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.

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

    @David Song Hey David, sorry if it was unclear but I have not communicated with the buyer directly. All correspondence has been through the buyer's agent and my own agent.

    0Reply
  • Gary Barella
    Flipper/Rehabber · East Brunswick, NJ · Member since 2018 · 64 posts · 152 votes
    8y
    I can’t believe all the people on here telling you to pay them. If you do, they will be laughing on their way to the bank saying what a soft idiot you are.
    3Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    8y
    All properties are sold AS-IS, unless otherwise stated. That term is used so much in the business and I never understand why. Even when a buyer elects an inspection contingency, the home is still AS-IS. They simply have the option to request repairs or walk away. I typically advise sellers to repairs items any and all buyers would ask for, and go from there. So with all that said...As is or not, the property has been transferred. No way no how you are on the hook. Think about the precedent that would be set in court if they ruled in the buyers favor. Sellers all over the country would have the ability to move into homes, “find” or create issues, and the go back to the seller. Not a chance. Give them the number of your AC guy. I personally wouldn’t have even gone as far as you did the day before settlement. The issue needed to be addressed at the time of inspections. The only situation you WOULD be on the hook is if the AC unit was working at inspections, then stopped working before settlement. But the issue would have to be addressed PRIOR to settlement. The buyers should have had you fill it with refrigerant to Make sure that solved the problem. Otherwise, they took ownership, it’s their problem. Did you sign a final walkthrough document at settlement that specifically states the buyer is accepting the property in its current condition, unless otherwise stated?? I always have the signed as the agent. As to not be in this position. I am curious what your agent is advising. I am not an attorney and this is not legal advice, just my honest opinion.
    0Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    8y
    Wayne Brooks don’t you mean if you were this buyers agent you would have had the issue resolved PRIOR to collecting your commission check at the closing table? I agree the buyers, and the buyers agent messed up big time by going to closing without resolving the issue. Everyone is giving their opinion on what is right and what is wrong, that’s why they differ so greatly. The simple fact is they signed the documents at the closing, knowing their was an issue, smaller or larger than believed to be, its on them. Again, like I mentioned there are specific documents in my state signed st the table to avoid this exact situation, have the agents pay for the home warranty, it’s just as much their problem as yours, at least that’s how I’d feel if I were in their position, they dropped the ball.
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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y

    @William C.  Yes, I would have insisted on a hold back of $1-2k, or not closed until fixed.  Short of that, no documents accepting the condition would have been signed....if the seller balked He would be in default under the Maintenance clause.  

    0Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    8y

    If you did not provide a home warranty, whether you are right or not. One can head for a disastrous reputation with someone bad mouth you.  Easiest place is on Yelp and complain about someone.  If you are flipping a home you need to understand condition below, inside, above in the attic, every place is covered, checked off and ask buyers to initial. In Florida after buying a home someone finding out the A.C. does not work right.  I will call for service and say it is on the house. 

    0Reply
  • Michael Slockers
    Real Estate Entrepreneur · Owasso, OK · Member since 2015 · 220 posts · 154 votes
    8y

    @Kyle Houlahan People are being pretty hard on you, maybe for good reason, but based on your story, you had little understanding of the magnitude of the issue. I personally may have had the AC charged the day before closing, but who knows?

    I've had an EXTREMELY similar situation happen to me on a house we flipped. The day after closing, the buyer communicated the AC wasn't working. As an investor, of course we want our buyer's to be happy. So yes, I did look into it for them. However, the final determination was that the buyer had ample time to perform inspections, including AC inspections. They did these inspections and did not find any concerns at that time. Additionally, like you, I had bought them a home warranty. Therefore, we didn't jump through any other hoops to get them taken care of. However, it has always bugged me a bit and my Lesson Learned from this experience was to go over-the-top, when selling to a retail client, to ensure everything is going to be to their liking after the sale is closed.

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

    @Sam Shueh Yelp is for business reviews. I do not own a business or any kind of entity that these people can leave a bad review for. This was a primary residence that I sold.

    @Michael Slockers Thank you for sharing your story. Very similar situation indeed. One important thing that I don't think a lot of people on this thread are understanding is that I did not sell this property to the buyer as a business or as a "flip". I don't own a real estate business and this is the first house I've ever owned. I'm not some business man trying to get over on someone and save a buck. 

    0Reply
  • Michael LaGarde
    Rental Property Investor · Thibodaux, LA · Member since 2016 · 9 posts · 5 votes
    8y

    The only examples I could think of where a buyer could go after you post closing is if you intentionally covered up a symptom of a larger issue. Like painting over a stain that would reveal a roof leak.

    I typically would nicely tell them that you did your due diligence and hired a professional to assess it pre-close. He likely feels that since you wrote it off as routine maintenance and it ended up being larger that it is something you should handle. But if they wanted a second opinion pre-close it should have been taken care of then. 

