Recourse for undisclosed leak after closing?

Question

So I closed on a property today and when my agent went over to the property afterwards the tenant showed to the kitchen where the ceiling was wet.  The tenant explained that it had started about a month ago, but nothing had been done about it yet.  He immediately called me and my property manager got a contractor out there this afternoon.  I don't know the extent of the damage or repairs yet, but...

Do I have any recourse if the tenant told the seller about the leak while I had the property under contract, but nothing was ever done or disclosed to me?

I had my agent do a final walk through of the property a few days ago, but he somehow didn't see this because he said he was focused on the issues we had the seller fix.  Yes I know my agent screwed up.  I've had the property under contract since November but closing was delayed due to issues getting a clear title and the leak was not there when the property inspection was done.

Thank you!

Christopher Block · Answer

This is how it works in Minnesota:

1) You have a seller disclosure or seller disclosure alternative. The first is full disclosure with everything, where-as the second one is for "selling As-Is".

2) Both parties can agree to arbitration or not..

3) I am assuming you have full legal recourse (did not buy property as-is), and that you will have to go to small claims court.

4) In Minnesota (and I have to believe every state) the seller is required to NOTIFY the buyer of an material changes right up to the very second the home closes that they become aware of as long as they are choosing not to sell the home as-is and go full disclosure.

5) The question is almost never whether the seller knew or not, but how to prove it? To me this is one of the easier cases because you have a tenant who actually was living in the property. Can they prove that they notified the landlord? Either via email, text, or phone records? If so you have a pretty slam dunk case.

6) The cheapest route is usually to hire a attorney to draft up a "official" looking document to send over to the seller. Find a flat-fee one who charges like $350 bucks to do it. It outlines: what they were contractually obligated to do, how the breached the contract, evidence, estimate of repairs, what your terms are, etc...

I find that usually the problem gets solved, or at least negotiated right there as long as you have a strong case. A lot of sellers are ignorant but not stupid. Once they realize they were caught red-handed they will usually deal.

7) If it does not work? To hire an attorney is very expensive, so unless it was a major $10,000 plus item you probably are not going to use them. It just becomes like others said what is your time worth?

8) HERE IS THE CRAPPY PART WE ALL FORGET SOMETIMES. EVEN IF YOU WIN IN COURT ALL THAT HAPPENS IS YOU SLAP THE PERSON WITH A JUDGMENT. THEN YOU HAVE TO FIND WAYS TO COLLECT, AND EVEN THEN THERE IS NEVER A GUARANTEE OF GETTING PAID.  That is why sending the official letter, and then settling for 1/2 the cost is usually always better than going to court.

I also agree with others and find it offensive you would say you have a crappy Realtor because you were not at the final walk thru. I am all about helping my buyers and doing final walk thru's with them, but I AM NOT an inspector. It is also very challenging to find every single problem in a home just by doing a walk-thru. If that was the case we would never have litigation issues!

This is a lesson that I have had to preach to buyers over and over again: spending money and time in your inspection is saving money. It is just that simple. Do anything and everything you can think of to prevent something like this, and even then if the seller is not 100% truthful things happen. Would you have noticed it in your final walk thru? Maybe, or maybe not. That is why the buyer MUST show up to one.

Jon Holdman · Answer

I don't think your agent screwed up at all, other than doing the final walk through.  That's not an agent responsibility.  That's yours.  If your agent was doing it out of the goodness of his or her heart, and you try to blame them for missing it, I think you'll burn a bridge there.

You would need to prove the seller was aware.  Do you have any evidence they were?

Seems like with every purchase, some things slip through the due diligence process and you get a few post-closing surprises.

I had a similar issue with a house that had an old whirlybird vent.  Water would come in through that vent when it rained, but didn't seem to cause any problems.  It became a real issue in those big storms we had in Sept 2013.  I ended up spending about $800 to replace that vent and another with new-style slantback vents and to repair the damaged ceiling.   You've got water coming from somewhere.  You need to find and fix that, then fix the damage.

Boyd McClean · Answer

What is your time worth?

What is an attorney going to cost you?

Chalk it up to experience and move on.

If it is not major then your probably going to

be spinning your wheels.

I had a similar issue. Since I did not have in writing

the notification of the issue to the then owner I was

wasting time and money.

Also state laws vary and this is a rental vs your home.

Wayne Brooks · Answer

Interesting, but probably not covered.  Disclosures are about condition of the property, at the time of the disclosure/contract.  This condition didn't exist then, so the owner couldn't have known about it.  Feces occurs.

Jacob Elbe · Answer

@Fred Heller

Thanks for the reply! I plan to consult a lawyer if the expense gets big enough to make it worth it. I thought I'd see if anybody here has had similar issues before and how they dealt with it.

Also, this property is actually in Indianapolis.

Fred Heller · Answer

This is one of those questions where the answer is you need to speak with an attorney practicing real estate law in Virginia. Only an attorney can tell you if you have any recourse in this situation.

I pulled up this article about Virginia home seller disclosure obligations. I won't comment on it directly as I am not an attorney, but it was not what I expected.

http://www.nolo.com/legal-encyclopedia/home-sellers-virginia-your-disclosure-obligations.html

Recourse for undisclosed leak after closing?

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