Bar is high for buyer to prove disclosure fraud
11/01/2008 12:00 AM
11/01/2008 5:27 AM
Q. I sold my home in Vermont this past June and, since the closing, that area has received tremendous amounts of rain. In fact, according to the National Weather Service, there have been 24 inches, a record-breaking amount. 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, 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.
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.
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.
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.
Q. We made an offer on a lovely house that is about 80 years old. We hired a really great inspector who knows the area well. He found two major problems. 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. We do have an inspection contingency; if she did not agree to pay for the repair, we could walk away from the contract. Do you have any advice?
You're wise to have found a top-notch home inspector who called your attention to these 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 sellers' circumstances might limit what they're willing to do to repair the problems, you need to look at the price you're paying to determine whether the seller must make the repairs, when you compare the home to other homes in the area.
Another issue: 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. Or, the seller can discount the house further, and you can do the work once you move in.
Ideally, you'll get the work completed. But if the sellers insist on doing it themselves 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.
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