Q We bought a house four months ago. Because there was a lot of interest in the property, our real estate agent advised us not to include a contingency for a home inspection in our offer. The agent thought a contingency would lessen our chances of entering into a contract with the seller.
We submitted a clean contract. We offered $12,000 more than the listing price and were the successful bidders. However, after we went to closing, we discovered a number of problems. The roof leaks, the electrical system is not strong enough to run a new air conditioning system, and there appears to be mold in the basement.
Incidentally, again on the advice of our real estate agent, the contract said we purchased the property in "as is" condition.
Do we have any recourse against the seller or our real estate agent? We estimate that we will have to spend more than $15,000 to fix the problems.
A Why do potential buyers buy a house without having it inspected? When you buy a car, you take it for a test drive; you kick the tires and read as many consumer reports as you can find. But when people buy a house, usually the most expensive purchase they will make in their lifetime, they just sign a contract and hope for the best.
You signed a contract that did not contain a contingency for a home inspection. That was a big mistake on your part. I know that you were eager to find a house and probably had been looking for some time. You probably were unable to get a contract on several other houses because you were outbid by other buyers.
It certainly seemed reasonable for you to rely on your real estate agent's recommendation that you submit a clean contract without any inspection contingency.
But in my opinion, it was a foolish -- and costly -- mistake.
I think a home inspection contingency should be part of every residential real estate contract. I would rather lose the house than discover after settlement that I have to pay thousands of dollars more to correct repairs I should have known about.
Such a contingency simply means that you have a number of days after you sign the sales contract, usually three to seven, in which to obtain the services of an independent home inspection contractor who will inspect and review every aspect of the house. If the inspector finds problems, you have the right to either cancel the contract and get your deposit back or to negotiate with the seller to fix the problems.
But your contract did not contain any such contingency. You opted to purchase the property in its "as is" condition. That means that at settlement, the house was supposed to be in the same condition as it was when the contract was signed, good or bad.
And I suspect it was.
If you can somehow prove that the roof was not leaking at the time you signed the contract, you may have a case against your seller. If you can determine that there was no mold in the basement when you entered into your sales contract, you may be able to get the seller to fix it. But how will you get this proof? You did not have an independent inspector look at the house, and if you took your seller to court, that is the kind of proof a judge would require to rule in your favor.
However, does your state require sellers to provide disclosure statements? In recent years, many states have enacted legislation requiring sellers to disclose the conditions of many aspects of their home, such as roof leaks, environmental problems or boundary disputes.
If you received such a disclosure from your seller, read it carefully. Does it indicate that the roof is in good condition? If so, you may have a case against your seller -- but once again, you will have to prove that the seller knew about the problems and misrepresented them to you. Litigation is time-consuming and expensive. I often tell clients that they are better off spending their money on making the repairs rather than paying their lawyer to file a suit.
You also asked whether your real estate agent has any liability for advising you not to include an inspection contingency in your sales contract. While I think real estate agents have a responsibility to properly represent -- and protect -- their clients, I do not think there is any liability in your case. Your agent merely advised you that the market was hot and that a clean contract would be looked on more favorably by the seller than a contract that contained many contingencies.
The agent made a recommendation; you made the final decision, and you can blame only yourself.
Benny L. Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed, stamped envelope to Benny L. Kass, Suite 1100, 1050 17th St. NW, Washington, D.C. 20036. Readers may also send him questions at that address.