The crowd of 100 was already sniggering by the time five somber leaders of Montgomery County's real estate industry rose to oppose a measure requiring homeowners to disclose major house defects to prospective buyers.
But when the Realtors' chief counsel ridiculed the proposal as "The Lawyers' Relief Act" and "The Home Inspectors' Get-Rich Quick Act," the audience, which included dozens of real estate agents, broke into laughter and loud applause.
In the face of such well-organized opposition last week, Montgomery County Council Chairman David L. Scull backed down from his earlier goal of including the disclosure bill in emergency legislation on the disclosure of road construction costs to home buyers.
"There is no urgency to these amendments," conceded Scull, referring to a series of measures requiring homeowners to disclose such "major" defects as structural damage, roof leaks, termite or rat infestation or defective mechanical equipment.
"If the state legislature is about to pass this stuff, we don't need to pass it," Scull said.
Scull's measure, which would make house sellers liable for the repair of any undisclosed major house defect for up to two years after a sale, would be one of the first such laws in the country. Five states, including Maryland, require at least one-year warranties on new home sales, but only Louisiana has a defect law to protect buyers of new and existing homes, according to the Federal Trade Commission.
Legislation similar to the Scull bill--but which includes a warranty period of just 30 days--is pending before a committee in the General Assembly.
"It boils down to a question of basic fairness," Scull said. "The seller should put in writing what he knows is really bad" about a house.
The disclosure law would establish a checklist of building features--from chimney pots to foundation footings--for homeowners to certify. Defects deceptively or inaccurately listed by sellers would make them liable for the cost of repairs, under the legislation.
Owners also would be required to list any outstanding liens on their property, as well as homeowner association fees and any monthly payments for local road construction.
Spokesmen for the Montgomery County Board of Realtors Inc., who said they supported the concept of disclosing major house faults, said Scull's bill was impractical and would create a mare's-nest of buyer-seller lawsuits.
"The concept is wonderful, the execution appalling," said B. George Ballman, the Realtors board attorney. "Disclosure on the mechanical features of the house has been part of our standard house sale contract for the past eight years. . . . This flips around our whole legal concept of innocent until proven guilty."
The contracts customarily require an owner to have the house in "operating condition" and to pay for termite inspections and exterminations before a sale, Ballman said.
"We have here what might be called a lawyer's paradise," said Charles R. Wolfe, an official with the Realtors board. "In one fell swoop we'll go from 'buyer beware' to 'seller beware' with nothing in between."
Because they would bear the burden of proof in any lawsuit over house defects, most prudent sellers would have their checklist certified by home inspectors, passing inspection costs on to the buyer, Wolfe and Ballman said.
Washington area housing inspectors said this week that defects serious enough to nullify sale contracts are rare. Some reported finding an average of two major structural defects--a flawed foundation, for example--in as many as 500 annual inspections; others said they found major defects more often.
"Part of the problem is defining a 'serious' defect," said Kenneth Adelberg, a registered engineer who has inspected area homes for 20 years. "To one person, a leaky basement is not a major problem--he can live with it. But to another guy, who has to spend $8,000 or $10,000 to have it repaired, then it's a major defect."
County Council member Rose C. Crenca (D-Silver Spring), a former real estate agent who opposes the disclosure bill, said the legislation has virtually no chance of passing in its present form. "The real estate industry wants to and is policing itself," Crenca said. "The bill is premature and impractical.
"All it does is put people on notice that there will be a battleground out there between buyers and sellers."
Scull earlier this week said he would remove the defect discloure amendment from the legislation requiring the disclosure of road construction costs to prospective buyers. Upcoming budget hearings will likely delay debate on the house defect bill until mid-May, he added.