How Are Property Disputes Settled? Common Methods and Legal Options

Property disputes arise when individuals, businesses, or government entities disagree over the ownership, boundaries, or use of real estate. Such disputes can emerge in various settings, from residential neighborhoods to large commercial developments and even in inheritance or business partnerships. While some disputes can be resolved informally through alternative dispute resolution options like negotiation or mediation, others may necessitate the intervention of the court when parties are unable to reach an agreement. 

The first step in resolving a property dispute is understanding your legal options. Therefore, let us examine the different types of property disputes, the legal and alternative resolution methods available, and real-world case examples to illustrate how these disputes are handled in practice. 

What Are Property Disputes?

A property dispute is a legal disagreement over the ownership, use, or boundaries of real estate. These disputes often arise from unclear property titles, overlapping boundary claims, zoning law violations, leasehold disagreements, fraudulent transactions, or inheritance issues.

Common Types of Property Disputes

These disputes hold significant legal weight because they can impact property values, financial investments, and business operations. Consequently, courts and legal professionals play an important role in ensuring the protection of property rights and the fair resolution of disputes, whether informally or formally.

Breach of Contract

This occurs when one party fails to fulfill the obligations stipulated in a real estate agreement. This can involve a seller refusing to complete a sale of land transaction, a lessee violating lease terms, or a contractor failing to adhere to construction agreements. For example, if a homeowner agrees to sell their house but later backs out after signing the purchase agreement, the buyer may take legal action to enforce the agreement or seek damages for the breach.

Boundary Disputes

These arise when neighboring property owners disagree on the exact location of property lines. These conflicts often stem from unclear deeds, outdated surveys, or encroachments where a structure extends onto adjacent property. For example, a homeowner builds a fence, only to discover later that it encroaches two feet into their neighbor’s yard. Resolving such disputes often requires a professional land survey and, in some cases, legal action to establish the correct boundary lines and clarify ownership rights.

Title Disputes

Title disputes arise when multiple parties claim ownership of a property. These conflicts may result from fraudulent deeds, errors in public records, or inheritance disputes where multiple heirs or beneficiaries assert rights over the same property. For example, a buyer may purchase a home only to discover later that an unknown heir of the previous owner has a legitimate claim. Resolving such disputes typically requires a thorough title search, legal documentation, and, in some cases, court intervention to establish rightful ownership.

Easement Disputes

Easements grant individuals or entities the right to use another person’s land for a specific purpose, such as access to a road or utility maintenance. Disputes arise when easements are ambiguous, improperly recorded, or interfere with a property owner’s rights. For instance, if a utility company has an easement to service power lines on private property, but the homeowner objects to frequent maintenance visits, legal clarification may be needed to define the easement’s scope.

Landlord-Tenant Disputes

Conflicts between landlords and tenants often arise over lease terms, maintenance responsibilities, security deposit returns, or eviction procedures. These disputes are common in both residential and commercial rental agreements. For example, a tenant who refuses to vacate a property after the expiration of their tenancy may force the landlord to pursue the recovery of premises through legal means.

Trespass

Trespassing occurs when an individual unlawfully enters or remains on another person’s property. This can include physical trespass, such as a neighbor repeatedly parking their vehicle on someone else’s driveway despite warnings or a business encroaching onto private land without legal authorization. In such cases, the property owner may seek legal remedies, such as an injunction to prevent further trespass or monetary damages.

Joint Ownership Disputes

These disputes often arise among co-investors, business partners, and family members who inherit property together regarding management, financial responsibilities, or the right to sell. For example, siblings who inherit a family home and one wishes to sell while the other wishes to keep it, or when one co-owner contributes more to property maintenance or mortgage payments and seeks reimbursement or a greater ownership stake.

