Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
Hi BP Friends, I bought my first rental in San Antonio, TX on 12/31/20. Tenant moved in to start 2 year lease on 3/28/19. Within one week, the plumbing fixtures (toilets, shower, jacuzzi bath, combo shower/tub) backed up with sewage and flooded the house. Plumbers say it has been a long standing issue based on their assessment - there is a very large belly in the plumbing and two separate plumbers say there is no way (in their opinion), that the prior owners could not have known/had issues before.
This was not disclosed. To add to it, the sellers moved out ASAP when we were under contract and had shut off the utilities prior to final walkthrough. They paid for a home warranty since I thought we should delay closing. The inspector did not note any issues and it’s a 2008 build, so he says he had no reason to recommend hydrostatic pressure testing.
All this to say, thankfully a large portion of the $40k repair is covered by insurance. I’m out about $6k and six weeks of misery at this point. From some more experienced landlords, would you take action against the seller?
Thanks in advance for any help/advice. I’m struggling with this situation
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Diana Frasier sorry to hear about your mishap. If the seller knew this should absolutely have been disclosed. Was this FSBO? I would go after the seller and seller's broker if there was one. You may not get any satisfaction but it is worth a shot. All the best!
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
If you didn't buy it "as-is," and your contract actually has a section for disclosing any known issues and they left it blank or said there were no known issues, then I'd sue them in small claims court without a lawyer. I see in TX you can have a lawyer, but I'd go without one, to avoid the lawyer fees. Your call, depending on fees, but I'd save the money.
You can sue for up to $10,000, so if you also lost money above the $6K as far as lost rents that weren't covered by insurance, I'd add that out-of-pocket loss, too.
Get written statements from the plumbers saying there's no way this wasn't a known problem that should have been disclosed.
It's only $34 to file. So, that's what I'd do. It's not much to lose.
Since they were living in the house, they can't claim they didn't know the condition. Doesn't matter how they purchased it.
Normally, you have to send them a demand letter first with a deadline to pay you. Then, go ahead and file your lawsuit. When I've filed small claims court claims, I've just gone ahead and filed at the clerk's office the same day I send off my demand letter (email and USPS mail with tracking). They usually don't respond or respond with a no. Then, surprise, they get served with your lawsuit. That usually brings them to the negotiating table.
For $34 you just show up, give your documentation to the judge and let the judge decide. The thing is, you would still have to collect from them, which could take forever or be never, so why also end up with lawyer fees? That's why I'd just take the $34 gamble. And, they may offer to settle before your court date, anyway. Don't need a lawyer for that, either.
Good luck. By the way, what insurance company was your claim filed with? Sounds like a good company. I'd like to know which one you use.
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@John Teachout
Well that includes the water mitigation, relaying the whole house flooring, the drywall/trim/doors/framing and then the excavation and replacement of the whole mainline and replacement. I think I could get interior fixed cheaper at this point, but I blew the deductible on the plumbing alone so kind of am deferring to USAA at this point
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Sue K.
Thank you soooo much! I appreciate your insight. This is so helpful and I will look into small claims. That’s what I was considering at first, given how shady this looks in hindsight.
I have USAA. They have been awesome! I will always use them even though they aren’t always the cheapest. The support and responsiveness has been incredible.
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Before going the small claims route, I’d at least get an opinion from a real estate attorney. Many will provide a 30 minute free consultation, or even if you have to pay a few hundred dollars, I think it’s worthwhile.
If you really have a case (which it sounds like, though there are always state laws that vary), the attorney may suggest suing for the whole $40K.
Worth a bit of discussion with someone who can review all the documentation better than we can.
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Mike McCarthy
Thank you! I will do that. I researched some and found one here in SA that seems highly recommended. I will try him before moving forward. I just feel awful for the tenant but he has been so cooperative!
I've had several houses that after sitting vacant for a period of time, the sewer will back up. Seems the spots that could potentially back up go ahead and do that when the line gets used again. I've had enough trouble with it that I just go ahead and have those snaked if the toilet is pulled during rehab, or keep a real close eye on it for a while.
