Due Dilgence - Denied

17 Replies

Have a 4500 sq ft custom house under contract with 10 day DD.

Seller is refusing to allow access for roofer, plumber electrician, pool inspector, etc. Only wants to allow my home inspector.

So we know there must be issue will all these systems but the house fits my family needs and we can turn additional space into an apartment for rental.

What option do we have besides walking away ?

You (and your agent if you're using one) need to re-read the contract and see what it allows for in terms of inspections. I have no knowledge on GA real estate law so I can't really give you advice on what your contract says, but it might be a bit overkill to have that many different inspectors running through a home, especially during COVID times. 

Going forward, you can just include additional language/terms that provide an opportunity for contractors of your choice to inspect the property during the due diligence period.

Typically the Home Inspector would go in first and identify any issues he feels should be addressed by a more specific trade Contractor. Maybe just get the HI in there first and tell him to be really curious. Better yet, hire a General Contractor/Home Inspector......a good one will be able to identify most all problems well enough.

Have your agent work with the listing agent to get this done. This is abnormal and any reasonable seller and listing agent should be more than accommodating for this type of thing. 

Section 8 of the purchase and sale agreement states that you have the right to inspect and do the things you're looking to do. So this could potentially be a breach of contract and be grounds for a lawsuit.

Thanks for the replys. . . here is an update.

We know the history of this house since we tried to buy it 2 years ago when it was for sale. We have a copy of a previous home inspection report.

Day 5 of the 10 DD: We contacted the agents broker/corporate office and we now have access.  

Day 6 of the 10 day DD: Finally got my home inspector, HVAC tech and contractor inside the house. As expected my found issues that need more competent professionals to look at. Need to schedule swimming pool inspection, septic tank, and exterior roof. 

Seller is refusing to allow any more inspections. Seller also refused to extend the DD to address issues found in our report.

My personal opinion is the seller and agent know there are multiple problems with the home, and they had hoped we were "incompetent, naive or stupid" and would not use our due diligence as contracted. ( most buyers don't ) 

So out of the 10 day of DD we have had 4 hours total . . . so far.

Originally posted by @Nolan Gottlieb :

I'm an agent in Georgia and I've never heard of this. Is the seller going to be at inspection? I'd just schedule everyone to show up at the same time for inspection and say this is my inspector team.

I am a contractor and I hate it when real estate broker (or agents) schedule multiple companies to do inspections at the same time. I totally understand the time restrictions, but also think it is unethical for a broker to expect my company to show up on-time and then have to hang around one or twp extra hours because there are representative from two brokerage firms at the property, the seller is at the property, several other companies are there doing inspections and I have to be polite and stand around for 1 or 2 hours waiting find out who is who while multiple groups are having in-depth conversations, I have to wait to find out what they want, where things are at, get permission to move things, get permission to open things and then can't get in a word to discuss my inspection.

When I see one other person at a property that is for sale I walk away because there is a lot of straight out bullsh..., promises and lies at home inspections. The sellers and the nuyers always try to dangle a carrot in my face by telling me that the inspection is not a waste of my time because they seriously intend to have my company do any necessary repairs. Bullsh...!!! The sellers don't want to spend one penny they don't have to and the buyers only want to get the purchase price discounted.

I don't blame the seller for not wanting multiple contractors on the property. Maybe, he feels he doesn't need to be overwhelmed with inspectors and if you back out it will be a good thing. Most companies that do home inspections go inside an attic if you look for a company that will and most home inspectors use drones to inspect the top of the roof. I just sold 24 homes in Las Vegas last year and I was impressed when many of the home inspectors found cracked roof tiles on the roofs that were 36+ feet high.

Jack, first of all, I do understand where you're coming from. However, I completely disagree. It's perfectly logical to have a home inspector, roofing contractor and an HVAC contractor there at the same time working simultaneously and NOT getting in each other's way. Home inspectors are fantastic (most of them) and they usually spot most of what is wrong with a house, but as you know if there's a roof issue in inspection it will recommend on the report that a licensed roofing professional come give another opinion. If you only have one appointment to get all that done, you do what you can...and sometimes that means double booking.

Also, as an agent, I respect your opinion, but my/our obligation is to represent our clients and protect them as best we can...not to protect contractors' feelings.

Update:

Day 7 of the 10 DD:

My home inspector did a great job on inspecting the house on day 6. He found several minor issues we expected but the MAJOR issue he found was that the 8 car garage addition ( 42ft x 42ft ) was build directly over the septic tank and drain field. Now we know why the listing agent and seller kept blocking our due diligence inspections. We double check the "sellers disclosure" and the seller listed the property was on sewer. The listing agent has 25 years experience in the community and he either did or should have known about this defect.

Day 8 of the 10 DD:

At 10am my agent and a local septic company did an inspection and confirmed the tank was under the garage.

