Being threatened with lawsuit.

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Being threatened with lawsuit.

Ken Williams
Member since 2008 · 44 posts · 2 votes

Hello, I am being threatened with a lawsuit on a property we sold for a failing sewer system. We put a clause in the contract about the sewer problem, which was the exact same clause we had in our contract when we purchased. The buyer knew there was a constant backup problem with the sewer line. My question: Does the buyer still have a right to come back on us for any damages at all, even when the sewer was disclosed in the contract?

He is asking for past records of work done on the sewer and who did the work. The only thing we did was snake the lines to clear the backup in the past. Should I show these records to the buyer or ignore the request?

Also, if a suit is brought against us should we go with a local real estate attorney? This was a commercial property in a small town with limited attorney presence. Would it be wise to go with a bigger attorney in the state, or even use our out of state attorney?

I will bounce some questions off of our real estate attorney on Monday, but this property is out of his state, and I have been worried about this after receiving word from the buyer today.

We sold the property at a discount and disclosed to the seller, so we tried to do the right thing by him.

I thought some of you might have experience and info you might be able to share. Any info would be appreciated.

Thanks

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Ryan Wright
Lender · West Jordan, UT · Member since 2011 · 32 posts · 20 votes
14y

Threats and accutally being sued are two very, very, very diffrent things.

When so own makes the three I tell them to do it and stop talking about it. In most cases typically more confident that a judge will be logical than someone that is upset. As long as you disclosed properly you should be confident.

I wouldn't give them anything like or even spend the money on a phone call to your attorney. If you get served with papers then deal with it. Until then relax. Keep in. Mind what Fear is

F. Future
e. Events
A. Arn't
r. Real

I would not worry about it until it is real and stop talking to the buyer. Deal with it if and I mean if you get served.

Also if you did get served I would hire council in the state located for sure

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  • Scott R.
    Real Estate Investor · Amarillo, TX · Member since 2008 · 547 posts · 214 votes
    14y

    If you fully disclosed that there were problems theres NOTHING they can do! theres almost nothing they can to even if you DIDNT disclose. I AM NOT FAMILIAR WITH commercial property, but with most residental, you would provide a sellers disclosure, and list what you KNOW is wrong with the property, but they could ALMOST NEVER prove you knew about existing problems, unless there was some type of documentation. I WOULD NOT provide any info about the sewer being snaked, because it does show you had problems, which should of been disclosed, but you said you disclosed it anyways, so i dont understand what they think they are going to accomplish with this..
    IMO ignore em, until further notice, if they do find a lawyer that is willing to take this case, which i dont think they will, i might reply if i got something from the lawyer, otherwise screw em! :)
    with all property sold, especailly at a discount, or "wholesaled" property you should have some type of disclosure that they are welcome to have the property inspected, and the property is AS IS!

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Ken,

    After you disclose an issue the buyers have what's called a "right to their own inquiry".

    What that means is when you disclose know facts when selling and the buyer is made aware of the fact they can investigate further.

    If the buyer chooses NOT to for saving money and wants to take the risk then it's on THEM.Remember anyone can sue for anything and doesn't mean they will win.Many times when they threaten a lawsuit they are fishing for quick money and to scare you.

    They probably found out after the closing that the problem is bigger than they thought to fix and now want you to pick up the tab.

    For a sewer issue all they had to do is get a plumber to SCOPE to line all the way until the street to find out exactly what the issue is.It could be tree roots,cleanout needs to snaked all the way until the street,etc.

    If you had a small pipe snaked and not the whole line that won't fix the problem it will usually just push the clog further down the line.

    No legal advice.

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  • Ken Williams
    OP
    Member since 2008 · 44 posts · 2 votes
    14y

    The buyer had plenty of due diligence time and should have been comfortable with the purchase. The buyer got a great deal with tremendous upside, and I think he is bluffing too BUT I want to be prepared. It is too bad we live in society with so much litigation and lawsuits. Just one more thing we have to deal with.

    I have never been sued before and do not have an attorney in the state of the property. Would I be better off getting an attorney from that state, or using an out of state attorney? (Hoping I will not need one).

    Thanks to all that have answered!

    1Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    You probably want an attorney in the area of the property. At least in the same state.

    0Reply
  • Account Closed
    Residential Real Estate Agent · Ocala, FL · Member since 2009 · 255 posts · 65 votes
    14y

    The right answer is more than likely what Jon said above...however ponder the following.

