QAbout a year ago, we bought a two-story Virginia townhouse with a basement. A couple of weeks later, after a heavy rain, our basement and patio flooded. We called the previous owners to inquire about the sump pump; they came over and were very helpful. They also told us that in the many years they owned the property, there was never any flooding.
We discovered that they lied to us, and that there had been several episodes of flooding, both inside and outside the house. Our neighbors told us this, and some contractors we hired confirmed that there was evidence of past flooding.
Should the owners have disclosed the problem to us when they accepted our offer to purchase? Is there any legal remedy?
AIn many states, the law requires a homeowner to disclose problems or unique circumstances in their house when they are selling.
In the District of Columbia, for example, a seller must disclose all known defects.
In Maryland and in Virginia, however, a seller has the option of either disclosing all such defects or disclaiming to disclose. According to the Virginia code, a seller can provide potential purchasers with "a residential property disclaimer statement in a form provided by the Real Estate Board stating that the owner makes no representations or warranties as to the condition of the real property or any improvements thereon, and that the purchaser will be receiving the real property 'as is,' that is, with all defects which may exist, if any, except as otherwise provided in the real estate purchase contract."
What disclosure form did you receive? Was it presented as a full disclosure of known defects or just a disclaimer?
Water-in-the-basement cases are troublesome. Even if you have a good case, many lawyers will not want to take on such a matter, either for an upfront fee or on a contingency basis. That's because a lot of research -- and a lot of proof -- is necessary to win. The burden is on the homeowner to first prove that the seller was aware of the problem. After that, the buyer must demonstrate to the satisfaction of a judge that the seller had a legal duty to disclose these facts. Finally, the buyer must produce sufficient proof of damages, which means getting contractors to testify in court about the cost of repairs. Many contractors are not willing to be witnesses in a court case, no matter how much they are paid.
You may have a legal remedy, but is it worth the effort? Have you obtained at least two estimates from reliable, licensed home-improvement contractors showing what it will cost to fix or correct your water problems?
Litigation is time-consuming and expensive. Many homeowners would just chalk it up as a bad experience and pay for the repair without suing. After all, if the corrective work will cost $6,000, you do not want to pay $10,000 (or more) in legal fees to get a judgment against your previous sellers.
Our courts follow what is known as the American Rule of legal fees: In the absence of a statute (such as a consumer protection law), or a provision in a contract or a lease, each side pays its own legal fees. In England, the losing party will generally pay the prevailing party's legal fees.
Your sales contract may contain a provision for legal fees, but there is still no guarantee that you would prevail or that a judge would award you a judgment that includes those fees.
Finally, I often tell people, "There is no cash register at the back of the courthouse." Even if you get a judgment, there is no guarantee that you would be able to collect from your sellers.
If the contractors you hired easily noticed evidence of past flooding, it is likely a home inspector would also have seen that evidence if you had an inspection before you bought the house. So the moral of this story is to thoroughly inspect a house before you go to settlement. Include a home-inspection contingency in your sales contract, and don't listen to anyone who tells you that you will lose out in bidding for the property if you demand such a contingency.
In your case, you may have a remedy against your sellers, but I am not sure that it is worth pursuing all the way to court. At the very least, though, once you get a repair estimate, you or your lawyer should send a letter to your sellers. Explain that you know they misled you and that you have proof that they were well aware of the flooding problem before they signed your contract. Tell them that you would prefer not to litigate, and ask them to contribute at least half of the cost of the repair.
I don't know what they will do, but it certainly is worth a try -- and it is clearly cheaper than litigation.
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 questions to him at that address.