Featuring America's Home Inspector: Nationally Syndicated Columnist, Barry Stone

Seller and Agent Fail to Disclose Defects

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: When we bought our home, the agent was selling it for his mother, and they told us that it was a maintenance-free home, in perfect condition. That was five years ago, and now the undisclosed problems have surfaced. First, we began to have septic problems, but no one could find the access to the septic tank. According to our neighbors, the garage was built over the tank. Another problem was lack of access to the crawlspace beneath the house. The seller had installed a forced air heating system, and the new air ducts blocked the access opening on the side of the building. Our home inspector pointed this out before we bought the property, but nothing was done about it at the time. Well last week, we made a new access hole and got a very unpleasant surprise. The crawlspace is filled with black, smelly, stagnant water from the laundry drain, and mold is growing on the underside of the floor. The seller simply ran a drain hose under the building and never told anyone. After this many years, do we have any recourse?  Leslie

Dear Leslie: If the agent was representing you, as well as his mother, that was not a good arrangement. You should have had your own agent to represent your interests. A good agent, working on your behalf, would have negotiated to have the seller provide a septic inspection report. The septic inspector would have found the septic access or would have discovered that the system was not accessible. In that case, an access would have been created to enable inspection and servicing of the system. If other septic repairs had been needed, that could have been negotiated before you bought the property.

If access to the crawlspace was obstructed, your home inspector should have recommended that access be provided before the close of escrow. If that had been done, the faulty laundry drain, the excessive moisture condition, and possibly the mold would have been discovered.

If these problems had come to light sooner, you might have held the seller, the agent, and the home inspector liable for faulty disclosure. After five years, you may no longer have recourse. However, you should check with a real estate attorney for clarification on that point.

How to Disclose “No Building Permits”

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: We just listed our home for sale and are worried about disclosure liability. In the past year, our home has been completely remodeled without building permits. Some of your articles have stressed the importance of disclosing non-permitted work. We plan to follow your advice but are worried that this may not eliminate our liability. What can we do to sell our home without problems turning up later?  Eugene

Dear Eugene: You are wise to approach this issue with caution and concern. In today’s business world, liability lurks around every corner. We can be sued for doing something wrong or doing nothing wrong, and in either case, attorneys are waiting to be hired. Liability can never be fully eliminated, but it can definitely be reduced, and real estate disclosure is a sure way to practice this principle.

When selling a home, every defect you disclose is removed from the list of potential liabilities. But beware: With non-permitted additions and alterations, the ways that you frame your disclosures can make a critical difference. Many sellers make a fatal mistake at this point in their transaction. Instead of simply declaring that the work was done without permits, they state or infer that the work was all done “according to code.” Disclosures of that kind are often made with utmost sincerity, but with little or no actual knowledge of building codes.

Sellers who are not professional contractors, building inspectors, or architects have no idea whether improvements were done according to code. The code books are voluminous, exhaustively complicated, and not easily understood by persons outside of the construction professions.

When you disclose that work was done without permits, you should state that “no guaranty is made regarding compliance with building codes.” You should also recommend that buyers hire a qualified home inspector to evaluate the condition of the improvements, as well as the rest of the property. With that kind of disclosure, you should be reasonably safe from complaints after the close of escrow.