Real Estate Fraud

Real estate fraud involves deceptive practices aimed at unlawfully acquiring property or financial benefits. Common schemes include forged documents, undisclosed property defects, and fraudulent mortgage applications. For example, a buyer may unknowingly purchase a home based on falsified records, only to discover later that the seller had no legal right to sell the property. Victims of real estate fraud may seek legal recourse through litigation to void fraudulent transactions and recover financial losses.

Construction Defect Disputes

These arise when a property owner discovers significant structural issues or substandard workmanship in a newly built or renovated property. These defects may include faulty foundations, poor plumbing, or inadequate electrical systems. For instance, a homeowner who notices severe cracks in the walls of their brand-new home may sue the builder for failing to meet contractual obligations or industry standards.

Zoning and Land Use Disputes

Zoning laws regulate how land can be used within a municipality, often leading to conflicts when property owners feel restricted by these regulations. For example, a business owner may purchase land intending to build a commercial plaza, only to discover later that zoning laws prohibit commercial development in that area. In such cases, the owner may challenge the zoning restrictions or apply for a variance to proceed with the project.

Common Methods for Settling Property Disputes

Not all property disputes require litigation. In many cases, alternative dispute resolution (ADR) methods provide faster, less expensive, and less adversarial solutions. 

One of the most effective methods is mediation, where a neutral third party facilitates discussions between the disputing parties. Unlike a judge, a mediator does not impose a decision but instead helps the parties reach a mutually acceptable agreement. Mediation is often used in boundary, landlord-tenant, and joint ownership disputes, as it encourages compromise while preserving relationships.

Another common approach is arbitration, a more structured process where an independent arbitrator reviews evidence and issues a binding or non-binding decision, depending on the parties’ prior agreement. Arbitration is useful in real estate contract disputes, where parties may prefer a private resolution instead of a lengthy court process.

In some cases, disputes are resolved through settlement negotiations, where parties reach an agreement through direct discussions, often with the help of attorneys. If both sides are open to compromise, negotiation can lead to a formal settlement agreement, avoiding the financial and emotional strain of litigation. This method is effective for contract breaches, financial compensation claims, and zoning disagreements.

While ADR methods offer flexibility and efficiency, they require a willingness to cooperate. If parties cannot reach an agreement through these informal means, formal legal action may become necessary.

Legal Options for Resolving Property Disputes

When alternative dispute resolution fails, formal legal action may be necessary to resolve a property dispute. The most common approach is property litigation, where a court determines ownership rights, contract obligations, or financial damages. Litigation is often required in complex cases involving title disputes, real estate fraud, and significant breaches of contract.

One essential legal remedy is a quiet title action, which clarifies ownership rights and eliminates competing claims, such as those from unknown heirs or fraudulent title transfers. For boundary conflicts, courts may issue injunctions, legally preventing a neighbor from encroaching on another’s land. Similarly, if a property owner’s land use rights are violated, they may seek an injunction to halt the interference.

In joint ownership disputes, when co-owners cannot agree on how to manage or dispose of a property, one party may file a partition lawsuit to compel a sale or physical division of the property. Similarly, landlords dealing with non-compliant tenants may initiate eviction proceedings to regain lawful possession of their property.

For cases involving real estate fraud or construction defects, courts can award monetary damages to compensate victims. In some instances, courts may also rescind contracts, voiding fraudulent or unfair agreements to restore the affected parties to their original positions.

Real-World Examples of Property Disputes and Their Resolution

Property disputes can take many forms, and their resolutions vary depending on the circumstances. Examining real-world cases provides insight into how courts and alternative dispute resolution methods handle these complex issues.

One notable example is Phipps White v. Spelling Manor Estate, a high-profile real estate dispute involving allegations of fraudulent title claims. Mirga Phipps White and Nicholas Phipps White filed deeds asserting ownership of Spelling Manor, a 120-room Los Angeles estate listed for $137.5 million. Their claim made the property's legal status more complex, which in turn delayed its sale. The Whites allege that former attorney Thomas Girardi and his estranged wife misappropriated client funds to finance the estate’s purchase. This case intersects with Girardi’s broader legal troubles, including his conviction for embezzlement. Nonetheless, no court ruling has confirmed their claims about the ownership of Spelling Manor. The ongoing dispute highlights the complexities involved in title fraud and real estate litigation.