We called the county building office: NO building permits ever filed for this property. We contacted the county health department and the water department: NO record of where the tank and drain field is located in their files but they both confirmed there is NO SEWER in the area. Building inspector dropped everything he was doing and we immediately meet to the property. Seller refused to let me in and also refused to let the building inspector look at the garage. The county health inspector plans to come out next week. We asked seller for an extension, they refused.

Day 9 of the 10 DD:

Spoke with 2 lawyers referred by closing attorney's in the area. Met with another attorney and he stated that since we now know about the problem we can not file a law suite if we buy the house. Also will loose our EM if we cancel after the DD. 

1. We don't know if the tank can be moved without tearing down the garage.

2. We don't know if there is a 2nd drain field area available

3. We don't know if the garage is safe or was built to code

4. We don't know if the ground under the garage is stable or will remain stable

Around 5pm that day, the seller sent a counter offer to sell us the house "as is" for the same price.

Day 10 of the 10 DD:

We canceled.

@Brian Dennis Good for you....this was gonna be a nightmare trying to relocate that septic. Seller is an idiot...if he had disclosed form the get-go and offered to work with you, maybe y'all could've worked out something, who knows? Now this issue is out there and cannot be hidden any longer.....

Maybe let him dangle trying to sell this for a while and when he get's desperate, swoop in and get it at a huge discount. In the meantime, do your research and talk to the city. They're going to be going  after him now as well.

Originally posted by @Brian Dennis :

Update:

Day 7 of the 10 DD:

... 8 car garage addition ( 42ft x 42ft ) was build directly over the septic tank and drain field.... seller listed the property was on sewer....NO building permits ever filed for this property...Seller refused to let me in and also refused to let the building inspector look at the garage. The county health inspector plans to come out next week.... We canceled.

Given the, shall we say, "Oversight" of building a garage over the septic area--what other low-quality (homemade) cobbled up mess awaits your surprise findings.

[1] I wonder if they will condemn the house re the Septic issue?

[2] Rather than demo the garage, why not just install a 2nd proper septic system.

[3] This guy must have some kind of car collection--what's his daily driver--some kind of "Far Out" Hot Rod?

@Brian Dennis thank you for sharing your story. You made the right decision. Garage over a septic system is nothing but trouble. Some people would let it slide thinking "it is working" but everything that ever stopped working, broke or collapsed was just fine the day before...

Update:

The original listing was 695k. We had it under contract for 650k in September. The property was a 4500 sqft custom home with 13 car garages. My plan was to move in the 3,000 section with my wife, also move my mother inlaw in the 2 bedroom suite which is 1500 sqft. Then convert 4 of the garages into AB&B units. ( the 13 garage total sqft was an additional 4000 total )

Now: 

Since we canceled I'm out of 2k in inspections fees and 100 headaches dealing with the idiot. 

Then we saw on line that the agent re-listed the property after we canceled for 675k. No mention of the septic tank under the 8 car garage.

Originally posted by @Brian Dennis :

Then we saw on line that the agent re-listed the property after we canceled for 675k. No mention of the septic tank under the 8 car garage.

This may not be in the public facing listing, but it should absolutely be in the disclosures provided to prospective buyers. If it isn't then I suggest contacting the broker and/or the Real Estate Commission - its completely unethical for the listing agent to not disclose this.

Originally posted by @Joe Norman :
Originally posted by @Brian Dennis:

Then we saw on line that the agent re-listed the property after we canceled for 675k. No mention of the septic tank under the 8 car garage.

This may not be in the public facing listing, but it should absolutely be in the disclosures provided to prospective buyers. If it isn't then I suggest contacting the broker and/or the Real Estate Commission - its completely unethical for the listing agent to not disclose this.

in most states real estate commission wont get involved with something like this..  But for sure a can of worms.  and spend 2k to save what sounds like 100s of thousands potentially.. money well spent.

Originally posted by @Bruce Woodruff :
Originally posted by @Scott Mac:

[2] Rather than demo the garage, why not just install a 2nd proper septic system.

Now there's an idea. As long as the inlet can be found and is not under the house slab.....

YUP thats the solution and in GA most houses are post and beam so that should not be an issue finding the sewer outlet

I think the seller may have some issues now that this potential buyer opened up pandora's box by notifying the health department and building department.. really depends on how aggressive those departments are .. in some areas this would be a major issue some probably could give a rip.

There should be no COVID related issues for any of the exterior inspections so that's a red flag for me. If they won't give you access, ask for a substantial discount to cover unknowns. That may make the seller change their mind. However, your home inspector should be able to call out any problems they see with plumbing, electrical and even roofing. In your inspection report you'll get photos of all areas of concern and often a quote for repairs. I'm not sure about the pool, though. Do you have specific concerns about any of these systems or are you just trying to be extremely thorough? We typically use a home inspector for general inspection and a pest inspector for termites. Between the two, they pick up most everything.