Buyer seeks recourse for undisclosed foundation defect

REThink Real Estate

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Apr. 12, 2012

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REThink Real Estate

Tara-Nicholle Nelson
Inman News®

Q: We recently purchased a home and the inspection showed some previous water in the basement (walls). My husband grinded off the two coats of paint and there is still water penetrating the foundation. This could be costly for us to fix. The sellers did not disclose this and the real estate agent made it appear like it was something that could be easily fixed. Do we have any legal rights? --Lynn P.

A: I'm sorry that you're going through this stressful situation; it's never fun to have an open-ended problem with your home that bodes ill for your pocketbook. That said, you may not be able to shift 100 percent of the blame and responsibility in this situation onto the other folks involved in your transaction.

In most states, buyers are advised as a matter of course that they have the right and the legal duty to have a home inspected before they buy it.

This is critically important because sellers may not be aware of --  or have the expertise to disclose -- every flaw of a property in a way that provides a sufficient basis of information for a buyer to make such a critical decision and massive investment as the decision of whether to buy a home.

Similarly, there are generally disclosures made to the buyer by his agent to the effect that the agent is an expert on real estate matters, not on the condition of a property, and again encouraging the buyer to obtain inspections from professionals who are experts in those areas.

Any such disclosures that were made, as well as the fact that the inspections you obtained actually called out and revealed that this issue was present, will be a major ding against any legal case you might try to bring against another party.

With that said, I can't see your paperwork or read your inspection report, so my top-line advice to you is to gather them all up and take them to a local real estate attorney who can more fully evaluate your claims based on the state of the contract, the specifics of the inspection and the laws of your state.

Here are some insights into how your legal rights and responsibilities shake out vis-à-vis those of the seller and your agent:

You vs. the sellers. In most states, sellers owe buyers a duty to disclose property problems they know or should have known about. And it does sound like the seller should have been aware of this problem. However, even if a court found that the sellers did breach their duty to disclose, the court would have a hard time finding that this breach caused you any harm.

The fact is, your own inspector, whom you paid specifically to flag such issues for you, did notify you that the problem existed, ostensibly before you bought the property. If learning of the problem from the inspector didn't stop you from buying the place or inspire you to get a repair bid or renegotiate the deal, why would a court believe that learning of it from a seller would?

You vs. your agent. Your agent has a duty to perform competent real estate brokerage services on your behalf, in good faith, and to deal fairly with you. Your agent does not have a duty to exercise competent home inspection duties, as that is not an agent's area of expertise.

As I see it, the breakdown in your situation occurred when you got the inspection report back but did not retain a drainage or foundation specialist to give you a repair bid on the fix after the inspector called the issue out. That would be a common recommendation for a generalist home inspector or a real estate broker or agent to make, in many areas.

When you talk with a local lawyer, make sure you bring anything you have in writing or your best recollection of what, expressly, your agent said that you feel downplayed the potential cost of the repair.

Most agents I know would shy far away from minimizing the potential expense of repairing anything that had to do with either water intrusion or a foundation. And it's possible that what you think is an "easy fix" is very different from what your agent considers an easy fix.

That's why it's so, so important for buyers to get repair estimates -- not just inspection reports -- while they're in escrow. Otherwise, you really have no way to know what you're getting yourself into.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

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