When you think about setting a price for your home, you're probably thinking about its square footage, number of bedrooms and baths, physical condition, and more. But the condition of the surrounding neighborhood will factor in, as well. Let's say you live in a suburban neighborhood that has mostly clean streets, quality schools, and local houses that are well-maintained; except for that of your immediate neighbor. 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 at odd hours, and strangers come and go.
You might struggle to find buyers willing to pay what seemed like a reasonable asking price. Is there any way to recover the lost sale value; perhaps by taking the neighbor to court?
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 why not, and some alternative possibilities.
First off, in the above example, 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 instance, 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 the neighbor has no legal duty to paint the house or keep up the lawn, even if failure to do so makes the neighborhood look worse.
Selling drugs or harboring drug dealers on one's property could constitute a violation of criminal statutes. You could certainly advise law enforcement authorities, but don't expect overnight results. The police would 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 things like letting paint get old, leaving old cars in the driveway, and of course engaging in illegal activities. (If your HOA isn't taking action, also see, Can Homeowners Make the HOA Enforce a Rule?.)
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 the house painted and the old cars removed, that investment would pay for itself. That is, you might spend $15,000 fixing up your neighbor's home and thereby increase your own home's value by significantly more. Your neighbor might even be willing to split the costs of such repairs, since they would ultimately benefit him long after you leave the neighborhood.