Buyer requesting A/C repair day after closing

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Buyer requesting A/C repair day after closing

Kyle Houlahan
Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes

Timeline of events

  • 2-3 weeks ago: inspection was completed. No issues with A/C unit given in inspection report
  • Day before close: Buyer did a walk through and notified me that the A/C was not blowing cold. I called an A/C technician and he came out and notified me that the refrigerant was low and would need to be topped off in order for the unit to blow cold again. I notified the buyer of this and told them they would need to take care of it themselves as it is classified as regular maintenance.
  • Day of closing: Closed on property. Property sold AS IS
  • Two days after closing on property: Buyer reaches out and states that he had an A/C technician come out and they told him the unit needs a new compressor, refrigerant refilled, and a few other minor things. Total for the repair is $1,700 and he's asking me how I want to go about paying to fix it.

Am I legally obligated to pay for this repair? I had zero knowledge of any issues with the A/C unit other than that it needed refrigerant, which I notified them of. The contract states the property is sold AS IS, and the A/C unit had zero issues at the time of inspection, less than three weeks prior.

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Max T.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
8y

You are not on the hook for this cost, but if you're doing a lot of business in the area and care about your reputation I would recommend that you:

1. Get a repair technician that you trust to diagnose the problem again. Their tech may just be trying to create more work for himself.

2. After you get that estimate from your guy, offer to go half-sies with the buyer.

11Reply
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  • Will GastonPro Member
    Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
    8y

    @Kyle Houlahan I think you're good. 

    The property was contracted and sold "As-Is" and I'm sure the price reflected that as you could've charged more for a property with a new unit.

    I would (in a kind manner) let the buyer know just that.

    3Reply
  • Mike McCarthy
    Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    8y
    There are very few cases where a buyer can go after a seller post-closing. They usually revolve around fraud and intentionally covering up problems. (Which obviously isn’t the issue here) I agree, I think it’s nothing you need to worry about.
    2Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    8y

    You are not on the hook for this cost, but if you're doing a lot of business in the area and care about your reputation I would recommend that you:

    1. Get a repair technician that you trust to diagnose the problem again. Their tech may just be trying to create more work for himself.

    2. After you get that estimate from your guy, offer to go half-sies with the buyer.

    11Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    Thanks for all of your input. Glad to hear that I'm not liable for this repair. I found out the buyer did purchase a home warranty, but it doesn't take effect until mid-month. While it may be inconvenient for the time being, the buyer should be able to get all the necessary repairs done for little to no expense out of pocket.

    2Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    Your standard as is FL contract Does require the house to be maintained in the Same condition as it was on the day of the executed purchase contract. You should have, and would have been wise to, simply top off the refrigerant at closing. Now, you do have a problem, since it was Not delivered in the same condition, not sure of the extent, but I’d at least top it off now. The buyers would have been wise not to close until it was done.
    2Reply
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    8y

    Legally responsible? I would say not. Although I am no lawyer, if they signed a contract that said the property is to be sold AS-IS, then they understood the risks of purchasing said property. If you have proof your AC tech said that it only needed refrigerant and presented this to the buyer, then you have done your part to remedy the problem as it was perceived at that time. They paid for their own inspection and found additional problems after the home closed. You are not contractually obligated to do anything as it is not your property any longer. 

    The buyer could have independently verified these findings before closing.

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Kyle Houlahan I am not sure why people say you are not legally responsible. That would be decided in arbitration or in court. 

    I see two problems here:

    1. The issue was brought up before closing and you stated it only needed refrigerant filled, which is probably under $200. The actual repair is requiring $1700, so from the buyers perspective you misrepresented the problem. I could see you being held liable for the difference.

    2. What kind of flipper sells a property with a broken AC in Florida? You have to consider what kind of reputation you want to build in this business. Even if you are not legally responsible, what is the cost to your reputation as someone who doesn't provide a quality rehab and misleads buyers?

    Reverse the situation. If you were the buyer, you would absolutely be unhappy and feel like you were deceived. You were told it was just refrigerant and it is a whole new compressor! You are only focused on your pocket book, which is very short sighted. I would offer them something for their inconvenience as they wait for the warranty to kick in. You have to decide what kind of business you are running, fly by night or are you here for the long run?

