, any other real property, be certain to disclose all material facts known to them which are unlikely to be known by or observable to the potential buyer.

That disclosure should always be in writing so that the buyer may not later deny that it was made.  Rarely do such disclosures “kill the deal.”

This same recommendation is also applicable to real estate agents.  That is, disclose all known facts, even if adverse.

Sellers who conceal material information which significantly diminishes a property’s value are exposed to being sued by buyers.  The same is true where the seller’s real estate broker withholds material information.  That is, the buyer may sue the seller on an “agency” theory, meaning that the principal (i.e., the seller) is liable for the acts and omissions of his representative (i.e., the real estate licensee).

Thus, sellers of apartment buildings as well as their agents should always disclose material facts known to them which are not known or readily apparent to buyers.

 

Dale Alberstone is a prominent litigation and transactional real estate attorney who has specialized in real property law for the past 40 years.  He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association.  He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice.

Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell.  An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity.       

The foregoing article was authored as of January 2, 2018.  It is intended as a general overview of the law and may not apply to the reader’s particular case.  Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.

Questions of a general nature are warmly invited.  Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 1900 Avenue of the Stars, Suite 650, Los Angeles, California 90067.  Phone:  (310) 277-7300.