Bought a House, Later Found Potentially Hidden Foundation Issues — Need Advice

[Harsh Patel]

Hi everyone,I’m looking for guidance from experienced investors because I’m dealing with a situation I didn’t anticipate.I recently purchased a rental property in Moore, OK. I completed full due diligence—home inspection + foundation inspection, both recommended by my buyer’s agent. The foundation inspector stated that the foundation “appears sound.”After closing, a neighbor informed me of troubling details:

• The previous tenant had water intrusion issues near the windows during rain.

• The tenant reportedly requested repairs multiple times. Owner didn't fix the issue.

• Tenant eventually hired a structural engineer to document the foundation problem so they can force the owner to fix the issue.

• Instead of addressing the issue, the owner (an LLC) non-renewed/kicked out the tenant and immediately listed the house for sale.

• Yet in the Seller’s Disclosure, the seller checked “No” regarding any knowledge of foundation issues.

This information led me to hire a second foundation company for an independent assessment. Their findings:

• There is 0.5" to 2" of foundation movement at the back side of the house. (I am attaching a diagram where the settlement is required)

• Recommended repair: 12 push piers, estimated at $16,000.

Because of this, I reached out to the seller (via their agent) and asked a very direct question: “Were you aware of any foundation issues during the time you owned the property?”But they keep avoiding the question and instead reply with: “We are not aware of any previous foundation work.” —which is not what I’m asking.Had I known about these issues, I would have negotiated the price further or possibly walked away.Considering long-term impacts:If I decide to keep the property and repair it, the foundation company is offering a 75-year transferable warranty. I’m wondering:

• Will having a repaired foundation harm the resale value?

• Or will the transferable warranty actually make future buyers comfortable?

I bought this property because I negotiated a good price. Even after spending $16k on repairs, the total cost would still be below fair market value compared to similar homes in the area. So part of me still wants to keep it as a long-term rental (based on my assumption by nearby sells).What I’m trying to figure out:Given everything above, I’m unsure how to proceed this situation. Should I:

• Accept the situation and treat the repair cost as part of the investment?

• Pursue action against the seller/LLC for failure to disclose under Oklahoma law? I am not sure how can I prove this legally when the seller keeps saying they aren't aware of any foundation issue.

• Or something else entirely?

Has anyone dealt with similar foundation disclosure issues before? What was the outcome, and what would you do if you were in my position?

[Greg Scott]

Here is what I would do in your situation.

1) Fix the foundation.  Other than the cash spent, there is no downside to solving the problem. I've bought and sold many TX properties with foundation work.

2) I would pursue recourse against both the seller, but know the odds of collecting anything meaningful are small. Find out all you can about this LLC. If they have other assets, you might have a shot. Many LLCs have only one property as an asset and once the asset is sold, the LLC is effectively defunct. You would spend way more than $16,000 pursuing them in court so the likelihood of a positive outcome is minimal. If they have assets, it is worth paying an attorney to write a tersely worded letter implying a lawsuit might happen unless they settle.

3) Did your first foundation company provide a similar map to what you attached?  This is fairly normal.  Typically any foundation variance of more than 1 inch over 20 feet is considered out of normal.  You might want to talk to the same attorney about this.  You might be able to hit their insurance company.  Odds are the best you might do here is a refund of the costs you spent on the inspection.