    3Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    Hey Joe,

    I appreciate your input. I understand where you're coming from, but I did not know the A/C needed a compressor or anything else for that matter, until the new owner presented this information to me two days after we closed. The technician that I called to come out simply put the gauges on it and said it was low on refrigerant and that it would need a minimum of 4lbs for it to blow cold. He quoted me $660 for the 4lbs of refrigerant, so not a cheap repair to begin with. I actually didn't even know the unit had a refrigerant leak until I called and asked the A/C company to send me a report of the visit, which I received yesterday (3 days after the tech came out). There's a difference in being unaware of the issue and being deceiving.

    The house was sold AS IS. The A/C was working completely fine two weeks prior and passed the inspection with zero issues. I do not believe the A/C NEEDS the compressor replaced. Is it an older unit and could possibly use a new compressor, sure, but does it absolutely need to be replaced for the unit to work, I don't believe so. It's like saying your vehicle needs a new engine at 100k miles when all it really needs is an oil change and spark plugs. The technician even wrote on their quote that the compressor and refrigerant was a "Band aid" repair and suggested that they purchase a new unit from them.

    1Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    @Wayne Brooks the technician quoted me $660 to add 4lbs of refrigerant to the unit. To fill it entirely would have been even more. Quite an unexpected expense the day before close, especially when I would consider that a maintenance item. I didn't have time to have any other techs come out and provide another opinion since it was Sunday afternoon. I told the buyer what I learned from the tech and he said okay and we proceeded to close. I personally would have had my own technician go out and inspect the unit if I was him, but that wasn't the case here.

    @Bob Okenwa the issue I'm running into now is that I just requested a written report from the A/C company, since up until now I had zero evidence that I even had someone go out there and inspect the unit. On the report it states leaking R22, needs repair or replace. 

    Problem 1: The report is very vague as to what the tech is actually suggesting is repaired or replaced.

    Problem 2: I was not aware that the unit was leaking when he initially inspected the unit. He called me and told me it needed refrigerant and provided a verbal quote for 4lbs to be added. Mentioned nothing about a leak or any costs to repair the leak.

    I'm going to call the A/C company today and see if they can have the technician specify exactly what he meant by repair/replace and provide the quote for the refrigerant that he verbally gave me over the phone.

    0Reply
  • Jeremy Woods
    Rental Property Investor · Windsor, CO · Member since 2017 · 79 posts · 57 votes
    8y

    To make a long story short “As-is” is not really what people think it is. It basically is a statement already in almost every contract which states to the buyer that the house is being sold in its current condition that nothing is being done to it, it’s not meant as a catch all for everything. It doesn’t mean that the buyer can’t ask for things to be repaired or replaced and that the seller can’t agree to do those things. As stated above most contracts also state that a house during the final walk through needs to be in the same condition as it was when it went under contract. Since the A/C worked during the initial walk through and inspection, it would be expected to be working upon final walk through. Since the buyer notified you of the issue before closing and the issue wasn’t resolved he may have a claim to keep pursuing the cost of the repair. I don’t know the exact legalities in Florida but I would think it would be handled two ways, option one the court says it’s the buyers issue because he didn’t postpone closing until the issue was resolved, option two the court rules that’s you knew the issue and the buyer took your word for what the repairs are needed to fix the issue which unfortunately didn’t work, so you need to cover the cost of repairs. If I were in your shoes I would agree to half and be done with it. 

    4Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    From the buyers perspective, would it even be worth pursuing legal action considering the cost of an attorney and the time it would take to come to a resolution? I think his biggest concern is getting the A/C repaired ASAP, but if legal action is going to take weeks/months, then he would be better off saving the time, money, and headache and just go through his home warranty in 10 days time.

    0Reply
  • Michael Plante
    Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    8y

    I would call the A/C company and ask what they meant when the technician said needs replaced 

    If they meant the condenser I would send the $1700 to the buyer after they sign a hold harmless type of contract. 

