Expert: Jim Root - 11/16/2007

Question
I bought a home in Mississippi Aug. 2006. We received a VA loan, so all of the inspections were handled in that manner.  Recently, we had water damage in one of our bathrooms.  Upon closer inspection the contractor determined that the damage was caused from a leak that had been previously and improperly repaired, leading to pooling of water under my house for some long time. Of course this information was not disclosed to us when we purchased the home.  The contractor has also discovered termite damage in the floor beams under the same bathroom.  What should I do?  Are the previous owners responsible for not disclosing this information?

Answer
Athena--
Well. first things first--of course, you need to repair the water damage,eliminate the pool of water under your house & eliminate the causative factors so as to preclude further pooling! The finding of past termite infestation & damage requires further inspection, repairs as needed & perhaps treatment to prevent future infestation by the "creepy crawlers!" And be sure to keep track of "every penny" you spend on getting the "House" back to being a "Home!" That done, you can move on to the questions of "Disclosure" & "Responsibility/Liability!"

Too many people operate under the "common misconception " that when FHA or VA is involved, the Appraisal is also a Home Inspection. Not so! An FHA or VA Appraisal does include a "Cursory Inspection" of the Property, to see if there are any "Readily Observable/Apparent Deficiencies!"
And this assessment is not to protect the Homebuyer, but is in the "Best Interests" of the Lender who will be holding the Mortgage on the Property!

A Homebuyer should hire a Home Inspector to do as "Detailed Condition Assessment" and make any Offers to Purchase "subject to" such an Inspection finding the Property Acceptable for the Buyer! I know that it would have been better if I'd told you this BEFORE you bought the house--but I wonder why your Realtor or Loan Officer didn't explain this to you?

Anyway, you might want to pass this info on to your friends &/or family members who might be looking for a Home! Tell them that the two or three hundred dollars it costs for a Home Inspection is WELL WORTH the money spent!It COULD save them thousands in repair costs later!

In a VA Appraisal, problems such as those you've described would not be "Readily Observable/Apparent" to the Appraiser & unless "Disclosed" by some party aware of them, would "slip by!" That's why many States have Real Estate Full Disclosure Laws" that require Sellers ( &/or Others like Realtors, Appraisers, Loan Officers, etc) who are aware of inadequacies,deficiencies,or problems, real or perceived, to disclose them to a Prospective Buyer! The key words there may be "AWARE OF!"

IF your State has a Full Disclosure Law AND the Sellers (or the "pro"s representing them) were aware of the problems you've described--and didn't disclose them, they MAY bear some responsibility/liability for your problems. You need a LEGAL OPINION on this matter & I am NOT an Attorney, so I urge you to contact an experienced Real Estate LAWYER in your area & let him/her help you determine any further "course of action!"

Good luck, Athena. I hope this works out OK for you
-JIM