    How likely is it for this person to actually pay to take you to court?

    What is the actual possible loss in dollars you might have to pay if everything is deemed your fault and you have to correct it.

    What is the cost of hiring a lawyer at this point, and what if any value does he even provide pre-lawsuit.

    So with that said, I usually subscribe to mindset of letting the car wreck happen and then I start calling the tow truck.

    You can put math to work if you can answer the above questions. If in theory it is a 5,000 dollar risk, with a 10% chance of it actually going to trial and you losing your only looking at a 500 dollar cost here. If the lawyer costs 500 to talk to him now and he may only help you offset the above risk 50% of the time than the cost of the lawyer isn't in theory worth doing yet.

    If you however just need to sleep at night, the lawyer may be the cure for what ails ya.

    0Reply
  • Ryan Wright
    Lender · West Jordan, UT · Member since 2011 · 32 posts · 20 votes
    14y

    Threats and accutally being sued are two very, very, very diffrent things.

    When so own makes the three I tell them to do it and stop talking about it. In most cases typically more confident that a judge will be logical than someone that is upset. As long as you disclosed properly you should be confident.

    I wouldn't give them anything like or even spend the money on a phone call to your attorney. If you get served with papers then deal with it. Until then relax. Keep in. Mind what Fear is

    F. Future
    e. Events
    A. Arn't
    r. Real

    I would not worry about it until it is real and stop talking to the buyer. Deal with it if and I mean if you get served.

    Also if you did get served I would hire council in the state located for sure

    2Reply
  • Chris Masons
    Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
    14y

    Hi Ken,

    You say in your original post the buyer knew that there was a constant backup problem. That being said, has something else happed aside from this? Did the line break so now they have no choice but to dig and replace the line? Or has it just backed up like what was described?

    Even if the line is now broke it was most likely caused by improper snaking done by the new owners. That would be a tough case to prove you were/are liable for.

    I'd just sit tight and wait it out. LIke everyone said he is probably bluffing and wanting some easy money with scare tatics.

    good luck,
    Chris

    0Reply
  • Cheryl C.
    Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    14y

    When you say failing sewer system, that makes me think "septic system". If it's just a slope problem on a sewer line, that makes me think an ejector pump is the solution OR you have a broken sewer line. Failing septic can be more problematic (drain fields etc.) I'm familiar with both issues. The septic only backed up when the tenants decided to shower (X2), run the dishwasher (which they installed) and do 8 loads of laundry back to back.

    Now, to your issue. I wouldn't talk to him. My usual response is "let's let a judge figure it out".

    This is the same advice you got above. No documents, no nothing. Talk is cheap. I wouldn't even worry about it at this point.

    As to local counsel if it comes down to it; I have some properties about 45 miles south of DC. If I brought a "big city" lawyer down there, it wouldn't go over well. I'd use a local attorney. Just my 2 cents.

    0Reply
  • Ken Williams
    OP
    Member since 2008 · 44 posts · 2 votes
    14y

    I believe what has escalated the buyers response to me was that the city told him he needed to take care of a backup or they would take action against him. (Just heard this). I do not think he is taking care of the tenants/property and especially any sewer issues. The problem with the sewer is a flat patch in the line (from what I was told by the plumbers, but I am not a plumber). The fix would be a pump or just snaking/pushing the line when it slows down. We would snake the lines when it slowed down about every 3-4 months or so. Not a big deal either way- and he knew this. When he starts bringing in liability claims of the city closing the property down, etc., that is when I start questioning things and second guessing myself. I have done everything right and if he serves me then so be it. I hope that is not the case, but I think we should be ready with everything we need to win.

    0Reply
  • Andy Collins
    SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes
    14y

    It sounds like you have everything in order, and the buyer is just looking for someone to help them solve a problem you discolosed at the time of the sale.

    Until you get something from an attorney do nothing,,,if you get something from an attorney you can have your out of state attorney reply,,if, in the one in a thousand chance, the guy really sued you, get an attorney in that particular town,,,small town judges and juries many times don't like "big city" attorneys

    0Reply
  • Ken Williams
    OP
    Member since 2008 · 44 posts · 2 votes
    14y

    One more question:

    If I had liability insurance on the property when we owned it will the insurance company pick up the attorney fees if this goes to court? I have since cancelled the liability policy but just a thought I had.

    Thanks

    0Reply
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