    1Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y

    @Kyle Houlahan  You keep trying to dodge responsibility for this.  You were required by contract to deliver the property in the same condition as when it was contracted.

    2Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    Well if it has a leak now then it had a leak when the property was contracted. Whether or not the inspector caught that it had a leak is another story.

    So in that sense, I'm not liable to fix the leak if it was a pre-existing condition, correct?

    Regarding the compressor, it did not fail, it simply is an older compressor and the technician suggests replacing it. I'm sure the compressor is in the same state that it was when the property was contracted 30 days ago, and if they had the same technician come out a month ago, he would have given them the same recommendation. 

    0Reply
  • Mike Wood
    Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    8y

    @Kyle Houlahan I don't know Florida contracts, but wanted to chime in a say the needing 4 lbs of refrigerant is not a maintenance item.  That's a problem.  If you guy would have said it needed 1 lb of refrigerant.  Not sure what size your unit is, but 4lbs is almost full capacity for a small 2 ton system.   The price of the repair bill should have alerted you to an issue.  I get trying to save money, but I dont think you are squeaky clean on this.  I would also expect that the buyers home warranty will not pay for the repair, as it was known before the warranty was purchased.  

    I would expect the buyer to keep coming after you on this.  I would suggest getting you AC tech back out to check it and fix it (after doing a full leak test/inspection), offering to pay half initially, but being prepaid to pay all of it.

    2Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    8y

    You are a rehabber...figure out what's really wrong with the unit and compromise with the buyer on getting it fixed.  We don't need lawyers or contracts to determine whether or not people should have working HVAC.

    6Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    The technician said the unit holds about 10lbs. He didn't tell me how low it was, but said it would need a minimum of 4lbs and then gave me a price. I made the buyer aware of this and they accepted that and proceeded to close.

    At the time of contract, the buyer requested I contribute 1% towards closing ($2,100), which I agreed to. If I were to have repaired the A/C unit, including a new compressor, I would have renegotiated the closing contribution to the buyer, as the value of the house would have increased after the repair, in my opinion. 

    0Reply
  • Michael Plante
    Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    8y

    Never mind 

    3Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    8y

    Not sure if you are liable, or if the buyer will sue you, but without a leak in the system adding refrigerant is not regular maintenance. The system should be sealed such that, in theory, no refrigerant ever escapes. 

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    2Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    @Michael Plante It was blowing cold when I fixed up the house and it was blowing cold during the inspection. That does not mean the leak wasn't present though. It can take months for refrigerant to leak out depending on the size of the leak. I'm assuming what happened in this case is that the leak already existed, but the refrigerant that leaked out from the time of inspection to the time of the final walk through (2-3 weeks) was enough for the A/C to not blow cold anymore.

    0Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    @JD Martin I've since learned that since this issue has come up. This is my first house I've ever owned and first encounter with A/C issues.

    0Reply
  • Justin Fox
    Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
    8y

    They should have pushed closing back until the unit was blowing cold like when the property was inspected, end of story.  I'm surprised their representative didn't advise them better.

    I mean, how thin are your margins?  Geez.

    2Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    @Justin Fox This is my FIRST property I've EVER purchased. This was a primary residence that I lived in and decided to sell due to work related reasons after 10 months. Did I make money on the house, yes, but I am by no means wealthy or a professional flipper.

    Should they have pushed closing back or had they're own technician diagnose the issue, yes, but they didn't. Neither I nor the buyer expected the A/C to need anything more than refrigerant.

    0Reply
  • Justin Fox
    Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
    8y

    I don't care about your history with the house or how wealthy your are or aren't.  This sale is the only thing that matters.  How do you not become alarmed when a technician tells you it's $600+ low on coolant?  And THEN proceed to tell the buyer it's their problem and that, "non-functioning AC is normal"?!

    0Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    @Justin Fox

    1. Not once did I ever say a non-functioning A/C is normal.
    2. I don't understand how this situation makes me a "con man" in any way at all. I never once lied or deceived the buyer for personal gain, which is what a con man is. 

    You're right, this thread is and will be public, but I still stand behind everything I have said in this thread. 

    0Reply
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