It turns out that one might have the law on their side and retain an excellent lawyer, and still get completely screwed. I don't know why this surprises me. The house remains unsold, even though the neighbor has conceded in writing that our home does not, in fact, constitute an encroachment on the easement. Our buyers have been incredibly patient; rather than backing out completely at the beginning of this fiasco, they extended the closing date and waited for us to straighten things out. Coolio, right? Problem is, the easement, while not necessarily enforceable, is still there. In theory, the neighbor can run a driveway right under our living room window, and our buyers aren't down with that scenario. And now they've gotten their own lawyer, so the only money changing hands is going directly to three lawyers.
What kills me is that EVERYTHING IS ARGUABLE. Our lawyer believes we can challenge the validity of the easement, but it's possible we might lose. We could talk the neighbor into applying for an off-street parking variance with the city, but there's no guarantee they will grant it. If the variance is granted, the neighbor will argue that the value of his property has been affected. (This is their latest attempt to extort money from us; we're waiting for a dollar figure before we tell them to fuck off.) We could be hard asses and try to keep our poor buyers' earnest money if they back out, but because I didn't check the little box on our disclosure statement that asks if the property had any easements, the whole contract is called into question. The buyers got the same title report that we did, which briefly and vaguely mentions the easement, but apparently I/we should have been more clever than they are when we bought the home.
The bottom line is this: we may be victims of our neighbor's questionable legal actions, but to establish that fact in a court of law could take up to eight months and cost $20,000 — and if we lost we would be liable for the neighbor's legal fees. We can't put the house back on the market until we hear back from our buyers regarding our latest offer, and they're taking their time. So we pay two rents and a mortgage, while the entire decision to sell the house was based on the fact that we couldn't afford it. And we wait.