Home inspector / seller liability? - Posted by A in TX

Posted by GlenSoCal on December 03, 2001 at 16:00:40:

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Home inspector / seller liability? - Posted by A in TX

Posted by A in TX on December 03, 2001 at 13:47:21:

Can someone give us advice on the following situation?

Two months ago we bought a house. We hired a home inspector who provided us with a list of problems that needed to be fixed. One of the repairs included replacing rotten siding (20-30% of all siding boards) and repainting the house.

During the negotiations the seller refused to do any of the repairs but agreed to provide us with money for repairs at the time of closing. The seller got the bids from contractors and the money was placed in the escrow account during closing.

After closing, we hired a contactor to repair the siding and it turned out that the entire bottom part of the house had severe damage from rot/insect/water etc: almost all bottom sill made of 2x4 had to be replaced, also many studs were rotten at the bottom, that also had to be replaced or reinforced.
We ended up paying additional $2500 out of our pocket for the job.

The interesting part was that this house has been flooded (1 foot of water) just 4 months prior during the tropical storm Allison, and all the interior including sheetrock had to be re-done. The sheetrock up to 4 ft was replaced on all the walls. The frame would be completely exposed if you remove the sheetrock, so whoever did the work could not have noticed the rotten bottom part of the house frame, that in many places was completely brown, crumbly and disintegrated!

We suspect that the seller knew about the defect and that was the reason for them to categorically refuse to do the repairs before the closing, because then they would have to pay more for repairs! The seller lived in the house for at least 8 years before they sold it to us. Of course it is possible that the contractor who did the flood repairs did not tell them (we are not sure if they hired someone or did the repairs themselves).

Also, we think the inspector should have suggested that since a lot of siding at the bottom of the house was rotten and needed to be replaced, that we might have the problem with rotten frame. He did not mention it in his report or orally. As we found out later, the rotten frame was even exposed to visible inspection but only in the small part of the house - the storage/utility room that did not have the sheetrock on the inside! We missed it but the inspector should have noticed! (the storage room is about 5-10% of the house, so we are sure the inspector will be liable for at least that part)

I understand that the inspection is only for visible defects, but it seems to me that the inspector has to have some experience and be able to suggest possible problems that are not directly visible from telltale signs (such as “There is seriously rotten siding at the bottom, there might be a problem with the frame behind it”)

So who is liable in this situation? Us, for being stupid and not inspecting more thoroughly?? The home inspector for not noticing?? The seller, for not disclosing if they knew?? The contractor who did flood repairs for not telling the seller?? Maybe even the realtor(s)??

We would like to get our money for repairs back, is it even remotely possible? What should we do: try to settle with the person (who?), go to small claims court or get a lawyer’s advice?

(By the way, we took pictures for evidence of all rotten parts before it was repaired, and got a statement from the contractor describing the problem in detail).

Re: Home inspector / seller liability? - Posted by David Krulac

Posted by David Krulac on December 04, 2001 at 19:16:54:

A,

the seller is legally bound to disclose, you need to prove it. You should contact an attorney, you should contact the contractor who did the drywall and it you concluded that A. your claim is valid and B. you can collect then proceed.

A friend of mine bought a house and the first day there there was a problem with the septic. The former owner denied any knowledge, but my friend was able to locate 2 people who had worked on the system previously. He sued the former owner and the real estate company and the former owner settled out of court for $20,000.

Good Luck,
David Krulac

Re: Home inspector / seller liability? - Posted by Bud Branstetter

Posted by Bud Branstetter on December 03, 2001 at 21:40:36:

I do live in Texas and I am familiar with Texas contracts and disclosure forms.

First, The contract probably allowed you to have an inspection done. After that inspection you had the unilateral right for 7 days to cancel the contract and get any earnest money back. The seller had no obligation to fix or pay for anything. Sorry that’s the way it is now. Last year, I had a realtor tell me I had to amend the contract to fix the things on the list. Bad habit, I don’t like people telling me what I have to do with a property I own. Making the story short, They bought the house but I did not amend the contract. I even negotiated a reduction at the last minute in the fee included in the contract for the realtor.

The inspection is licenced by the state. He fills out a state approved form. As has been said it is his opinion. Before you sue anyone, recognize that it will take 2-5K just to retain an attorney. Figure a couple of years and tens of thousands more to try and prove they knew about it. Then, in Texas, you will have a devil of a time collecting. If it is not at least 10-20 it just isn’t worth it.

