HELP! Sellers didn't disclose major issues - unrentable and requires massive repairs

HELP! Sellers didn't disclose major issues - unrentable and requires massive repairs

Member since 2019 · 3 posts · 2 votes
We recently bought a property that we have found out within the first few weeks of owning it that is has VERY SERIOUS drainage and humidity issues and lots of previous water damage that the sellers did not disclose. Massive dehumidifiers are filling with at least 3-4 gallons of water daily - we can't rent until a slew of multi thousand dollar repairs are completed.

We were told that the dehumidifiers the sellers had in the house were only used during the spring when snowmelt was very bad.  When the sellers left, they left the dehumidifiers on and we are now removing over 2-4 gallons of water DAILY with them and it would be more if they didn't fill up then shut off.  Smaller ones are filling up within 12 hours and the large unit they left with 2x 5 gallon water jugs to empty into AND a catchment below....because obviously the sellers knew that it fills over 5+ gallons in just TWO DAYS.

We have had to get a structural engineer in who has noted other water damage throughout the basement (unfinished) that was hidden behind sellers boxes and personal items during our inspection.  Our original inspector noted a drainage issue on the north side because of improper sloping.  Sellers did not allow us to get professionals in to give estimates for a french drain before closing (yes, our red flag we should have walked away with), but agreed to lower closing price.  We have also found our that the sellers lied on their disclosure of what they knew about the hail damage to roof.  We did get negotiate money from them to help with roof repair, but now know they were not honest on their disclosure.

Our inspector missed code violations, HVAC issues, pipes that had been worked on and issues hidden that had occurred while sellers lived in the house, signs of drainage and water damage inside the house that had been painted over, completely blocked dryer vent...and we are finding more daily.

We have had the house looked at by a structural engineer and HVAC techs that has told us we need thousands (likely tens of thousands) of dollars worth of repairs to make this property able to rent and come up to code for rental.  We also can't have renters dealing with the humidifiers as it is a mold problem/foundation issue if it isn't taken care of.

We are taking pictures and videos of everything, we have multiple professionals that have documented everything (and told us to lawyer up) and have neighbors that we have already had agree to discuss their drainage problems when we get a lawyer.  

HELP!!
-Recommendations for Denver real estate lawyers?  Especially if they specialize in seller disclosure problems.
-We have to move forward to help mitigate this problem b/c one owner lives 3 hours away and I live 30 min away and can't be at the house daily to empty dehumidifiers.
-What other information should we be gathering?
-What else can we do?!

thank you for ANY advice!!!
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Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
2y
Quote from @Ashley Gamble:
We recently bought a property that we have found out within the first few weeks of owning it that is has VERY SERIOUS drainage and humidity issues and lots of previous water damage that the sellers did not disclose. Massive dehumidifiers are filling with at least 3-4 gallons of water daily - we can't rent until a slew of multi thousand dollar repairs are completed.

We were told that the dehumidifiers the sellers had in the house were only used during the spring when snowmelt was very bad.  When the sellers left, they left the dehumidifiers on and we are now removing over 2-4 gallons of water DAILY with them and it would be more if they didn't fill up then shut off.  Smaller ones are filling up within 12 hours and the large unit they left with 2x 5 gallon water jugs to empty into AND a catchment below....because obviously the sellers knew that it fills over 5+ gallons in just TWO DAYS.

We have had to get a structural engineer in who has noted other water damage throughout the basement (unfinished) that was hidden behind sellers boxes and personal items during our inspection.  Our original inspector noted a drainage issue on the north side because of improper sloping.  Sellers did not allow us to get professionals in to give estimates for a french drain before closing (yes, our red flag we should have walked away with), but agreed to lower closing price.  We have also found our that the sellers lied on their disclosure of what they knew about the hail damage to roof.  We did get negotiate money from them to help with roof repair, but now know they were not honest on their disclosure.

Our inspector missed code violations, HVAC issues, pipes that had been worked on and issues hidden that had occurred while sellers lived in the house, signs of drainage and water damage inside the house that had been painted over, completely blocked dryer vent...and we are finding more daily.

We have had the house looked at by a structural engineer and HVAC techs that has told us we need thousands (likely tens of thousands) of dollars worth of repairs to make this property able to rent and come up to code for rental.  We also can't have renters dealing with the humidifiers as it is a mold problem/foundation issue if it isn't taken care of.

We are taking pictures and videos of everything, we have multiple professionals that have documented everything (and told us to lawyer up) and have neighbors that we have already had agree to discuss their drainage problems when we get a lawyer.  

HELP!!
-Recommendations for Denver real estate lawyers?  Especially if they specialize in seller disclosure problems.
-We have to move forward to help mitigate this problem b/c one owner lives 3 hours away and I live 30 min away and can't be at the house daily to empty dehumidifiers.
-What other information should we be gathering?
-What else can we do?!

thank you for ANY advice!!!

