Expert: Russel Ray - 4/4/2008

Question
Our offer on a house was accepted one week ago and we promptly went ahead with house inspection. It is a 1996 house that we fell in love with, which quickly turned into nightmare with the house inspection. We found:
1. driveway and porch entry concrete are located above the foundation, with the concrete, as well as the ground next to the concrete, in direct contact with the siding of the house (with wood framing behind the siding).  It turns out several other houses in the neighborhood have a similar problem, and one of them has a contractor fixing this problem now (about 7 houses away).  The contractor inspected our house and quoted 20k to 25k expense for minor dry rot and termite damage for one month of work.  

2. plumbing of the lower-level bathroom is not to code, no hard-bracing of the drainage pipes (clearly visible from the large crawlspace underneath accessible from north wall small door).

3. irrigation system valves are inside the house walls: this is not allowed; by law anything inside the house has to be done by a plumber and irrigation systems have to be outside the house

4. irrigation system piping is all PVC connected to the house-pressure Cu piping, this is also not allowed due to PVC not being able to reliably stand the standard water pressure inside the house

What amazed us is the seller agent responded first "we may not cooperate with repair cost as we already negociated a pretty low price on the house". After she learned who our house inspector was, she claimed she doesn't want to receive any house inspection report from us.

We feel it is reasonable, given the Seller purchased the home less than 3 years ago with house inspection done and given that the issues are so obvious to a trained inspector, that the Seller must have known about at least some of these issues at the time of filling out the Property Disclosure Form.  Therefore we feel that the Seller was not truthful in the Property Disclosure Form where they list no knowledge of any problems with the house besides some minor water seepage in the crawlspace.   

We ended up cancelling the transaction on the ground of dissatisfactory house inspection result. Is it reasonable to question the honesty of the seller and the ethics of the seller agent?

Thanks.

Echo

Answer
Hey, Echo.

I could easily write both a yes answer and a no answer to your question. But if you have a bad feeling about the house after the home inspection, then I think you were right to cancel the transaction. A home is too expensive an investment to go into it with lingering doubts.

I'll generally discuss some of your concerns:

"1. driveway and porch entry concrete are located above the foundation, with the concrete, as well as the ground next to the concrete, in direct contact with the siding of the house (with wood framing behind the siding).  It turns out several other houses in the neighborhood have a similar problem, and one of them has a contractor fixing this problem now (about 7 houses away).  The contractor inspected our house and quoted 20k to 25k expense for minor dry rot and termite damage for one month of work."
What you have found there is not unusual in any part of the country. However, it can cause more problems in some areas. For example, it will be more problematic along the Gulf Coast than it will be for me here in San Diego (or any of the deserts in the Southwest). I find the contractor's estimate to be exorbitantly high, even if he were working here in San Diego on a 15,000-square-foot house. Personally, I think he's trying to take you to the cleaners, and there are no clothes involved.
 

"2. plumbing of the lower-level bathroom is not to code, no hard-bracing of the drainage pipes (clearly visible from the large crawlspace underneath accessible from north wall small door)."
I'm not sure what is meant by "hard-bracing of the drainage pipes." Generally, drainage pipes should be supported in some form or fashion about every four feet, depending on local codes.


"3. irrigation system valves are inside the house walls: this is not allowed; by law anything inside the house has to be done by a plumber and irrigation systems have to be outside the house"
I would agree with that.


"4. irrigation system piping is all PVC connected to the house-pressure Cu piping, this is also not allowed due to PVC not being able to reliably stand the standard water pressure inside the house"
That is going to depend on the rating of the PVC. Some PVC actually has a higher pressure rating than copper. In many areas the public water supply comes into the subdivision or house at anywhere from 100 to 200 pounds per square inch (psi) and is then lowered by means of pressure reducers to 40-80 psi for the house. However, we quite often run landscape irrigation systems at higher pressures since they cover so much more territory and can go up and down depending on the topography of the land. When I was working landscaping--and I note that it is still being done here in San Diego--we connected the landscape system to the copper pipes right at the hose bib where the house shutoff valve and pressure regulator are.


"What amazed us is the seller agent responded first "we may not cooperate with repair cost as we already negotiated a pretty low price on the house". After she learned who our house inspector was, she claimed she doesn't want to receive any house inspection report from us."
Both of those are well within their rights. Very few things are actually required by law, with almost everything being negotiable. For example, here in San Diego, law requires earthquake straps on the water heater and a working smoke alarm on each floor when real estate title is transferred. Everything else is negotiable.


"We feel it is reasonable, given the Seller purchased the home less than 3 years ago with house inspection done and given that the issues are so obvious to a trained inspector, that the Seller must have known about at least some of these issues at the time of filling out the Property Disclosure Form.  Therefore we feel that the Seller was not truthful in the Property Disclosure Form where they list no knowledge of any problems with the house besides some minor water seepage in the crawlspace."
Here is where the disclosure forms fail us. I don't know what state you are in, or how old your sellers are, but most disclosure forms state "To the best of my knowledge..." So it's difficult to tell the seller that to the best of their knowledge, they knew.

  
"We ended up canceling the transaction on the ground of dissatisfactory house inspection result. Is it reasonable to question the honesty of the seller and the ethics of the seller agent?"
It may or may not be. I can't answer that question since I don't have enough information. I'd have to be fully aware of the conversations you have had, how the disclosure forms are worded, etc., but I am a firm believer that if one has any lingering doubts, it is best to move on. In a purchase of such magnitude, those lingering doubts would always be with you.

I hope this helps you.