Surprise!! Half-owned driveway. New owner nextdoor, flipper, playing hardball

Rehabbing, Fix and Flip, Rental Properties
1

I’ll be the first to admit when I am in error. In this case, I think I am behind the curve, so I’ll preface my remarks by admitting first off that heretofore, I will do things differently. But what I need right now is some very sound advice on how to proceed. Here we go…

I’m new to real estate investing. I’ve been at this two years and own four single-family investment houses. Fortunately, so far, I’ve had good tenants (and this issue is not directly tenant-related). This is a property issue. My most recent acquisition is has a gravel driveway running alongside the house from the busy main road in the front to a wider parking area at the rear of the house. I purchased this house in June of last year. The previous owner rarely, if ever, lived in the home during the 26 years that he owned the home (1985). He may have rented it out for periods of time, but we don’t know. The house is in immaculate condition and required very little in the way of repairs when we bought it. No complaints there. The house is in great shape.

We bought the house assuming that the deed included the gravel driveway (the only access to parking for anyone living there). Our agent asked him verbally if he owned the driveway. He replied in the affirmative. Strictly verbal, and there was no reference to the driveway in the deed. In August of last year we have the property surveyed. We are shocked to discover that the property line bisects the driveway longitudinally. It’s a driveway of average width (11 ft or so), so it’s not an option. Our tenant HAS to be able to use it in an unfettered manner. Up until about a week ago, there have been no problems over the bisected driveway.

The house on the adjacent property has been vacant and distressed for as long as we have owned our house to it. It was an eyesore. Long story short, a flipper has swooped in, bought the broken down house, hired a bunch of laborers to fix it up (and quickly, I might add). The old house was a duplex and a fully-owned driveway on it’s opposite side PLUS 1/2 ownership of the driveway that borders our property. The flipper is turning it into single family, doesn’t need the 1/2 driveway on our side and has contacted us offering to sell us his half (nice guy, right)?

Only if you consider nice as being stonewalled to purchase his half of the driveway for a highly-inflated and over-valued price. He wants $3,500 for a 550 sq ft parcel. Our very experienced property mgr ran some good, vigorous comps on like real estate (alley way, undeveloped). He gave me the range of sq ft values ($2.5-$4.50). Using the MAX VALUE, the FMV of the parcel is $2650 and change. Dude wants almost $1000 above that. He calls my wife and says that he doesn’t want to involve and attorney, and just wants to do a nice, clean sell, then he says he won’t negotiate off of his $3500 price. Then he says “after-all, he doesn’t HAVE to sell us his half…DUH!!”

Now you’ve got the picture. Bend over, pay $1000 more and get the parcel and full ownership of the driveway, or go for an easement against this guy. Lawyer says I’ve got good case for prescriptive easement through adverse possession, yada yada yada. It’s not that much $$$, but I hate getting bent over. If I slap an easement on super flipper, it could very well encumber his ability to “flip” this house. All’s fair in love and war, I suppose. Yes, I appreciate his willingness to sell. I would, however, appreciate at least a quasi-FMV deal, not extortion.

I find it interesting that he said that he’d prefer not to involve a lawyer. Read between the lines there. And then there’s the misrepresentation by the seller in the contract for sale under the conveyance clause. How the hell could he NOT know that he only owned 1/2 the driveway after owning the place for 26 years???

Lesson learned…ALWAYS get a survey before you buy. And yes…I should have hunted down the owner of the vacant house AS SOON as I discovered the divided driveway issue. The guy was probably hurting for money and would have probably taken $500 for the strip of dirt.

I need some good advice here. Any is much appreciated!! Thanks!!!

2

Hi,

It will cost you more than $3500 as this will require a surveyor placing new pins and certifying the additional square footage and this will require a drawing and probable a civil engineer to stamp the drawing and then will need to be escrowed and title insured!

If you try to force the easement and fail the other owner does not need to sell you this strip of land and you could find the offer to sell withdrawn and a fence placed exactly on the property line.

Now you could buy the property from the flipper, take your land strip and re-sell the duplex property!

But probable an agreement could be done and if you play your cards right and do a little pre agreement check you might find that seller would be forced to pay all the cost’s of survey and stake and civil engineering / drafting to prepare and deliver up said parcel with seller paying sellers side escrow cost which should include title insurance!

$3500 might be more than fair!

                GR
3

I’d offer him $1000 and ask if he’s familiar with the term “adverse possession” but then again I’m not very good at making friends.

Also, he just wants to flip it. He’s not going to put a fence up, the fence would cost money and get him nothing in return.

4

You don’t need to buy the property. You just need an easement to use the property.

For significantly less cash.

Since it’s your only parking access, make sure it’s an “appurtenant” easement so that it will survive to your benefit when he sells the property.

And make sure it gets filed at the county clerk (or whatever filing location applies in your jurisdiction) so that it gets put on the next survey of the neighbors property.

5

I’ve thought about it some more. I think I’d call his bluff. Repeat the last crap story some deadbeat tenant told you and say you’re hard on luck and make a lowball offer. He gets nothing if he sells the house like this, and the new owner may be much easier to get along with. I think he’ll take it.

Plus, it will cost more money and risk litigation if he causes hardship for your tenant.

6

If we were talking $10k over the value its one thing, but if you think $2500 isn’t far from fair, and he wants $3,500, pay it and mark it up to experience,

I don’t buy anything without a survey, even if I don’t need it (sometimes a hard money lender won’t require, but I’ll need one when I refinance, so I go ahead BEFORE I buy and get it done

I’m wondering if its the $1k difference that’s bothering you, or being “bent over”,I’ve learned not to let my ego get in the way of doing a deal,sometimes I get slightly screwed,but if I do I learn a lesson from being in that situation

7

You might want to check the (right away rights in your state/city). It was your fault for not getting everything in writing and including the driveway in the the deal.