Home Seller discloses false info on Title Issue, can buyer get earnest money back? (Chapel Hill: section 8)

[abgilliam]

Hello. We have run into an issue in a house purchase in Chapel Hill. Seller Disclosure stated that there were no encroachments, etc related to title. We had survey done, and it showed that a sidewalk is on neighbor's land. Seller then provided paperwork from 2013 agreement with neighbor, seller said she forgot about this. While this is going on, due diligence expires. Attorney then says that the garage is on the setback, and asks sellers, seller says she knows nothing.

House had been on market for a while, and is in a planned community, so I can't believe she didn't find this out when she bought it. I suspect that this issue has scuppered a deal before now.

Our attorney is at some conference this week and is having a junior attorney cover, and that attorney said that in this community people typically just do nothing about setback issues... I don't believe that because how could they get title insurance or a mortgage?

Can any of you real estate gurus advise as to whether we can just walk away now, and get our earnest money back easily? In many states a seller giving false info on Disclosure gives the Buyer an out.... I will get info from a real attorney asap, but wanted other insight as well...

Thanks!

[BoBromhal]

Garage is ON the setback, or over?

As far as the sidewalk, I'm guessing it's a personal walkway perpendicular to the street from front to back yard?

In theory, you've (both) got Realtors. Your closing attorney should be readily capable of handling this issue for you.

Your contractual rights and obligations are pretty clear in the standard 2-T OTP that all agents use.

[MikeJaquish]

Title insurance can be obtained, with an exclusion for encroachments.
It is up to the underwriters to determine if the encroachment presents enough risk to quash the loan. Within the setback should be able to be rectified with an exclusion. It is unlikely that the building would be required to be moved or removed.

If you used the NCAR Standard Form 2-T, ask your attorney if these issues will prevent seller from conveying marketable and insurable title. Ask if that responsibility survives the DD Period, and extends through closing. He may refer to Section 8. (f) on page 7 of 12.

Smart of you to have a survey performed. So many people cheap out.

[abgilliam]

Thanks all! The sidewalk is from front to backyard, and that is covered in an agreement which the seller signed in 2013, but had forgotten about apparently. I looked on the survey, and the garage corner is .7 feet from property line. Home is 18 years old, so this must have come up before and hopefully is easily settled. We are cash buyers, so maybe the seller thought that we wouldn't get a survey....

Hopefully seller will be able to come up with an acceptable fix to let us stay in the deal...

[static_g]

Originally Posted by abgilliam

maybe the seller thought that we wouldn't get a survey...

You don't seem too thrilled with the seller. I might suggest getting out of the deal, because you'll always be wondering what else he/she is screwing you on.