Boundary Disputes: Don't Cross The Line
Everyone makes mistakes, right? Trying to conduct business, or live your life, without ever making one is not a reasonable expectation. So, what do you do? Reducing the risk of making mistakes can go a long way to mitigating the effects of mishaps and misinterpretations. And more equitable resolutions are within reach if best practices are followed up front.
Here’s a real-world scenario where a simple act of sharing a document could have clarified a misinterpretation or at least reduced the effects of the mistake and the resulting claim.
SITUATION
A real estate agent listed a cottage for sale that was located on a lake inlet. The cottage, originally built facing the water and situated on an oddly shaped lot, also had views of an adjacent, partially wooded lot. Because of the shape of the lot, the agent urged the sellers to survey and stake the lot by a qualified professional.
PROBLEM
Although the property was surveyed and staked properly, the agent incorrectly interpreted the positioning of the stakes. The agent assumed the stake in front of the cottage facing the lake represented the boundary between the lots; however, it represented the opposite boundary of the adjacent lot. The boundary stake between the lots was not visible because of overgrowth.
MISTAKE
In addition to misinterpreting the positioning of the stakes, the agent neglected to provide the survey results to the buyer for review.
RESULT
After the closing, the buyers removed the trees located in front of the cottage in order to improve their view of the lake and to install a dock for their boat. Because the agent presented the incorrect boundary line to the buyers, they freely stripped the adjacent lot of most of its trees and vegetation during their renovation. The adjacent property owners, who had plans to construct a year-round retirement home on their property, sued the buyers, who in turn brought the agent and the managing broker into the litigation alleging negligence and negligent supervision.
PREVENTION
Due to the agent’s incorrect assumptions, a rather significant settlement was paid to both the buyers and the neighboring property owners. Had the agent provided the survey results to the buyers, the litigation may have been prevented.
Keeping in mind that any real estate transaction could lead to a claim will help real estate professionals examine business practices and procedures with a more discerning eye. Attention to detail and careful review can also ensure that all parties in a transaction are adequately informed and able to make the best decisions.
For more information about E&O coverage and other risk management topics, visit pearlinsurance.com.This article was produced in conjunction with AXA XL and is not to be taken as legal advice.