AboutTimmy Chou Expertise I am a experienced Mediator and a partner in a management consulting firm. As a mediator I work as a third-party neutral and specialize in partnership/shareholder disputes, management/labor issues, company culture difficulties, and family-owned business problems. I can help describe why alternative dispute resolution may be a good choice for you. As an experienced management consultant I may be able to offer creative ideas to help resolve your organizational and business problems and disputes. "If you say conflict, I say opportunity".
Question My wife and I have been sent an arbitration request from the couple that bought our home two years ago. We live in Minnesota. The buyers are claiming that we lied in our disclosure statement because the basement got wet in the first month after the buyers were in the house. We had disclosed that the basement got wet when we owned the house during a heavy rain a few years earlier. Now the buyer says that based on some rain data, our basement should have been wet more than we disclosed (even though it wasn't) because it got wet during similar rain events after they moved in.
My question is, What else can we say besides what we said on our disclosure statement? Honestly, to the best of our knowledge that one rain event was the only time the basement was wet.
I even have location specific rain data that shows the rain event we disclosed being twice as high as any other rain event since.
Another point is that we disclosed that the detached garage had a crack in it and they specifically sent a structural expert to investigate the crack to get us to fix it or pay them/reduce the house price and we did. No investigation was done on the house regarding the wet basement disclosure. After the buyers moved in and the basement was wet they sent in an "expert" inspector who found a history of water damage. The house is 60 years old.
Knowing that, shouldn't they have payed more attention to the disclosure before they purchased?
Also, is there anything else we can do to prove our points?
Answer Thank you for your question!
As I always mention to questioners, mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement. The case you describe here is unfortunately very typical. I am not a lawyer, nor can I mediate your dispute with just you alone but I can respond to your question from my business consulting experience. Note that this issue may develop legal implications and you may wish to consult an attorney.
Your instincts are correct about your dispute. To me it seems that the buyers are overreaching. Unless they can conclusively prove that your basement was wet (despite their artfully constructed circumstantial case) while you owned the property AND you knew this and deliberately concealed the fact, they cannot argue that your disclosure was faulty.
I would not even enter into a "circumstantial" discussion about local rain data, as there is no proof any rain data has any particular relevance to any particular dwelling. I would not even go there, the discussion is not relevant and in no way proves that you are a liar. For all we know, the "one wet event" that you disclosed opened up some drainage to the basement area that is more active now. You are not a geologist and have no way to know what may be going on. Is the buyer claiming you had some obligation to measure local rain data and disclose a range of predicted rain volumes that should be suspicious? I think not.
They COULD have had an inspector look at the basement at any time and they chose not to do this. Not your fault. Why is this a surprise that a 60 year old house may have been vulnerable to basement moisture, even though YOUR limited experience was fully disclosed? Why would you have any obligation to speculate about what may or may not have happened before you lived there?
The due diligence obligation belongs to the buyer. Your only obligation is not to tell lies. You may disclose issues that are of major concern. You also have the option to just say you are selling "AS IS" and you make no disclosure or warranty (many do this now, for just this reason).
The Buyer will want to have a discussion about measuring your honesty with some arcane non-issue like rain data. Do not let this happen. Confine your discussion to the Buyers proper due diligence and keep the discussion there. There is NO EVIDENCE that you are dishonest.
Be sure you document all contracts and every instance of meetings and discussions. Be sure to document all the parties who were there and be as detailed as possible.
Keep dealing calmly and in good faith, but do not discuss things like rain data and assist the buyer to muddy the water.
These are some ideas. Feel free to follow up with additional questions.
In all my answers, and for your information, the pros and cons of the types of dispute resolution are provided below.
GOOD LUCK!
Arbitration, Mediation, and Litigation
Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system
Benefits of Arbitration:
Confidential, no public record
Limited exchange of documentation, information
Quick, don't have to wait for a court date
Arbitrators have expertise in the subject matter and are trained in conflict resolution
Cheaper than litigation
Preserves business relationships
Negatives of Arbitration
It's a compromise, no %100 winner
Complex arbitration can be costly
If not satisfied, may litigate the arbitration procedure
Poor results with an unskilled arbitrator
Both parties must agree to cooperate in the process
Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.
Benefits of Mediation:
Neutral mediator can objectively suggest alternatives not considered before
Parties are directly engaged in negotiating the settlement
Can be quicker than litigation
Less costly than litigation
Preserves business relationships
85% of American Arbitration Association cases mediated find successful solutions
Negatives of Mediation
may not reach a binding decision
unskilled mediator
Litigation: using the judicial system to resolve disputes
Benefits of litigation:
a clear winner and loser
uses a prescribed set of procedures
more predictable outcomes
is final
Negatives of Litigation:
waiting for court dates can do more harm
usually more expensive than mediation and arbitration
part of the public record
