Buying your first home should be exciting. For one of my buyers, an undisclosed fence-line dispute took some of the shine off what should have been a very special milestone. The cross-lease property was listed with another real estate agency, and I was helping the buyer through the purchase.
The issue that was never disclosed
After her offer had been accepted, we learned that the vendor and the owner of the neighbouring property were already involved in a Disputes Tribunal proceeding.
The dispute concerned the position of the fence separating the two properties. The flats plan and a surveyor's report indicated that the fence had been positioned incorrectly when the properties were developed and may have needed to be moved slightly into the property my buyer had agreed to purchase.
This wasn't a minor detail. It was an active dispute that could potentially affect how much of the outdoor area my buyer could use, as well as exposing her to costs or further complications after she became the owner.
Most importantly, neither my buyer nor I had been told about the proceeding before her offer was made. Failing to disclose the Disputes Tribunal hearing was also a breach of the vendor warranties under clauses 7.1 and 7.2 of the sale and purchase agreement.
Protecting my buyer
The timing made the situation particularly difficult. Settlement was due to take place before the Tribunal issued its decision. That meant my buyer could become the new owner while the outcome-and its possible consequences-remained unknown.
My priority was to make sure she understood the situation and had the right people protecting her interests.
I stayed in close contact with her and worked alongside her lawyer while the options were considered. A retention arrangement was negotiated so that part of the purchase money would be held back on settlement until the dispute had been resolved.
If the Tribunal's decision resulted in costs for which the vendor was responsible, those costs could be met from the retained funds. If no costs arose, the money would be released to the vendor.
The vendor needed to agree to this arrangement, but it gave my buyer an important layer of protection while allowing her purchase to proceed.
The outcome
The Tribunal ultimately dismissed the dispute. It considered that the fence had been in its existing position for a considerable period and that the owners had already had a reasonable opportunity to identify and address the issue.
No costs arose, so the retained money was released to the vendor.
It was a positive outcome, but my buyer experienced uncertainty that could have been avoided if the dispute had been disclosed before she made her offer.
Lessons for buyers and sellers
Buyers are often prepared to work through property issues when they receive clear information and have an opportunity to investigate. The real problem is discovering something significant only after an offer has been accepted.
If you are selling and know about a boundary concern, disagreement with a neighbour or Tribunal proceeding, raise it with your agent and lawyer before going to market. Something that feels manageable to you could materially affect a buyer's decision.
If you are buying a cross-lease property, ask your lawyer to review the title, lease documents and flats plan. If anything appears inconsistent with what is on the ground, further investigation or advice from a registered surveyor may be needed.
This experience also reinforced the value of having a good team. An agent cannot replace legal or surveying advice, but they can keep communication moving, ensure concerns are followed up and help make a daunting situation easier to manage.
My priority was to stay beside my buyer, keep her informed and work with her lawyer to help protect her interests. She got into her first home, but the process was far more stressful than it needed to be.
Clear, early disclosure would have made all the difference.
What my client had to say:
"My situation was a strange one. Lee went above and beyond to get me into my first home. He made the process less daunting. He kept in touch the whole time. When the time comes to sell this house, I will be looking for Lee first."
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