So the title might be a little extreme, but this is our first go at this and aren't sure.
We are supposed to close on our first flip tomorrow! It is a townhouse we bought at the courthouse and luckily the rehab was just some drywall work, new floors, paint, appliance, and countertops. The buyers inspectors literally praised the work we had done throughout, but a week ago the CL-100 wood infestation inspection came back noting a small bit of non-structural exterior sheathing damage along the bottom of the back wall behind the vinyl siding due to moisture :(
The good news is we are 99.9% sure the issue was caused by rain water coming off of the roof and landing in an area that had standing water before we brought in some dirt and gravel to resolve the drainage issue during the remodel (townhouse is on a slab). The Cl-100 report also noted there was no active issues (ie. growing model or rot) and the moisture content in the wood was normal. So we filed a maintenance request with the HOA and called them. During the call the HOA confirmed that they would be responsible for exterior sheathing repairs if it was deemed necessary and caused by exterior water.
We informed the buyers agent of the above, and to make a long story short, the buyer's broker is now demanding (not so nicely) that we pay to fix the sheathing ourselves before closing! On top of that, the broker has called our CL-100 inspector this morning and apparently yelled at him and called him not so nice names.
Every experienced real estate person we have spoken to has confirmed that the buyer should move forward with the sale the way things stand.
However I thought I would post here to to document this experience for anyone else who might find themselves in this situation and to ask are we the crazy ones for standing our ground or is this the broker in charge from hell?
@Ryan Corder, you right, broker is probably an idiot, and transaction should proceed as scheduled since repair is HOA responsibility. On the other hand, I would not let deal fail over such a small thing. You can offer to escrow some money for 12 months for the repair and if it is not done in 6-8 months, do it your self or have a contractor do it... Good luck.
Our local contracts states that anything related to the HOA, such as repairs, violations etc is the responsibility of the seller and to be completed before settlement. So here, that would be common, of course your contract will dictate it.
@Dan Bryskin , thanks for your the confirmation. We have considered the escrow option but we were waiting on the broker to get back to us as apparently she was going to go walk through the townhouse today.
@Russell Brazil , I do believe the South Carolina contract is similar in that a clear CL-100 inspection is expected at closing, even if there is an HOA, but if not the buyer only has the following 3 options:
- Accept the Property in its present condition,
- Negotiate with the Seller for the payment of these repairs and treatment, or
- Terminate this Contract by Delivering Notice of Termination to the Seller
We have been clear that we won't be replacing the sheathing as we are not authorized to remove the siding to do so, but they haven't given notice on any of the above options. This is also after a lot of back and forth with the buyer first saying they would accept a letter from the HOA stating they are responsible for fixing the sheathing and then deciding the email from them wasn't good enough.
Here is the contract language in this regard if anyone is curious:
If the infestation report reveals the presence or indication of or damages by termite infestation or other wood destroying organisms, Seller shall remedy such deficiencies and shall furnish the Buyer with an infestation report by a qualified/licensed/bonded pest control operator (dated no earlier than 30 calendar days prior to Closing) that the Property is free from infestation or any damage herein mentioned; or documentation that the infestation has been treated and damage has been repaired as appropriate in a workmanlike manner on or before closing and reported by an appropriate licensee. State law and regulations control CL100 issues. If the Seller does not make the repairs and treatment, the Buyer shall have the option to (1) accept the Property in its present condition, (2) negotiate with the Seller for the payment of these repairs and treatment, or (3) terminate this Contract by Delivering Notice of Termination to the Seller
Originally posted by @Ryan Corder:
the buyer first saying they would accept a letter from the HOA stating they are responsible for fixing the sheathing and then deciding the email from them wasn't good enough.
I don't see a problem. If the buyer says a letter is good enough and that an email is not good enough, why don't you simply go back to the HOA and get a physical letter from them? That would seem to be the easiest, cheapest fix to this.
Or, if the buyer/agent objected to the specific wording in the letter (perhaps because it did not cover the issue sufficiently) ask the HOA to rewrite it.
@Randy E. , yea that was the plan but then the broker jumped in and decided that they wouldn't accept any type of communication from the HOA on this matter and that we just needed to FIX IT!
You can't make this stuff up.
My wife is currently getting her real estate licence and guess who the guest speaker was at class last night... That's right. This Broker trying to recruit new agents to her brokerage.
But wait, it gets better
In front of the whole class the broker told the story of our unit! She stated that she went out to our unit that morning (we knew she was going to do a walk through), ripped off the vinyl siding, and found termites! All while not knowing my wife was sitting there in class.
After she was finished speaking, students interested in learning more about their brokerage were instructed to go outside to speak one on one with them. So my wife went out walked up to the lady and said "I need to tell you something, but I am not sure how your going to take it." The broker was like ok... "I am Erin Corder"
The brokers eyes got wide, "yes, yes um I do know who you are..." as she slowing realizes everything...
My wife, "So we have termites."
The broker, "no I didn't see any termites and I didn't actually remove the siding."
And the conversation carried and luckily the broker was much much more polite in person and apologize for her story to the class.
I met the broker, the agent, and the CL100 inspector this morning, and I think we have them back to a good place. They are going to send out their own contractor to take a look.
I will reply with updates as I have them.
@Ryan Corder it is really a shame your wife didn't catch or call her out in the class... Explain she is the owner and the broker better not have removed siding from your property! Amazing what people will say/do when they think noone is looking.
Sounds to me like you have grounds to file a complaint with the state board of realtors against this broker especially if this somehow kills the deal. But I agree that you shouldn't let the issue stop it from going through. Thanks for sharing. Hope it works out.