Disclose Past-But-Fixed Water Issues?

Question

A friend and neighbor is considering moving. I would list her house.

She has a desirable home - .75 acre lot in an area where .1 is huge.

The problem is that I think the house was built on top of an underground lake. I've never in my life known of a home with so much water in the basement.

She had a trench dug out in the basement, and a drain system installed with 3 turbo-charged sump pumps.

Since installation, there has been no water, and it's been a couple of years.

I'm a "disclose everything" kind of agent. This one is a bit different since I have first-hand knowledge of the defect - I even helped her bail the water out several times.

We're in a super-hot market, so I think it would still sell. But it's been repaired, so disclosure is not required.

I know what  I have to do, but I  want to hear it from you all, too.

@Russell Brazil ? @Dawn Brenengen ? @Jonna Weber ? @Dan Mackin ? @Anson Young?

Mike Cumbie · Answer

Some people say jump right in and get your feet wet!, Not here!!! With 3 TURBO charged Sump Pumps your basement will be dry enough to store tissue paper. Why do I need tissue paper you ask? To fill all the gift baskets you can give out with the money you save from the new energy efficient windows!

Russell Brazil · Answer

@Mindy Jensen In Maryland and DC you do not need to disclose a problem that has been fixed.  However I always feel that not disclosing it will cause a headache.  So what I do is I disclose the problem in a way that looks positive.  I attatch receipts for the issues that have been fixed to the disclosure forms, or in a list of upgrades.  $20k or whatever amount spent on top of the line french drain system and sump pumps.  So this has the effect of disclosing to cover your liability, but looks to the buyer and buyers agent as a plus, see they fixed this and they did it right.

Jeff Brower · Answer

I like seeing issues that have been remedied on disclosure forms. It actually gives me a better feeling than if reading a blank form. It gives me a sense of knowing that they are being honest and upfront, vs the curiosity of seeing absolutely nothing listed.

Joshua B. · Answer

I feel like you're asking to be sued if you don't disclose and something bad happens.

I'd disclose, but when disclosing I'd also provide a bit of well-presented information to show I repaired it correctly (i.e. contractor information, a summary of what the issue was and what was done to fix it, etc). Basically demonstrate that you've got your act together and don't cut corners.

Max Gradowitz · Answer

Whether you are legally required to disclose that specific thing may vary from state to state.  I'm pretty sure in CA that the standard CAR disclosure forms specifically asks if repairs were made, so you may be required to (check your disclosure forms carefully).

Whether it's smart to do so or not is unambiguous and doesn't matter what state you are in.  Disclose it.  It keeps you from being sued later for nondisclosure of a material fact. If you are in a hot market, it shouldn't effect the sale.  In fact, if you think it's a big issue, just include a statement in the "agent only" portion of the MLS listing that briefly explains the repaired issue.  That way any agent that shows the property will mention it to their buyer and if it's a deal killer it will filter out those buyers right away.

I've seen this done with a property where the homeowners were murdered 5 years prior. In CA you only have to disclose deaths for 3 years, but they disclosed anyway because they were smart (you could easily Google the address and find details of the murder, so yeah it was a smart move on their part). My buyer was smart too, because he didn't care about the death at all and got the home for a nearly 20% reduction in the listing price, then BRRRRed it.

Disclose!  The more disclosure the better.  It's very purpose is to protect you legally.

Ryan Scott · Answer

Im sure the OP knows her disclosure laws and I understand her reasoning behind bringing the question to the forum.

Basement water issues are pretty much the norm in my area...Welcome to Southwestern PA!

The remedies to these problems are extremely effective and usually the new homeowners never experience any further issues.

I think this type of mitigation / systems should be touted to buyers as an asset - a problem that was reliably resolved.

Point out the value of system in place instead of the past problem.

But don't forget that proper maintenance and checks is essential to proper long-term functionality of these systems.

Hope this helps.

Ryan Scott

Mindy Jensen · Answer

Thanks @John Woodrich . I know the disclosure laws.

Dawn Brenengen · Answer

@Mindy Jensen I agree with Russell.  In NC, you don't have to disclose if the problem has been fixed.  However, I would put this in an"upgrade list," so you have effectively disclosed that there used to be a problem.

Jonna Weber · Answer

Idaho's disclosure form has a section that asks the sellers if they have ever had water issues. I would let the sellers disclose the past issues and provide documentation of the remedy.   As an agent, I would also be available to answer any questions and verify what happened.  Happy Selling!

Disclose Past-But-Fixed Water Issues?

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