Late Disclosure

[Lazykins]

I put an offer on a new construction in which I noticed the sump pump was running constantly during our visit. On the disclosure form the seller has written "Sump pump runs a lot because of the wet Spring [we've had]. I feel gutters and a lawn will help stabilize this." That is all that was mentioned in the paperwork about the pump or water. He told us in person that the water flow was due to no rough grade. We said rough grade it, then, as part of the contingencies and we pretty much assured that we'd have a nice dry basement.

We've had three weeks of absolute drought, lawns are turning brown, dirt is blowing away, and the pump continues to run at the same frequency (constant and continuous) as when we first saw the house. Problem. This is not surface runoff. I called experts.

When we asked again (for the third or fourth time) about it, the seller finally disclosed that there will always be water because the home is constructed in an area with a high water table.

We would not have put an offer on the house if we knew this. A sump pump alone is not enough protection in a construction like this - a perimeter drain system should have been used ($$$).
This means that there is always a better than average chance the basement will flood... and insurance will not cover damages due to it. I would never be able to safely add a bedroom or other living space downstairs, even though it is, to quote the listing, "expandable."

The language the seller used on the property report to describe the reason the sump is running is so vague; it is not a lie, but it is incorrect and in my opinion, misleading, since he obviously knew the real reason the sump was running.

We are backing out. We want our deposit back. Are we entitled to it? We've lost money on the inspections and the appraisal already, so we feel that we shouldn't have to lose any more.

 

[Michael Wechsler]

I can't say the water problem was properly disclosed but it was not concealed. The law may vary from state to state but I believe that in general it is your responsibility as a buyer of real estate to do a proper inspection. I will check with some authority but I believe the famous cases deal with termite inspection damage and the rule was that with regard to real estate, the buyer must beware what the buyer is purchasing. The buyer has the ability to inspect. The defect was not concealed. If this is the case, you should have insurance or a case against the inspector for negligent inspection. I'll provide more information later.

 

[Lazykins]

Misleading statement

Thanks, Michael.

Inspectors will only inspect the sump pump to make sure it's working, which it was. They can't tell you the source of the water. The inspector did note a wet basement on his form.

We had no reason to suspect or inspect for a high water table before putting in the offer because the seller said 1) during the showing, 2) on the written disclosure form and 3) on several occasions after the offer was made that the water flow was due to the lack of rough grading on the property and could be fixed. In fact, during one discussion he said he was "99% sure" that grading would "correct the problem." Only when we began calling experts did he change his reason for the water and tell us that the water would never stop completely.

Wouldn't that be the same as a seller telling me that the termites I was seeing were lady bugs?

We withdrew our offer today and we're waiting for his reply.

 

[Michael Wechsler]

I'll let you know what the case of the termites stated but now you are providing additional facts where the seller actually made a representation. My recollection, and this is several years later (and I think the state was Mass.) is that a seller can keep his mouth shut and sell you a house and not be liable in many states (states law differ and I must tell you this -- I think states have been moving towards protecting the buyer more than they have.) A seller can get themselves into trouble if they make a representation and that may have happened here, especially if they misrepresented that doing something would absolutely fix a problem. Being in writing is also important.

Regarding the ladybugs, if you see bugs in the house and don't check them out, it's really your problem. You can see what they are for yourself and see they aren't ladybugs. Here you can see a problem and by not concealing it you should have been warned to check it out. If the buyer then affirms something in writing it may change the story and depends upon your state. You'll see if you have something to worry about with the offer.

Did the seller accept? Unless there has been some consideration paid, my understanding is that you can withdraw the offer.

 

[Michael Wechsler]

Perusing a few legal references there is a note that certain states have taken measures to protect buyers against latent defects. There is an issue here of representation as well, the seller mde a certain representation that something could be fixed by taking a specific measure.

The only thing I can see here for certain -- no matter how much you like a house, car, or any other item you are interested in purchasing, once you notice that there is a problem with an aspect of that item you should be very careful in deciding whether to accept the item with the problem. As is nature, most of us would probably like to believe the best because it is something they want. However, it does change the picture since the defect has been brought to the attention of the purchaser and cannot later claim that it was hidden from them. Latent defects are those which are not apparent by inspection, e.g. a crack a pipe which a seller fixed but is not visible on the surface.