Real Estate News
Seller's contractor can't be trusted
How can buyers ensure repairs will be performed to code?
By Ilyce Glink
10/28/2008 8:00:00 AM
Q: We are in the process of buying a home. We really did our homework before we started, but we've still hit a big bump in the road. We made an offer on a lovely house that is about 80 years old. It was advertised as renovated and was even on the area preservation society's tour of homes. We hired a really great inspector who knows the area well, and he found two major problems.
One problem is that the house has knob and tube wiring, which would preclude us from getting homeowners insurance. The seller has agreed to fix that, to the tune of about $3,400.
The other problem he found involves a structural issue. When the house was renovated around 2000 (by owners prior to the current seller), they removed a floor furnace and did an inadequate job of shoring up the foundation. It needs new piers, among other things.
When we first looked at the house we expressed concern about the dip in the floor over that location. The seller's agent told our agent that she had a licensed contractor take a look at it, and that it was no big deal. Well, according to our inspector, it is a big deal and needs to be repaired. Now this same contractor has come back and given the seller an estimate saying it will cost $1,100 to fix. We decided we weren't comfortable until we had our own contractor look at it. Well, he said it would cost $3,700 to fix!
We aren't sure what to do. The seller was already balking at paying for the entire $1,100 repair. She's already re-wiring the house and taking a $50,000 loss on the house, which she bought in 2006. So we feel tremendously bad for her, especially since her home inspector did not find any of these problems. But we can't afford to take on her problems.
We do have an inspection contingency, so if she did not agree to pay for the repair, we could walk away from the contract. We would prefer not to do that, but we worry that even if she did make the repairs that they would be done by her contractor, who originally said this situation was "no problem." We are concerned that we would end up with a house that was still improperly renovated. Do you have any advice?
A: You're wise to have found a top-notch home inspector who called your attention to these potentially troubling and difficult problems. Given the current market conditions, you need to be focused on yourself and the condition of the house you're looking to buy.
While the seller's circumstances might limit what she's willing to do to repair the problems with the home, you need to look at the price you're paying for the home to determine whether the seller must make the repairs when you compare the home to other homes in the area.
Another important issue to consider: How badly do you want the house? If you want it only if these issues are taken care of, then you should allow the seller to have them repaired, but agree to have a reinspection based on the work that has been completed. Or, the seller can discount the house further and you can do the work yourself once you move in.
Ideally, you'll take on the project of getting the work completed. But if the seller insists on doing it herself or hiring someone to do it, you'll have to figure out a way to look over the work (ideally) while it is being done to make sure it is done properly. You have to be willing to walk away if the work is substandard or does not conform to the norm in which those repairs should be completed.
The ball is in your court. I've seen some extraordinary concessions from sellers lately due to their desperation to sell in a very slow market. Who knows? If you push a little bit, the seller may be more than willing (although clearly not happy) to meet your request.
Q: I sold my home in Vermont this past June (I now live in New Jersey) and since the closing that area has received tremendous amounts of rain. In fact, according to the National Weather Service, there has been a record-breaking 24 inches of rain.
As a result, the new owners have had water in the finished basement. They claim we knew about the leaking in the basement because they discovered "staining" from where it had occurred before.
This is disturbing to us since we never had water in the basement in the eight years we lived there other than condensation on the pipes, which would weep off onto the floor during hot humid weather. After wrapping the pipes in foam insulation and having air conditioning installed in the home, we never had that problem again. We did disclose this issue on the seller disclosure form.
I'm concerned about this, however, and don't know what my next steps should be. Do you have any advice?
A: When it comes to proving disclosure fraud, the buyers have to prove that you knew or should have known about the problem. That's a pretty high bar for them to cross.
To get there, the buyers have to find a "smoking gun," of sorts. The evidence that you knew about the problem might include the testimony of neighbors who would testify that you complained to them regularly about water in the basement or who could provide the name of a plumbing company that made regular visits to help you out. Or, perhaps the buyers might find a plumbing company or some other sort of company that turns out to have been a company you hired in the past to correct massive flooding, and these companies can produce invoices for services rendered.
If you never had any flooding in the eight years you were there, then you probably don't have to worry about someone finding some sort of proof that says otherwise. When you have a 100-year or 500-year water event, there will be some fallout. It is unlucky that the buyers experienced this right after moving in, but if this never happened on your watch, it's hard to imagine how they'll be able to pin this on you.
If the buyers pursue this, they'll find their way to an attorney or to small claims court. Once that happens, you'll need to find an attorney who can guide your response to their legal claims. Unfortunately, just because you're not responsible, doesn't mean you don't have to defend yourself.
To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.