House not winterized properly after inspection. Who pays repair?

Question

Purchased an investor owned property. They had it dewinterized for our HUD inspection for a renovation mortgage. All plumbing worked without issue

They had it rewinteized on 12/11/18 a week after our inspection. We didn’t close until 2/27/19. Today (3/13/19) I had plumbers out to install a new hot water tank that was missing and to dewinterize the property. They noticed one cracked pipe at a low spot in the house and repaired. Once water was turned back on they found and repaired roughly 15 splits in the pipes from the second floor to the basement between the hot and cold lines. Ceilings were taken down, walls were cut open and water obviously got into everything.

Question is, who should be responsible for the bill? House was purchased “as is” but the condition has changed and those repairs for the pipes are not budgeted in the mortgage.

I have already spoken to the insurance company who is doubting coverage since the damage most likely occurred prior to my policy from improper winterization.

Also spoke with lawyer who is doubting we would be able to prove fraud or negligence against the seller.

Both options leave me with the bill which I just can’t accept. Any advice?

Greg H. · Answer

Since this was a HUD property you have absolutely no recourse.  In my opinion, you would not have any recourse no matter who the seller was.

Keep in mind, when HUD or anyone winterizes, they only winterize the drain lines and not the water lines as no one wants anti freeze in their water supply

Matthew Paul · Answer

Inspection was Mid December and settlement was basically the first of March .  Thats a long time in between .    The house was probably winterized correctly . BUT the main shut off valve could have had a small leak . That would fill the pipes back up in a couple days or less .

Matt M. · Answer

@Craig March

Zero recourse. End of story.

Lynnette E. · Answer

I read it that an investor owned the property and he was getting a HUD loan.

Also, when I winterize a home, I DO winterize the water delivery lines,  I do NOT put anything IN them, but I do completely drain them so they do not have any water in them.  That is how one can prevent them from freezing and cracking the lines, and what is commonly done in homes in areas that freeze.  If there were freeze cracks in the upstairs lines, it was not drained!

Wayne Brooks · Answer

We don’t know what your contract says.....whether the seller was Required to maintain the house in the same condition as when you signed the contract, or not. If this was an REO, their 18 page addendum of course overrides a lot in your state contract.

There would also be the problem of Proving when the damage occurred.

Jessica Sadusky · Answer

If this was a HUD property unfortunately they will not make any repairs.

This happen to us last year . We were under contract on the property, the appraisal happened and listed on the appraisal were “damaged radiators” which was news to us ! Come to find they were not properly winterize and they exploded when it got really cold. HUD would not make repairs, but we could of backed out of the deal and got our deposit back.

Lori Greene · Answer

It's good that you're talking to an attorney but their opinion doesn't always mean there is no solution because maybe this attorney didn't read the entire contract. Read all terms with a creative mind to see if if it sparks any ideas.

And I love the suggestion from @Lynnette E. to check with the Realtor and Prop Mgr for any insurance that might cover it.

Even if these are long shots, it's worth a try.

And sometimes, after you've exhausted all avenues, you just gotta let it go and get it done and move onto the next one. They can't all be winners. But hopefully, overall, you'll have a great investing career in the end anyway.

Ryan Murdock · Answer

This doesn't help your situation but it may help others in the future.

I am currently in the process of selling a vacant winterized home. I had glycol injected into the hot water baseboard system which allows me to keep the heat on but eliminates the risk of the lines freezing in the event of an extended power outage. Additionally, I had compressed air blown through the domestic water lines to completely clear them.

The buyer wanted the water turned back on for inspections which is a reasonable request. Fearing a potential unattended freeze up I, as the seller, instead agreed to escrow $5k at closing so that we could turn the water on the day of closing and the buyer will have those funds available in the unlikely event of any damage. I'll also have the glycol drained from the heating system and replaced with water. Once all is good, the $5k (or whatever balance is left after a repair bill) will be released to me.

Less than ideal but significantly better than risking complete destruction of the property by charging the water lines and leaving them unattended in subzero temps even if only for a few days. It also gives the buyer some protection that the house is in good shape right up to the day he takes possession.

This plan works with conventional or cash purchases. It gets a lot more difficult if there is a lender mandated water test or the appraiser needs to verify the water is on to comply with the loan requirements.

Caleb Heimsoth · Answer

@Craig March I doubt you have any recourse on this

Lynnette E. · Answer

Many contracts place the burden of rewinterizing on the buyer--even though they do it and charge you back.  Read your contract and see if the burden was on you, and if so, then you have no chance at all.

Otherwise, likely there was a property manager for the house who likely rewinterized it and he may have insurance to cover this.  If you used a realtor they may be able to hunt this down for you.

And you likely signed a final walk through inspection release, and that is when you should have had the water back on to check everything again.

House not winterized properly after inspection. Who pays repair?

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