Boundary conflicts often require a mix of legal action and settlement. In Jefferson County v. Romero, a homeowner, Taralyn Romero, purchased land only to discover that local residents had been using part of her property for years. When she attempted to enforce her property rights, county officials sued her, claiming public access rights. After intense negotiations, the dispute was settled when Romero agreed to sell a portion of the land for $250,000 while keeping ownership of the rest. This case highlights how property disputes, even when contentious, can sometimes be resolved through financial settlements rather than prolonged litigation.

Not all disputes involve private individuals; some arise between homeowners and government entities. In Ahwatukee HOA v. Arizona Department of Transportation, residents near Phoenix sued the state over the impact of a highway construction project. They argued that noise, pollution, and blocked views devalued their properties. 

Initially, a lower court awarded them $6 million in compensation, but subsequently, the Arizona Supreme Court increased the settlement to $12,000,000. In Burnett v. National Association of Realtors, plaintiffs accused the National Association of Realtors (NAR) and several major real estate brokerages of conspiring to enforce rules that kept real estate commission rates artificially high. 

In October 2023, a federal jury in Missouri found the defendants liable for antitrust violations and awarded $1.8 billion in damages to the plaintiffs. Following the verdict, in March 2024, NAR reached a $418 million settlement to resolve nationwide claims and agreed to policy changes affecting commission practices. A U.S. judge approved the settlement in November 2024, marking a major shift in the real estate industry’s commission structure and brokerage practices.

FAQ About Property Dispute Resolution

How Can You Settle a Property Dispute Without Going to Court?

Many property disputes can be resolved through alternative dispute resolution (ADR) methods like mediation, arbitration, or settlement negotiations. Mediation allows a neutral third party to facilitate discussions and help reach a mutually acceptable agreement. 

Arbitration involves an arbitrator who reviews the evidence and issues a binding or non-binding decision. Direct negotiations, often involving attorneys, can also lead to a settlement without the need for litigation.

What Should I Do If My Neighbor Builds on My Property?

If a neighbor encroaches on your land, start by reviewing your property deed and survey to confirm the boundary. Communicate with the neighbor to resolve the issue amicably. If that fails, you can send a formal legal notice requesting the removal of the encroachment. In unresolved cases, you may need to file a lawsuit for an injunction, requiring the neighbor to remove the structure or seek damages if the encroachment has caused financial loss.

How Do Courts Decide Property Ownership Disputes?

Courts determine property ownership by examining legal documents, such as deeds, titles, wills, and property tax records. In cases where ownership is unclear or disputed, courts may allow a quiet title action, a legal process used to establish rightful ownership and eliminate competing claims. 

Factors like historical possession, property maintenance records, and adverse possession laws may also play a role. Expert testimony, land surveys, and real estate appraisals are often used as supporting evidence in these cases.

Can You Force a Co-Owner to Sell a Property?

Yes, if co-owners disagree on selling a jointly owned property, one party can file a partition lawsuit. In a partition by sale, the court orders the property to be sold, and proceeds are divided among the owners. 

In a partition in kind, the court physically divides the property if feasible. Courts generally prefer partition by sale when a physical division is impractical, such as in urban settings or properties with structures that cannot be split.

How Long Does It Take to Resolve a Property Dispute?

The specific timelines for resolving property disputes can vary based on jurisdiction, method of resolution, and complexity of the case. 

Alternative dispute resolution mechanisms such as mediation and negotiation may lead to a resolution within a few months. Litigation, especially for complex title disputes or boundary conflicts, can take a year or longer due to court proceedings, evidence gathering, and potential appeals.