Expert: Todd C. Menard - 9/11/2008

Question
I recently found out that the house i bought was sold to me on the terms that it was on sewer but i come to find out it is on septic. The disclosure  says as is but the listing information said sewer. I have spent alot of money fixing problems from water back ups. I wouldn't have bought the house on septic. Who is responsible for the misrepresentation.

Answer
Hello Jason - I apologize for the delay in my reply as I was out of town. There are multiple levels of repsonsibility in disclosure issues. First, were you represented by an agent? If so, did you tell your agent that you would not purchase a home with septic? Next, if you were unprepresented and the seller had the home listed with an agent, did you tell the listing agent that you would not purchase a home with septic? Finally, depending on the state the property is located, the seller may be required to provide a property disclosure indicating known items about the property. In Arizona we use a SPDS- Seller Property Disclosure Statement. This document tells the propsective purchaser about existing conditions of the property and its surroundings as well as any repairs or improvements the seller has made during their ownership. If you purchased the home from a seller going through a short sale or from an REO-Lender Owned Property than they usually have you sign an "AS IS" agreement inicating the home is sold in its current 'condition' and the seller forewarns the prospective buyer that the seller will not pay for any repairs other that those that occur during escrow. BUT, this does not relieve the seller of disclosure responsibilities of KNOWN issues or  misrepresentations. The same is held true of the Listing Boker or any buyers agent provided he/she ia a member of the National Assoc. of REALTORS. If membership exists, he/she or they is/are held accountable and obligated to perform according to the tenets set forth in the NAR Code of Ethics (avail. at realtor.com) which are exceptionally strict and protect the seller and buyer from misrepresentation. Now, about the advertising/representation in the listing document stating the property is on sewer. There is usually a statement on the listing document itself indicating "Information deemed reliable but not gauranteed. Buyer to verify all information". The information about a property is provided by the seller to the listing broker, therefore, the listing broker can only be a accurate as the information provided by the seller. On the other hand, a listing agent is responsible for having enough competence in their filed of expertise that they should recognize 'red flags' about the property that could require additional investigation. Sewer/septic in AZ is one of those latent (non-visual) items that even if there are man-hole covers in the streets does not validate or justify that the property is on city sewer. So, if you indicated that you woudl not buy a property with a septic up front then this item should have been an item that a prudent representative would not have answered without providing further due diligence on both the agent and on yourself to investigate further. Of course, if you have experienced significant troubles with the septic the possibility is strong that the previous owner did as well. If so, then the seller should have disclosed this and also would have thus been aware that the property is on septic not sewer. So, having authorized the listing agent to represent the property as septic would have been false advertising... or failing to disclose a KNOWN defect or repair(depends on your state). The "AS IS: agreement does not exonerate the seller from the responsibility of disclosing a MATERIAL DEFECT. I recommend that you seek an attorney with a REAL ESTATE specialty. If there were no provision in the contract regarding post closing matters and if you should seek reimbursement of expenses incurred. An attorney will provide you with your rights under the law in the state in which the property exists. Then based on the options provided by the attorney you can make your decision how to proceed. I hope this was helpful. Please reply if yo need any further information. Please remember I am not an attorney so this is not intended to be legal advice, rather it is real estate information that any professional REALTOR should be able to provide to expand the context of your situation from a real estate perspective. Once again, please accept my apology for the untimely reply. - Todd