Re: Home inspector / seller liability? - Posted by Ray S(FL)

Posted by Ray S(FL) on December 03, 2001 at 15:30:58:

A in TX,

As suggested by the other posts, I would first read the purchase and sale agreement. If you bought the property AS IS then you really don’t have an argument with the sellers. The sellers probably gave you so many days to inspect the home or have it inspected and agreed to a certain dollar amount or a percentage of the sales price for repairs. That being the case they did give you time to uncover this problem.

Disclosure is a pretty major issue. Here in Florida a realtor was sued for not disclosing that someone had been murderd in a property, which she had no idea, and lost. Not disclosing that the house had been flooded seems like an act of deception. (if your laws are like ours) The problem is sueing them’ winning the case, only to get a judgement against the sellers. Maybe the threat of a law suit would get some kind of a response from them. I would look at all or your options closely. Did you get a good deal on the house?? Disclosure still has to be proven and even though it is obvious to you and probably a judge it still has to be proven.

The home inspector should have seen the damage or rotten wood on the exposed framing however if it is not visible to him then he is not suppose to guess that there might be damage. He is to report only what he sees. Granted he should have seen the one section of the home were there was damage.

Contractor, Maybe. If the home ispector didn’t see it and the contractor didn’t see it untill he started replacing side board then your best bet maybe to go after the seller.

good luck to you
Ray S(FL)

Re: Home inspector / seller liability? - Posted by John - CA

Posted by John - CA on December 03, 2001 at 15:05:02:

I agree with Mark.

I’m no real estate expert, nor am I from Texas, but in California there are a whole slew of disclosures for known defects from the seller. Check your purchase contract and additional addenda. Then go consult a real estate attorney.

John.

Re: Home inspector / seller liability? - Posted by Marcos

Posted by Marcos on December 03, 2001 at 14:40:54:

Doubtful the seller will have any liability, it was up to you to do due dilligence. They are under no obligation to provide you with any information on the house.

Read your home inspectors contract, most of them(if they have been in business for a while) clearly state that they offer no warranty, that this is only a representation of their opinion on the property. Unfortunately most of them have these weasel clauses, so it’s hard to enforce what they “should” have seen.

The one I would be upset with is the contractor who gave you an estimate on the repair costs. He’s the one who should have seen the rotted wood. I don’t know if you could go after him, but I’d suspect he’d be your only option. I could be wrong though. In any case, for $2500 your legal options remain fairly slim.

Good Luck,

Marcos

Re: Home inspector / seller liability? - Posted by Nate(DC)

Posted by Nate(DC) on December 03, 2001 at 20:57:33:

Again, this may vary by state…but here in the DC area, seller is REQUIRED to disclose any known defects, even if the property is being sold “as is”. Of course, then you have the prove the seller knew about the defect, which is often difficult if not impossible…

Correction… - Posted by Marcos

Posted by Marcos on December 03, 2001 at 18:56:17:

I assumed that the seller sold the house “As Is”, other than what was disclosed prior to purchase and put into escrow. Here in Florida after our hurricanes, all the houses were sold as is. So, I just made that assumption.

If it wasn’t sold “As Is”, then of course you have a leg to stand on. Assuming you can prove that they knowingly witheld that information from you.

Marcos

Hold on Marcos… - Posted by Mark

Posted by Mark on December 03, 2001 at 14:53:13:

I don’t know what state you are from, but some states have a law dealing with “latent disclosure” of defects. You can sue a seller in small claims court (up to about 3500.00) and possibly win if your case is documented well enough! Consult a lawyer with real estate experience.

Good luck…

P.S. if you win, good luck collecting! Often times, getting the judgment in your favor is the easy part! Collecting from the seller is hard!

Re: Home inspector / seller liability? - Posted by A in TX

Posted by A in TX on December 06, 2001 at 11:15:34:

Ok, lets ASSUME they did know about it (the contractor paid by flood insurance showed them - or they did the repairs themselves and saw it). In that case, what would be the best way to go about it? Who should I contact first?

The amount of claim (only $2500) is probably too small to be cost-effective for getting an attorney, but I have never done this myself, so I need all the help I can get…
Thanks in advance!