Contact your attorney who worked on the closing.  You would need to check the property disclosure report.  Remember, caveat emptor on all real estate transactions.  You should prob. consider hiring a PM to help manage since one of the owners lives 3+ hours away.  Grace Property Management is pretty decent.

As for the draining of the buckets, simple solution.  Add a hose and it will drain automatically into a your sump pump or another drain.  Your lawyer should be able to go after the home inspector and previous owners if they hid a substantial material defect.  

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  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    2y
    Quote from @Ashley Gamble:
    We recently bought a property that we have found out within the first few weeks of owning it that is has VERY SERIOUS drainage and humidity issues and lots of previous water damage that the sellers did not disclose. Massive dehumidifiers are filling with at least 3-4 gallons of water daily - we can't rent until a slew of multi thousand dollar repairs are completed.

    We were told that the dehumidifiers the sellers had in the house were only used during the spring when snowmelt was very bad.  When the sellers left, they left the dehumidifiers on and we are now removing over 2-4 gallons of water DAILY with them and it would be more if they didn't fill up then shut off.  Smaller ones are filling up within 12 hours and the large unit they left with 2x 5 gallon water jugs to empty into AND a catchment below....because obviously the sellers knew that it fills over 5+ gallons in just TWO DAYS.

    We have had to get a structural engineer in who has noted other water damage throughout the basement (unfinished) that was hidden behind sellers boxes and personal items during our inspection.  Our original inspector noted a drainage issue on the north side because of improper sloping.  Sellers did not allow us to get professionals in to give estimates for a french drain before closing (yes, our red flag we should have walked away with), but agreed to lower closing price.  We have also found our that the sellers lied on their disclosure of what they knew about the hail damage to roof.  We did get negotiate money from them to help with roof repair, but now know they were not honest on their disclosure.

    Our inspector missed code violations, HVAC issues, pipes that had been worked on and issues hidden that had occurred while sellers lived in the house, signs of drainage and water damage inside the house that had been painted over, completely blocked dryer vent...and we are finding more daily.

    We have had the house looked at by a structural engineer and HVAC techs that has told us we need thousands (likely tens of thousands) of dollars worth of repairs to make this property able to rent and come up to code for rental.  We also can't have renters dealing with the humidifiers as it is a mold problem/foundation issue if it isn't taken care of.

    We are taking pictures and videos of everything, we have multiple professionals that have documented everything (and told us to lawyer up) and have neighbors that we have already had agree to discuss their drainage problems when we get a lawyer.  

    HELP!!
    -Recommendations for Denver real estate lawyers?  Especially if they specialize in seller disclosure problems.
    -We have to move forward to help mitigate this problem b/c one owner lives 3 hours away and I live 30 min away and can't be at the house daily to empty dehumidifiers.
    -What other information should we be gathering?
    -What else can we do?!

    thank you for ANY advice!!!

    Contact your attorney who worked on the closing.  You would need to check the property disclosure report.  Remember, caveat emptor on all real estate transactions.  You should prob. consider hiring a PM to help manage since one of the owners lives 3+ hours away.  Grace Property Management is pretty decent.

    As for the draining of the buckets, simple solution.  Add a hose and it will drain automatically into a your sump pump or another drain.  Your lawyer should be able to go after the home inspector and previous owners if they hid a substantial material defect.  

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y

    I agree with Calvin aside from getting a PM. As long as one of the owners is local and can handle things, I wouldn't get a PM.  Sorry that you had a bad inspection and the sellers were not honest.  Talk to the person who handled the closing and your agent and ask them for advice.

  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    2y

    It doesn't sound like you have too much on the previous owners... If you identify an issue before closing, then that issue is now the responsibility of the new owner - draining and roof. Not being allowed to get estimates is something that you agreed to. You have the burden of proof that they knew about these issues and that the inspector was negligent. It sounds like the flags were raised but for whatever reason, you chose to ignore them.

    I would be careful of money hungry attorneys who would take your case just to get more money out of you. You may have something but I would be very careful.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    The first two questions to ask yourself is 

    A) Are you in a state that requires disclosure or a caveat emptor state?

    B) If a disclosure state, what is actually required to be disclosed?

    Until you have a firm grasp of these 2 questions, everything else is irrelevant.

  • Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    2y

    Colorado is considered a “caveat emptor” state, aka buyer beware so the onus is mostly on the buyer to uncover any issues during their due diligence time period. However we also have a required sellers property disclosure form that the seller has to fill out and disclose any known issues with the property. Sellers are not required to disclose material facts about the property that they "should have known," nor are they required to perform any inspections to uncover any issues themselves. So the burden of proof  will be on you to show that the seller knew about the issues, failed to disclose them, and that they covered them up hindering your ability to inspect and uncover the issues. I’d consider what your actual damages  are, if they are easily quantified and can be proven to be caused by the non-disclosed issues, and then use that to determine if it will be worth taking up a fight. Maybe just a stern letter from an attorney will be enough for the sellers to come to an agreement to pay something to you without having to take it further. I can recommend a good lawyer if you want to connect. However if you were able to see that there was moisture in the basement and that they had humidifiers running, then it may be a tough case to argue that these things weren’t disclosed when it would have been obvious there was an issue with a basic visual inspection prior to closing. Your due diligence time period would have been the right time to inspect further if you wanted to, to gather the info you needed in order to make a buying decision on your end. If you saw the issue and chose to close on the property anyway, that’s going to be a tough case to win. A French drain isn’t usually that expensive or difficult to install however. Most basements get water in them at some point in my experience and I see “inadequate drainage”, “negative grading”, “recommend extending downspouts” etc. on most inspection reports.

