I live in an nice suburban neighborhood: clean streets, good schools, and local houses that are mostly well-maintained. I'm in the process of selling my home, and had hoped to bring in about $700,000. That's based on its fair market appraisal, taking into account basic features and location.
My neighbor, unfortunately, is far less diligent about upkeep. His roof shingles are falling off, his paint is chipping, the grass is brown or nonexistent, and there are two junk cars parked permanently in the driveway. Moreover, the house has a reputation as being a place for buying and selling drugs. Cars pull up to it at odd hours, and strangers come and go. My real estate agent tells me that, due to the neighbor's lack of upkeep and poor reputation, she's struggling to find buyers willing to pay my asking price. Is there any way to recover the lost sale value?
Unfortunately, it is unlikely that you could sue your neighbor after your home is sold to recover the difference between your home's anticipated and actual value. Let's examine some of the possibilities.
First of all, it's not clear that your neighbor has actually violated any legal duties owed to you. A legal duty is an obligation that one person has to another, the violation of which can give rise to civil liability. For example, your neighbor has a legally implied duty not to build a playground on his property filled with spikey metal rods if there are children in the area, because such an attractive nuisance would likely result in those children getting hurt. But your neighbor has no legal duty to paint his house or keep up his lawn, even if his failure to do so makes the neighborhood look worse.
It sounds like he might be violating criminal statutes, by selling drugs or harboring drug dealers on his property. You could certainly advise law enforcement authorities, but don't expect overnight results. The police will need to conduct and investigation, meaning observe the activities and potentially obtain a search warrant before arresting or taking other action against your neighbor.
Criminal statutes do not always give rise to a private cause of action. Nevertheless, it's worth checking your state's laws: the activities that accompany drug sales could provide grounds for a private nuisance claim in small claims court.
If you live in a common interest development (such as a condo) that is governed by a homeowners' or neighborhood association (HOA), be sure to speak with its leadership to report the problem. Normally, community CC&Rs and other rules would prohibit many of the things you've described: letting paint get old, leaving old cars in the driveway, and of course engaging in illegal activities. From your description, it sounds unlikely that you live in such a place, unless the HOA board has been delinquent in its duties!
Another possible remedy here is to wait to sell your home and take steps to get your neighbor to clean up the property as much as possible. You might not be able to do much about the illegal activity, but perhaps if offered to pay to have his house painted and the old cars removed, that investment would pay for itself. That is, you might invest $15,000 into fixing up your neighbor's home and increase your own home's value by significantly more than that. Your neighbor might even be willing to split the costs of such repairs, since they would ultimately benefit him long after you left the neighborhood.