Who's responsible for defects discovered after closing?

Answer may seem obvious until you consult inspection reports, disclosures

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Feb. 27, 2012

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Answer may seem obvious until you consult inspection reports, disclosures

Dian Hymer
Inman News®

Homebuyers who buy during the dry season can be in for an unpleasant surprise when the roof leaks or the basement floods after the first rain. Who is responsible for damage caused by water intrusion and for making the necessary repairs to prevent it from happening again?

It's possible that you are responsible if information about potential water intrusion was disclosed to you before you closed the sale and you accepted the property in its "as is" condition regarding this.

For example, if there are trees overhanging the roof gutters, and the sellers and your home inspector told you the gutters need to be kept free of debris, you probably won't get very far asking the sellers to repair roof leaks if it turns out they were caused by your lack of maintenance. When gutters get clogged, water can back up and run into the house.

The first thing you should do if you discover a defect after closing that you think is either a new condition or something you're sure has happened in the past is to look through the inspection reports and disclosures, if there were any, to see if you were made aware of this before you bought.

Plenty of paperwork is generated during today's home-sale transactions, but many buyers and sellers are prone to recycle most of it as soon as the sale closes. It's a good idea to reduce the amount of paper, but not the critical information you'll need for tax purposes, such as your settlement statement and documentation of the property's condition.

Ideally, the purchase contract and addenda, any disclosures and all inspection reports should be burned to a CD for your records before recycling the paper copies.

What should you do if you clean the gutters but the roof still leaks during the next rain? Did you have the roof inspected before you bought? Was maintenance recommended? Did you have the work done? If so, call the roofer. If the seller hired a roofer to maintain the roof, make sure you have documentation that identifies the work that was done, and contact that roofer.

Dealing with defects discovered after closing is not always black and white.

For example, let's say the sellers told you that they occasionally found a small amount of water in the basement after a heavy rain.

In fact, the basement floods when it rains so that it can't be used for storage, and the flooding is rusting the bottom of the furnace and the hot water heater. A fix for a problem like this could be expensive if it requires a new drainage system.

HOUSE HUNTING TIP: Your purchase contract should detail how disputes will be dealt with if they can't be solved by the parties involved or with the help of their real estate agents.

Some contracts call for disputes to be mediated before they are either resolved through arbitration or in court. In any event, you should contact a knowledgeable real estate attorney for answers to any questions regarding who's responsible for defects disclosed after closing.

Be sure to hire the best inspectors you can find in your area. Disclosure requirements vary from state to state. Also, many buyers buy bank-owned or estate-sale properties where there typically aren't thorough disclosures because the owners didn't occupy the property and may be exempt from providing disclosures.

A good home inspector would see signs of flooding in the basement, such as bubbling paint on the foundation walls, rust on the bottom of the furnace, and water stains, unless they have been intentionally covered up by the seller. If the home inspector recommends hiring a drainage specialist to look at the property, be sure to follow through with this.

THE CLOSING: It's best to resolve property defect issues before closing, if possible.

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."

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