    Now personally, I offer to go above and beyond to try to make sure everything that they could feel slighted by is remedied even after close. All I have is my reputation and my investment area is not densely populated. We all know how people can ruin your name especially with social media even if you did nothing wrong. It's all about perceptions.

    0Reply
  • Redgy Saint-Germain
    Rental Property Investor · Boston, MA · Member since 2017 · 241 posts · 135 votes
    8y

    @Kyle Houlahan 

    The inspection was done prior to closing and the property was listed " sold as is". I don't think you're not responsible nor liable for anything post closing.

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
    8y

    I think if the buyers did decide to pursue it legally there's a reasonably good chance you'd be on the hook, because you knew information you did not disclose. You would have been best off to not have anything checked at all, legally and financially speaking, because once you know information you cannot 'un-know' it. I'm not familiar with Florida's real estate contracts but I would be that there's a disclosure clause somewhere in that contract. 

    EDIT: I just looked at a standard Florida purchase agreement. I think you are on the hook, if they want to pursue it, under clauses 13 and 14. I think @Wayne Brooks already mentioned one of these clauses. For that reason, you might want to consider seeing if you can come to a reasonable solution with the buyer; splitting costs 50/50 usually seems fair to most people when the alternative is trying to go to court and get a few hundred bucks more at most. I don't think the home warranty thing is going to work because A) you have the time limit exclusion, and B) it's really fraud, and you don't want to get involved in that. Clause 14 is "As-is as of the day of the contract", which I would take to mean, as an impartial observer, that if the AC went bad between the time the contract was signed and the closing, the seller is responsible to make repairs or make disclosure of the condition to the buyer. What you should have done, legally, was had the condition of the AC added to the contract as a disclosure. 

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y
    Originally posted by @Redgy Saint-Germain:

    @Kyle Houlahan 

    The inspection was done prior to closing and the property was listed " sold as is". I don't think you're not responsible nor liable for anything post closing.

    What if I put a house under contract "sold as is" and the day before closing someone broke in and stole all the copper pipes out of the property? Is the buyer stuck with that because it was sold as is? Hope you see my point. When the contract was signed, the AC was blowing cold. It was even blowing cold during inspection. It broke after that point. The "as-is" condition is based on contract date, not closing date. That is the entire purpose of doing a pre-closing walk through.

    0Reply
  • David Song
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    8y

    @Kyle Houlahan

    If you are going through your realtor, then he shall be able to handle this situation and provide you with local requirements. If the buyer did their inspection and removed their inspection contingency, I do not see why the seller is still responsible for any damage afterwards.

    The seller is responsible for disclosing to the buyer any known issues, but not unforeseeable future damages. The buyer may postpone the closing if they find any issue right before closing, but I can not believe they still want to ask the seller to fix anything after closing.

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

    @JD Martin In what way did I not fully disclose all information that I had? I informed the buyer immediately after I had the unit inspected and I relayed all the information that I had at that time. In no way did I do anything deceiving or fraudulent. 

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
    8y
    Originally posted by @Kyle Houlahan:

    @JD Martin In what way did I not fully disclose all information that I had? I informed the buyer immediately after I had the unit inspected and I relayed all the information that I had at that time. In no way did I do anything deceiving or fraudulent. 

     I don't think an oral information relay would stand up. In writing it says you maintain as- is on the day of the contract. Nevertheless, you are not going to entertain the request so it doesn't really matter what anyone says here. I think you were looking for confirmation of your position; a few people here have given you that, so you should run with it. If/ when you get sued you'll find out what the law says one way or the other.

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

    @JD Martin you're right, I'm not going to dish out $1700 to the buyer just because someone on the internet told me to. I have yet to see a single lawyer comment on this post with an actual legal viewpoint. There are numerous reasons why I haven't made an attempt to remedy the issue by paying for it yet, one of which is because my agents broker specifically told me do not do anything at this time.

    Legally, the buyer cannot sue me before attempting to resolve the issue in mediation (per the sales contract), so it will never come to a lawsuit. Worst case, we will meet, defend our viewpoints, and then agree upon a resolution. However, by the time a mediation was arranged and attended, the issue would have been resolved by the home warranty.

    Also, the buyer's agent could be partially liable as they advised their client to close, knowing that there was an issue with the A/C. It could also be argued that the inspector should have tested the unit for any leaks and notified the buyer. 

