Structural Issues

5 Replies

Hi BP,

I recently went under contract for a quad and secured a pretty fair deal from the retiring owner.  Everything was going smoothly until the inspection revealed some potential structural issues.  Upon further inspection from a structural engineer, he determined that several structural beams, footings, etc needed to be repaired or more likely replaced.  This home is 100 years old and the issues stem from the building techniques used 100 years ago and typically decay, from what the engineer has explained. My first impulse was to walk and find another deal but the seller agreed to make all repairs using a third party and then have my structural engineer do a final walk through and provide to me a letter of their correct repair.  The structural engineer is a licensed, bonded, and insured professional.  Does this letter shift any liability to the engineer who passes the work?  Would this repair and 3rd party verification make this a viable deal?  Ultimately, is this a deal other investors would make or would the repair/replace still not be enough?  (I understand that without listing out the specific structural defects in greater detail what I am asking is hard but just trying to get a general idea.)

Thanks

Originally posted by @Stephan Nemeth :

Hi BP,

I recently went under contract for a quad and secured a pretty fair deal from the retiring owner.  Everything was going smoothly until the inspection revealed some potential structural issues.  Upon further inspection from a structural engineer, he determined that several structural beams, footings, etc needed to be repaired or more likely replaced.  This home is 100 years old and the issues stem from the building techniques used 100 years ago and typically decay, from what the engineer has explained. My first impulse was to walk and find another deal but the seller agreed to make all repairs using a third party and then have my structural engineer do a final walk through and provide to me a letter of their correct repair.  The structural engineer is a licensed, bonded, and insured professional.  Does this letter shift any liability to the engineer who passes the work?  Would this repair and 3rd party verification make this a viable deal?  Ultimately, is this a deal other investors would make or would the repair/replace still not be enough?  (I understand that without listing out the specific structural defects in greater detail what I am asking is hard but just trying to get a general idea.)

Thanks

If the numbers make sense and the seller is willing to make repairs and provide you an opportunity to inspect afterwards, I don't see where the issue is.  Here in Wisconsin foundation repairs are done all the time during a transaction.

The structural engineer's letter will most likely be worded to limit most of his liability.  I would switch my focus to the parties that the seller is going to use to make the repairs.  Make sure they are qualified, and if possible have them provide a warranty.  Also make sure you require the sellers to provide you with copies of the paid invoices, and lien waivers.

@Sam Erickson  
That sounds like great advice. 

@Stephan Nemeth

I am a new investor and a deal like this wouldn't scare me off. I am trying to get a 4 plex myself that has been vacant for about 2 years. It's been completely gutted due to a fire a couple years ago. The outside is in terrible shape. I haven't had a chance to inspect the inside yet. If I find foundation or structural issues, that just means more room for price negotiation to me. 

Foundation issues are scary until you get into one and find that most people are scared of them for little reason.  Make sure the numbers work after you get a quote for the repairs, if they don't work then you can go back to the seller and explain why you either need a lower price or have to drop the deal.  You should try to work with reasonable people so that you can sleep at night and have a more enjoyable commute not yelling at the steering wheel.

Thanks everyone for the insightful responses. I'm starting to feel a little more comfortable with the deal, as long as everything gets fixed. Since the seller is paying, it shouldn't impact the purchase price that we agreed upon but I will stay somewhat involved to ensure they are using listened and insured people as well as obtaining the correct permits.  Thanks 

The other option is for you to find out what the cost of this repair is from a contractor that you chose and have the owner reduce the amount of the property by that figure. There also is a time factor here.

What will your structural expert  charge for his inspection of the work done and who is paying for that inspection?

Since this is a 100 year old building what updates are in place for the electrical and plumbing and heating system??