Ambient occlusion where two meshes overlap? I have a house (cube) that's on an uneven ground. On this example the ground is maybe a little to wavy to be realistic, but I find it looks rather good mesh-wise, with the house intersecting the ground, so it's not on a completely flat surface. See LEFT image.

However, there are no shadows on the house from the ground or vice versa, so it looks kind of fake. 


Sun Strength 1.00 straight angle towards the house, which is slightly rotated.
World AO is on 1.00
No more lights


I made a mockup of what I expected (RIGHT) regarding shadows. How can I make it more realistic?

EDIT: Apparently it's something with the ground material, when I change it to simple diffuse, I get the desired result. I need to find out what can cause this though.
For this model rather than using the World ambient occlusion why not instead bake an ambient occlusion map on the model itself? There are hundreds of resources available for how to go about accomplishing this however I would recommend using this website as a source.

http://www.katsbits.com/tutorials/blender/basic-ambient-occlusion.php

You can bake the ambient occlusion on both the box as well as the ground mesh giving you more control in how it looks.