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Caleb Heimsoth
Hi Caleb, I definitely will going forward. I’ve had two plumbers run the cameras and they said that if the ground was dry in December when I inspected, it may not have been spotted. They said it was exacerbated by the rain we’ve been getting. Supposedly the only way I would have caught it would have been a hydrostatic pressure test. I’m definitely paying for the camera going forward.
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Joe Green interesting. I wish mine would have been solved with snaking/getting a plumber on the drains. I believe with this house it’s truly an issue in the main line. It’s not graded properly into the sewer supposedly
Thank you soooo much! I appreciate your insight. This is so helpful and I will look into small claims. That’s what I was considering at first, given how shady this looks in hindsight.
I have USAA. They have been awesome! I will always use them even though they aren’t always the cheapest. The support and responsiveness has been incredible.
It's so good to know about USAA. Thank you for that info. Thank goodness, you had them in your corner, at least.
About a year and a half ago, I even used small claims court to sue AARP The Hartford on a renters insurance claim where they denied me what they should have approved to the tune of $1800. I simply filed a small claims action after they blew me off - delay, defer, deny....
You can also subpoena anything with a small claims court action. So, I subpoenaed AARP The Hartford's in-house memos regarding incentives to agents or employees to deny or delay claims. No extra charge to me. They couldn't send a lawyer and there was no way they were going to pay a lawyer to try to train some local manager or agent LOL. So, guess what? They cut me a check for $1800 and said they didn't admit guilt, but were giving it to me out of the goodness of their heart. See, in CA, you can't have a lawyer in small claims court.
Anyway, small claims court is a great option for many people to sue without a lawyer and a way to get people to settle. That's how I mainly use it - to get people to quit blowing me off and give me a fair settlement. Without having to pay a lawyer.
You should also know, though, that if you do win and you decide to hire a lawyer, you normally can also get the judge to order the defendant to pay your lawyer's fees. Again, though, the problem is in collecting.
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
I wanted to add that my daughter had a PM/tenant situation like yours and the PM was saying it would cost $6,000 to fix the plumbing problem, and she'd, of course, need to hire the PM's plumber and it was going to require permits pulled with the city, on and on, to rip up the old pipes to the street and the city hook-up, etc. They also had a camera showing roots growing into the pipes, etc., etc.
We hired another plumber who simply snaked it again, located the drain clean-out, we talked to the tenants about not putting grease down the drain, and that was the end of it. That cost maybe $300. The thing is, it's not uncommon for there to be some cracks or roots, etc., in old ceramic pipes and that doesn't necessarily mean they need to be completely replaced.
I don't know if you're dealing with a PM, but there could be a major scam there. I'd have to guess, though, that if USAA paid on the claim that they were convinced the situation was real.
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Diana Frasier legally IF seller knew and did NOT disclose then yes, you would have recourse. But 2008 building, this sounds weird. Also, did you get the sellers disclosure statement? I agree a normal inspector would certainly not question a newer house, so this seems really strange.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
6y
This may sounds weird, but talk to your agent. Relay what happened and have them talk to the seller agent. Many people choose a listing agent based on it being their friend or friend-of-friend. It's someone they will likely trust. If confronted about this and their likelihood of liability, they may wish to settle.
The agents may also be willing to kick in money. I've been involved in two situations where agents kicked in money. One was a $1K bill that didn't get paid in escrow and one of the agents (don't remember which) ate the cost. The other was a $30K issue that popped up and the seller and both agents agreed to each take a 1/3 hit.
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Sue K.
Gosh I feel for your daughter too but glad she got it resolved without that giant bill! I am self-managing since I have just the one property (and I didn’t anticipate this big of an issue so soon!). I spoke with an attorney today and she also highlighted the consideration that even if I win, these people may not be able to pay. Small claims court is looking like the best option if I pursue it!
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Greg M.
Thanks for your advice. I’m going to do that first. See if we can work out something before going any further with a demand letter/small claims. I’m just so grateful insurance came through for a large chunk but this has definitely been a learning experience in landlording!
Rental Property Investor · San Antonio, TX · Member since 2019 · 24 posts · 15 votes
6y
@Stone Saathoff I'm talking to one now! It was OO, so I have a pretty good feeling that they knew. Definitely a learning experience for my first deal. I have definitely learned a few lessons to take to the next one.