    We had a property with a humid crawl space basement and set up a dehumidifier with a hose coming from it to a floor drain so that we didn’t have to keep emptying it’s tank all the time. Dehumidifiers also run continuously if the space they are in is not sealed well. They pull any moisture they can get out of the air, so if there are any small cracks or openings to outside air they will just continue running, filling up their tank from the moisture in the outside air and not working efficiently at drying out the space you’re trying to dry very well. If there is a dirt floor there needs to be a good tight vapor barrier there also or it will keep pulling moisture through the earth. Everything needs to be sealed up tight. Fans also help a lot especially the big industrial fans. Just fyi on that in case it helps. Good luck!  

  • Member since 2019 · 3 posts · 2 votes
    2y
    thank you everyone!  This is a big help.

    In the SPD under "Building conditions" it asks if the sellers know of problems EVER EXISTING.  Under the "moisture and/or water" section the sellers stated "water in basement during heavy rainstorm of june 2023. repair completed, sealed wall, added downspouts" with no mention what-so-ever about moisture....nor other walls that were painted over to hide water damage.  Our inspector flagged improper grading on one side of the house and said that it needed to be remedied to avoid another flood incident as noted in SPD.

    We asked about the dehumidifiers and sellers stated they only needed to be run during spring runoff, but these are the few items they left upon vacancy.  They were unplugged during inspection, but plugged in upon move-out and left with the 2 x 5gal catchment jugs (seemingly signaling intent to hide the problem before the sale).  We have not unplugged long enough to see if the humidity raises to the 60% threshold for mold, but it does raise to 50-55% after about 7 hours.  Would that be enough to assume sellers knew of the undisclosed moisture issue or is that still questionable proof that they knew of a problem needing disclosure?

    Unfortunately there are no drains or sump pumps in the basement to empty the water into.
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    Quote from @Ashley Gamble:
    thank you everyone!  This is a big help.

    In the SPD under "Building conditions" it asks if the sellers know of problems EVER EXISTING.  Under the "moisture and/or water" section the sellers stated "water in basement during heavy rainstorm of june 2023. repair completed, sealed wall, added downspouts" with no mention what-so-ever about moisture....nor other walls that were painted over to hide water damage.  Our inspector flagged improper grading on one side of the house and said that it needed to be remedied to avoid another flood incident as noted in SPD.

    We asked about the dehumidifiers and sellers stated they only needed to be run during spring runoff, but these are the few items they left upon vacancy.  They were unplugged during inspection, but plugged in upon move-out and left with the 2 x 5gal catchment jugs (seemingly signaling intent to hide the problem before the sale).  We have not unplugged long enough to see if the humidity raises to the 60% threshold for mold, but it does raise to 50-55% after about 7 hours.  Would that be enough to assume sellers knew of the undisclosed moisture issue or is that still questionable proof that they knew of a problem needing disclosure?

    Unfortunately there are no drains or sump pumps in the basement to empty the water into.

     I'd say based on the information you provided, in addition to Steve clarifying the caveat emptor nature of Colorado,  you would have zero luck in pursuing from my experience.

  • Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y

    @Ashley Gamble

    @Steve K. hit it on the head. We do have a Sellers Property Disclosure that's required in all transactions. But they only have to disclose problems for which they have "actual knowledge" of.

    So ... 

    Do you know they had an inspector tell them about these water issues? Did they receive any kind of report about major moisture problems? The presence of the dehumidiers is something, but -- and I'm no lawyer here -- I'd bet that's not enough to hang your hat on in a lawsuit.

  • Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    2y

    I have to agree with Russell and James unfortunately. It sounds like the sellers did disclose at least some water-related issues in the past, and the inspection you got called some issues out also. Whether they disclosed everything they should have, updated the SPD as they should have (if the issue got worse), or whether the issue changed and got worse after the sale, will be on you to prove. Definitely not a slam dunk because you did have some info on these issues, and did have the opportunity to dig deeper on these issues during your due diligence window and renegotiate accordingly prior to closing. It might be worth speaking to an attorney about and I'd be curious to hear what they say, but based on what you've shared it seems like a tough one to pursue based on my experience. I have a good attorney in the area I can recommend if you need. Personally I'd probably just put my energy into fixing the issue and getting it rented. Good luck! 

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