Black Mold Found in Bank Owned AFTER Inspection

10 Replies

We found a TON of black mold in our finished condo basement after the inspection. The bank admitted that the foreclosed on previous tenant flooded the basement, but the inspector stated that there was no mold. Upon removing a piece of dry wall just recently (6 months after purchase), we have continued on to find the entire basement covered in black mold. Our condo insurance doesn't cover anything mold related. Is there anything we can do to recoup some of the costs? I'm assuming the bank and inspector are clear of any recourse after closing, but hopefully I'm wrong!! 

Any advice would be great!

If the bank disclosed the flood then they're not liable.  I'm sure the agreement with the inspector also stated that they're not liable for anything they don't find as well.  If home inspectors had to pay for any issues that weren't discovered you'd be paying $10k+ for an inspection.  At most if an inspector really screws up you might get your money back that you paid for the inspection. If you knew about the flood had a concern about mold you should have had a mold test done, which is not within the bounds of what a normal home inspector does. 

At this point you don't really have any great options.  Luckily sheetrock isn't that expensive...tear it all out and get it all dry and replace it.  

You can always go back to the inspector and find out how he missed that. But sometimes you can't always see those types of things. But black mold is very bad. You will have to have a company do a special cleanup since black mold is toxic.

"upon removing a piece of sheetrock....6 months after purchase".  Not a chance.  Inspectors don't tear apart walls, the owners would never allow.  This is your problem now.

Correction... the bank did NOT disclose that the basement was flooded in any of the paperwork. We were told by the neighbor, but after reviewing the paperwork from the bank pre-sale, there is nothing about flooding or water damage.

Here is the exact wording 

"2 bedroom, 2 bath, Condo located in Harrison Twp. Home Includes: Hardwood floors, fireplace, 2-car detached garage, deck, and finished basement. Close to shopping, parks, lakes, and expressways for easy convenience to almost anywhere! All info estimated, buyer's agent to verify all info. Property sold as is, seller to make no repairs, and buyer to pay 399 REO Compliance fee to listing office at closing."

You are basically on your own.  The bank make the necessary disclosure as required by the selling broker they contracted with.  It was basically a simple template that states they never lived there and have no knowledge of the property.  Could you find an attorney that would be willing to push some buttons for you at $250/hour?   Sure.  Will it likely get you anywhere?  NOPE.  As is Where is purchase, buyer beware.  Case law is pretty strong in this area.  Additionally, you, a greedy, profit digging investor will score no sympathy points with the court.  Furthermore, you likely are required to first take this matter to arbitration...which still will not end well for you.

Hypothetically, you might be able to prove that the bank knew about the flood because of their own inspections or because the original borrowers told the collection department about the flood as a reason they could not pay.  Still....the bank was not required to disclose this.

Had an individual that owned it....be it a distant landlord that never lived there, or an actual homeowner not disclosed this....then yes....you have a case to take before arbitration or the court....whichever is mandated as the first step per your sales contract.

Hopefully you bought it low enough that you can still make a profit or at least minimize your losses.

@Chris Simmons Thanks, Chris, and everyone else for the replies. I actually bought this before I had any interest in being a real estate investor (thus my lack of proper inspecting). My girlfriend and I currently live in the property and really liked it until now. We would like to stay in it. I guess we will bite the bullet and get it cleaned out. 

Any tips on mold remediation?? Do you guys typically clean it yourselves or go with a professional? We've got it pretty bad... behind all the drywall, above the ceilings, probably under tiles in the bathroom..