encroachments

What is the name of your state? north carolina
We are in escrow on a waterfront lot. We found out by our survey that the neighbor put a retaining wall on the property we are in contract on without the owners permission. The wall has now washed out and washed out the neighbors dock. So the property we are in contract in now has a huge drainage issue and a mess where the wall fell out. The neighbor wants if fixed even though she encroached and the owner will not fix it to close on the property. We are afraid that if we close the neighbor will try to hold us liable for her dock wash out, even though all opinions are that she caused it by digging on the property. Can she hold us liable for something that happened prior to us owning the property?

I am not a lawyer, but I urge you to consult one because I think you are walking into a can of worms here. If it were me, I would either pass on the property, or I would make the present owner come to a legal agreement on this with his neighbor before I closed on the property. You don't want this to become your headache. Besides, I think that the current owner is obligated to disclose this issue, and I can't imagine anyone else being interested in buying the property under those conditions.