Expert: liznarr - 6/25/2009

Question
Hi, My Dad built a home for him and my mom. The home was 3
bdrms upstairs and an unfinished above ground basement,
which they later built 2 addl rooms, one was for storage,
the other a sunroom.  Later they decided to sell it.  They
listed the house with a realtor and they offered the house
as a 5 bdrm house, which was clearly on the brochure along
with the septic tank deminsions.  The new owners had it
inspected and the inspector ok's everything, the sellers
agree and buy the house.  Now after a year of purchase they
contact my parents that the septic is too small for their 8
person family.  My parents had 4 people living in the house
when they occupied it.  My parents, with my dad being a
builder, decided to put in an additional septic tank to help
alliviate their septic problem.  That wasn't good enough for
the  new owners either, and they wanted more, after another
year, they still complain to my parents that neither septic
is working and they want to resend the contract altogether,
my Dad wants to comply and offers to buy the house back,
with the condition that my parents sell their house first.  
That wasn't good enough for the new owners, so they hired a
lawyer and sued for fraud and they won the case.  Everything
my father has worked for they are taking from them.  They
won $415,000, and my Dad is 80 years old.  What should my
parents do??  Their lawyer want's to appeal and wants them
to go and talk to a bankruptcy attorney.  Need advice!!  
Thank you so much and God Bless you!

Answer
Hi Pennie,

I am so sorry for the delay in responding, but your question never came to my email and All Experts has just advised me that your question is still pending.

If your parents have already been through litigation and lost based on fraud, there are obviously a lot of facts that I am not aware of.  Some questions that come to my mind, however, are:

1.   When your parents’ house was originally sold and listed as a FIVE bedroom house, was there a septic  permit/approval in place for a five-bedroom house?  I’m guessing that the approvals may not have been in place, or else your parents might not be in the dilemma they are now in.

In the area where I live, the number of people living in a house has nothing to do with the septic
tank size; septic tank sizes in my area are approved by the County in which the property is located
based on the number of bedrooms a property has.  Your area could have different requirements.

You stated that your parents listed their home with a Realtor who apparently listed it as a five-bedroom house.  Have you asked the attorney if this Realtor should share any of this responsibility?  With either new construction and/or additions to a home with a septic tank (ESPECIALLY construction by an OWNER), proper permits in place for building permits, septic permits, etc, is something that a responsible Realtor should either verify personally, or request the Seller to verify.  Was this done?

2.   If your parents’ Purchasers had an inspection which checked out okay and with no mention of an improperly-sized septic system, or an improperly-functioning septic system, that is good; but if the inspector did not verify there were proper approvals in place for the septic tank size based on … whatever your parents’ County requirements were … he may or may not have liability.  You would have to check with the E&O (Errors & Omissions) insurance carrier of the home inspector to see if he would have had an obligation to see that all proper permits were in place.  If the inspector did have an obligation to do this and did NOT, then I would think he, also, has liability.

3.   Did your parents ever add the real estate company they hired, the Realtor at that real estate company,
and the home inspector to the litigation as additional defendants?  If not, I would ask their attorney,
why not?

The first thing I would do if I were in your parents position is ask some pointed questions of their attorney regarding my questions above.  If they have already been addressed in the lawsuit, the only other advice I can suggest – and I probably would do this in either case – is to contact a different good, TRIAL attorney for a second opinion.  With a verdict against your parents based on fraud, at this point they need to see if they, in fact, do have good basis to appeal their conviction.

I’m not suggesting that their attorney did not offer a good defense, but if your parents feel they did not have proper legal representation, that could also be a basis for appeal.  

There are time periods in which appeals have to be filed, so make sure your parents do not lose their position by not acting timely.

On the bankruptcy issue, I really do not know how to advise you there.  Your parents need a good attorney and/or tax expert to help them make the right decisions.

Good luck to you all, and feel free to write again if you have additional questions.

Regards,
Elizabeth