Q: I am a long term follower of your website, ThinkGlink.com and weekly newsletter. And, you’ve provided me with very helpful advice in the past. But I have another situation and need your guidance.
My son and his wife purchased a vacation house last year. That house’s real estate ad specifically noted that the house included “deeded” access to a nearby lake. That lake is approximately 80 yards from their property line, with another house directly in front of their house, and located on the lake’s edge.
Most recently they decided to rent a room in their house, noting in their ad that lake access was included. As a “courtesy”, the neighbor whose house is on the water’s edge informed my son and his wife that they do not have deeded water access.
The real estate offering, upon which they made their purchase, did specifically state that deeded water access was included! (My son and his wife have retained copies of that real estate offering.) But upon reviewing their deed, they now realize it does not include that deeded, and quite valuable, lake access.
My son and his wife paid for the water access based upon the Realtor’s property description. Now they are at a loss how to proceed, and wonder whether they can recover their significant loss.
They closed with a local title company. Should they seek a remedy from that firm? Should they get an appraisal done that shows how valuable lake access would be to the property so they can support their damages?
Here’s another wrinkle: Before they found this out, but after the closing, they made significant upgrades to both the property and the house. Thus, a cancellation of the initial real estate transaction would not be an offer that they would readily accept (at least without compensation for those upgrades).
What do you think they should do?
A: Your letter is another excellent argument for hiring a real estate attorney to go through your documents, negotiate the transaction and watch out for your rights in a real estate deal. If you had hired an attorney and had discussed the water rights issue, your attorney would have checked on whether the property had deeded lake access and whether there were any other easements attached to the deed when you signed your purchase and sale agreement and before you closed on the property.
It sounds like your son and his wife didn’t use a real estate attorney for this deal. But they should immediately contact a real estate attorney who can help them understand what rights were conferred to them with the purchase of the property and can help them figure out what, if any, legal options they have at this point.
My guess is that they will not be able to make a claim against the title policy. A title policy guarantees that the buyer will have clear title, which it sounds as though you have.
In general, a title insurance policy will not protect a buyer if you thought you had parking rights, water rights or any other right that is not specifically insured by the title company. If after closing the sellers’ long-lost sister showed up with a valid claim on title to the home, then you might have a title insurance claim. Or if you received water access rights and had title insurance on that right and later found out that you could not use that right, you might have a claim.
Clearly, your son and his wife should have double-checked to make sure there was deeded access to the lake before making an offer. If there were false promises made, your son and his wife might have a claim against either the real estate agent or seller. On the other hand, the legal onus might have been on your son and his wife to check this issue before the closing.
Find a real estate attorney who has knowledge of the local area laws and customs and who does not have a conflict of interest with the local real estate agent or seller.
Your son will need to discuss with the attorney whether the contract they signed contained any indication or reference to their getting water access with the purchase of the house. If the contract does contain that reference, they may be able to go after the seller for failing to comply with the terms of the contract. However, if the only thing they have is the brochure or other marketing materials from the broker, they may face an uphill battle.
Most marketing materials from brokers and real estate agents will have fine print that will state that the information they are giving is not guaranteed. Even if the water rights were the selling point for the property, if the broker was wrong, your son may not have a remedy against that person. Any solution to your son’s issue will be dependent on the laws in the state in which the property is located and that is why he should talk to an attorney as soon as possible.