Expert: Dick Dennis - 8/29/2009

Question
QUESTION: Hello Mr. Dennis, and thank you in advance for your expertise and advice.  

My wife and I purchased a house in CO at the beginning of the year, and at the time of sale, it was checked on the disclosure statement that the house was on the PUBLIC SEWER line.  After living in the house for seven days, we found our crawl space flooded with raw sewage and waste water.  After digging up the main line to fix the problem, we discovered that we were actually hooked up to a nearly collapsed septic tank instead.

After contacting the seller and his agent, the response we received was that when they bought the house two years prior, it was disclosed to them as well that it was on PUBLIC, and that is why they paid the Public Sewer bill for two years (which is true, they did pay the bill for the two years they owned it).

My question is, do we have any legal rights at all?  The fix cost nearly $7K, and it seems insane to me that the seller would have no legal obligations in this matter.  While I understand that the house might of been improperly disclosed to them when they purchased it, does that mean that I am the one who has to suffer for it?

My thinking is that what happened between them has nothing to do with me.  We purchased the house from him, and it was improperly disclosed at the time of sale.  Due to this, we had no way to properly protect ourselves.

Do we have any case at all, or is he simply off the hook if he can prove that he did not know either?  THANK YOU FOR YOUR HELP!!!

Jim

ANSWER: That's his problem, Jim. When he represents that the property is connected to a sewer line and it isn't, then he is obligated to make sure it is before the house is conveyed to you. Period. There are no ifs ands or buts about it. Besides, I suspect, that might be part of the reason why he sold the property. He thought he could pass on the problem to the next guy (you). Give the seller the option of paying for the connection of the sewer with a formal letter to him. He should get some reasonable time to respond. If you are not satisfied with the response, it is time for SUPER attorney. Go find yourself a good local REAL ESTATE attorney and I'll bet you will find that your sewer will be connected WITHOUT having to go to court. Then the seller will have to go after the guy who sold the property to him. But that is not your problem.

Further, you will find that a good attorney will go after the LISTING agent as well, possibly even your agent. The attorney will find the deepest pockets around. Guaranteed. It was the listing agent's responsibility to verify that the property actually is connected before he took that listing. Your agent went along with what the listing agent believed. I do wish you well.

Dick Dennis
California Broker License #00349415
dixiedee13@aol.com

---------- FOLLOW-UP ----------

QUESTION: First off Dick, let me say thank you for your help.  I truly appreciate it.
I do have a follow up question, as well as an addition to the story.  I didn't want to overload you with too much to reply to on my first question.  

This happened about 7 months ago, and when it happened, I did exactly like you said.  I emailed the listing agent for the sale, as well as the seller, approximately 5 times over the course of 6 months, explaining the situation to them.  I let them know that what happened during the seller's purchase had nothing to do with me, and I should not be the one to suffer.  I asked for, exact words, "a fair and ethical resolution" from the seller to make things right.  Now, I did not send a formal letter as you had suggested, but I have the printed out emails where I repeatedly asked for him to make things right.  The response I continually got was "Sorry, we didn't know either.  It's not our responsibility".  

So finally, after giving them 6 months to do the right thing, I sent a final email asking again for "a fair and ethical resolution", and said I had asked many times, and if they didn't provide it, then they were leaving me no choice but to make it a legal matter.  I still was holding out hope that the seller was going to step up and do the right thing.  This is why I gave him so long to reply and make up his mind.  I received no response.  

So leaving me no other option, I filed a Small Claims Court case against the defendant, and pretty soon after he was served for the case, I receive a threatening call from his attorney, telling me I have no way of winning my case, that all he has to do is prove he doesn't and didn't know, etc.  Basically saying that everything I thought was wrong, and that he wouldn't ever be required to pay for the fix if he could prove he didn't know about it.  On top of that, she is saying I didn't go through the proper routes to ask for a mediation, as is his right through the real estate contract.  I told her that I did, by email, ask numerous times for the seller to provide a fair resolution, and I had all those emails for proof and evidence, but she just continued to fire back at me with more things I did wrong and how I would be the one suffering in the end.

Do you think she has any validity in her statements, or is she just trying to scare me off?  Seems funny to me that if the seller is not legally responsible, then why is his lawyer calling me?  Why wouldn't he just go to the 30 minute Small Claims trial and win, and it's over with.  Why would he be paying a high priced lawyer to call me and scare me off?

Thanks again for your help Dick!!

Jim  

Answer
I agree with you, Jim, but please remember I am no attorney, but then, the seller's attorney is not a real estate attorney. Yes, I can tell. She specializes in sending out letters to scare off possible suits. There is one thing you probably should do: go ahead and pay for the connection of the sewer. That way you have the cost of the offense, which what courts (small claims included) require to establish the damages. Even if you should lose, you have your sewer connected.

I presume you cancelled the small-claims action, probably because you were scared off (If you know real estate as much as I do, you cannot be scared off by any attorney) by his attorney, if indeed she WAS an attorney. But she was right about the mediation. Before any suit is instituted you must call for a mediation. Calling for one on email doesn't count . . . I believe. You should consult with your agent to find out how to call for a mediation. Then do it. It looks like you skipped a few steps here. So, I recommend you go back to square one to do this the right way. The call for mediation, however, is only valid if both you and the seller initialed that paragraph in your purchase agreement . . . including any and all counter offers. If one of you did not initial, then a mediation may not be required. But you better consult with your agent's boss, the broker of his office, to make sure.

I do wish you well

Dick