    1Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    Kyle Houlahan if you put as much effort into this thread as you did the actual problem it would be resolved by now lol. I doubt you are legally liable. Even if you are unless your buyer is loaded and just wants to sue you to prove a point, I doubt that happens either. So at this point I think it just boils down to how much you value your reputation or not. If you value it, pay for half the repair or all of it. If you don’t, do nothing. Your profile lists you as a rehabbed/flipper yet you’ve said you’re not one. Well which is it? Are you someone who just did a live in flip, sold it, made some money and that’s it or are you doing more? If you’re doing more your reputation matters more. Last night on the episode of flip or flop that I watched they rewired an entire house because the existing electrical wasn’t safe. Did they have to? Probably not. Should they have? Yes. It’s not a perfect analogy but I think it’s close enough to this situation to fit. Do you need to do anything ? Probably not. Should you do something? Probably. Only you can decide where you fall.
    2Reply
  • Kyle Houlahan
    OP
    Rental Property Investor · Tampa, FL · Member since 2017 · 36 posts · 12 votes
    8y

    @Caleb Heimsoth Hey Caleb, thanks for your input. This was a live-in flip, but I have intentions of flipping properties in the future, which is why my profile shows rehab/flipper. I have a career in finance, so real estate is just a side focus for now. I don't own a business and have zero intentions of investing in any more properties in that area. My reputation to me matters, but I don't think my reputation is at stake here at all. Nor am I concerned about a lawsuit. The intentions of this thread was solely to get a few peoples opinions on the matter so that I could understand the situation better. However, it turns out that people's opinions on the subject are vastly different and there is no clear cut rule to follow here, so I have decided to sit this one out and let my agent's broker handle it the best she sees fit. If this means going to mediation and covering some of the expenses, then I will accept that. If it means we do nothing and the buyer goes through his home warranty to take care of the repair, I'm okay with that as well.

    0Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    Personally I have never heard of a home warranty company covering a preexisting condition. I will admit that things can be different in Florida than where I am. It would pretty much be fraud here, but that's really the sellers problem now since they bought it and they are making the claim. I would expect after they are denied that this flares back up.

    Also there is a whole lot of talk of lawyers. Again I am not familiar with Florida laws or customs, but here $1700 would be small claims court where we can't even have lawyers. You are pretty much standing in front of a judge (may be a local farmer, business man, Manager of a grocery store). They look at the facts and make a determination based on how they see the law. Roll the dice on how that comes out. 

    That all being said, I would have done something to make it right at some point. Most likely not $1700. With 4 groups of people involved that have a stake here, Just how much time and energy is $425 worth? I can give you my lawyers rate though......

    Just my 2 cents.

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  • David S.
    Investor · Prairieville, LA · Member since 2015 · 311 posts · 424 votes
    8y
    To save legal and reputation issues as well as protect you against future AC repairs, offer half of $1700. It is just the cost of doing business. However, it sounds like you have a functional compressor. So the problem is a MASSIVE FREON LEAK which makes the AC a huge future money pit. More than likely it will need a complete replacement. R-22 parts are extremely hard to come by nowadays and the last few leakers I have had needed a complete replacement. The new refrigerant R410A does not have compatible parts with R-22. 90 % of freon leaks are in the evaporator coil. If this is the case, you can take a shortcut and replace the air handler but use a R-22 orifice instead of a R410A orifice. However, it is best to do a complete replacement, especially since the condenser is old as dirt.
    0Reply
  • Billy Smith
    Shawnee Mission, KS · Member since 2016 · 719 posts · 313 votes
    8y

    We had a home warranty  company  not pay on a valid claim for a sewer .Home.... USA cost us 5k out of pocket .

    They more I read about home warranties  the more I see lots are scams that are  to be avoided .

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    You would be smart to listen to @Wayne Brooks. Not only is he one of the most experienced people on the site, but he is an expert in FLORIDA real estate.

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  • Eddie Memphis
    Investor · Englewood, CO · Member since 2015 · 158 posts · 140 votes
    8y
    Originally posted by @Wayne Brooks:

    To be blunt, if I were the buyer’s agent I’d own your a$$.

    What does that mean?

    0Reply
  • Ben NelsonPro Member
    Investor · Bremerton, WA · Member since 2015 · 2 posts · 0 votes
    8y
    I am not 100% sure on if you are legally responsible but morally, I would at least split it with them. Imagine the shoe was on the other foot and this happened to you when you bought the house. I just sold a rental house and they called out some rot under the house and we had a contractor come in to fix it and they reinspected the day before closing to find our contractor did not fix it to the liking of their inspector. They could not delay closing because of their rate lock and their agent did not ask to get it in writing and they proceeded to close. Our contractor met with their inspector to find out exactly what they wanted and it was $2k over what the original bid covered- we still fixed it all even though the property was theirs and there was nothing in writing. But, especially on lower priced flips, the typical buyer is a first time home buyer and have put their life saving into buying the house and can't afford to fix things. That is the reason for inspections and re-inspections. I would at least offer to go 50/50 because as many have said before, it's a small price to pay to keep your reputation intact, especially if you plan on pursuing more flips in that area.
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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    8y

    Never seen so many thoroughly honest and upfront businessmen together in one place in my whole life. Your probity warms the cockles of my heart and restores my faith in humankind. Yet, were it my $1700 block of cheddar in question, I too would be looking to keep it intact. The sale is completed, the cheddar is in the bank, the buyer can go pound sand down a rathole all day long until a higher authority than the Interwebs makes me come to Jesus.

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