Is Disclosure of Partying Neighbors Required?

Question:  We have lived in our Goodyear home for more than 20 years. We never had any problems with our neighbors. Last year a young couple moved in next door. Every weekend there are parties, and I think that drugs are involved. We have listed our home for sale because we want to move into a smaller home now that our children are grown. Our listing agent said that we have to disclose to buyers any material and adverse fact regarding our home. Do we have to disclose these new neighbors? Our son is a lawyer in Los Angeles, and he says that a young couple having parties on the weekend, even if drugs might be involved, is not a material and adverse fact because that’s what young couples do. Help! We want to be honest, but we don’t want to scare buyers.

Answer: What is considered a material and adverse fact requiring disclosure depends on what is legally reasonable. Although a Trump voter may think an Obama voter living next door would be a material and adverse fact, and vice versa, that is probably not legally reasonable. Therefore, whether the next door neighbor is a Trump voter or an Obama voter would not need to be disclosed by the seller. If the seller, however, is specifically asked by a buyer if the next door neighbor is an Obama or Trump supporter, the seller has to tell the truth and cannot lie. Telling the truth doesn’t mean that the seller has to say that the neighbor supports Trump or Obama; for example, the seller can simply say it is “none of your business.”

By way of background regarding what a seller needs to disclose, our law firm founded and operated a Hotline for the Arizona Association of REALTORS® for more than 20 years. The purpose of the Hotline was to answer real estate questions from real estate brokers throughout Arizona. One of the most common questions from these real estate brokers related to what facts about the home were required to be disclosed by the real estate broker to buyers. Our initial response to these disclosure questions was, one, disclosure to a buyer is required if it’s a material and adverse fact and, two, if it’s not a material and adverse fact, then why not disclose it? Both sellers and real estate brokers, however, want specific answers as to what is a material and adverse fact that must be disclosed.

Ultimately, a jury would decide whether disclosure by a seller or a real estate broker was required. In regard to your situation with the young couple next door, to older jurors the disclosure of neighbors partying over the weekend with possible drugs may be a material and adverse fact. To younger jurors, maybe not.


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