A problem that comes up a lot when people come to sell a property is that they have to suddenly deal with a neighbour who wants to make the process really difficult for them.

This interference can come at different stages in the sales process and in a number of different forms. For example, it may range from playing loud noise or being unruly during open homes, attempting to sabotage the auction process or sending legal letters to prospective purchasers about boundary disputes.

So what can you do? Let’s look at those three examples above because your legal recourse will depend on what it is your neighbour is doing – although none of them are perfect solutions!

Our neighbour is doing something offensive during open inspections

Depending on what it is, you might be able to sue your neighbours under the tort of nuisance if they are disrupting inspections. What is required here is for your neighbour to be creating an unreasonable interference with your use of the land. Playing loud music, leaving rubbish on your property (or common property)or creating oppressive smells may satisfy this criteria.

It may also be appropriate to report their behaviour to Local Council, the Body Corporate (if applicable) or even the police if it is a serious act of indecency or involves damage of property.

However none of those recourses tend have a tremendous success rate and it is usually best to try and solve the issue in a non-litigious way.

We think our neighbour will attempt to sabotage our auction

It is possible that a disgruntled neighbour might attend your auction and shout out something disparaging during the auction to put people off.  If this is the case, they may face serious penalties for disrupting an auction -although this depends on the details of their behaviour and which State or Territory you are in.

For example in Victoria, section 47(5) of the Sale of Land Act imposes fines of $10,000on anyone attempting to disrupt an auction. However, the laws make it clear that this does not prevent a person from asking in good faith, a reasonable number of questions about the property before the auction.

There are similar prohibitions in NSW against persons doing anything to cause another person to abstain from bidding. However the rules there tend to be more focused on preventing ‘collusive practices’ – in other words, the scenario where the neighbour might be looking to talk down the property so he can purchase it himself (which is probably not the neighbour’s most common motivation).

Again, because of the limitations around these protections, it is best to try and manage a neighbour who you think might disrupt an auction, much earlier in the campaign.

Our neighbour is intending to send a legal letter about an alleged boundary dispute

While the previous two examples of interference from neighbours are very irritating, it becomes really serious when the neighbour starts to send legal letters – even when they are without legal merit.

Most legal claims from neighbours logically relate to boundary issues, either to do with encroaching structures or removal of support.

Problematically for vendors, the Conveyancing Act in New South Wales says that a vendor must let the purchaser know if they received a notice or claim in relation to any common boundary or any boundary fence between the land and adjoining land. If they have and do not disclose it, the buyer has a potential right of rescission or a claim for compensation.

But what if the claim is totally spurious and unfounded? The bad news is that the buyer is probably entitled to find that out themselves independently. If they’ve already exchanged, this may mean having to permit them further time to undertake a survey or a geotechnical report which may cause a delay in settlement.  

And even if the buyer’s independent research establishes that the neighbour is completely in the wrong, the transaction will likely already be tainted for them and theywill regret purchasing next to a vexatious neighbour. They may attempt to claim compensation for failure to disclose a dispute with a neighbour or try some other way to get out of the contract.

One thing that the vendor may be able to do if the claim can be shown to be spurious, is to sue the neighbour under the tort of interfering with contractual relations. However, strictly speaking the purchaser would need to have breached the contract to give rise to this claim – this might be difficult given the implied warranty under the Conveyancing Act described above,which if activated allows the purchaser to pull out.

So what we can we do about the neighbour from hell?

There are a number of torts available to the vendor to bring against a neighbour interfering with a sale but none of them are perfect remedies. The better course of action is to attempt to address the underlying issues with the neighbour before going to market. Sticking your head in the sand and hoping for the best is only likely to lead to a situation where the neighbour manipulates the situation to their advantage at significant loss to the vendor.