When Home Sellers Lie

When I bought my house, the seller lied. He promised in the purchase contract to replace or fix some things -- a chipped bathroom sink, a rotten board on a gable, a leaky bathroom faucet. An hour before closing, during the final walk-through, I discovered that he hadn't made the repairs. He hadn't even started.

A lot of home sellers break the promises they make on binding legal contracts. There are a number of ways to deal with sellers who welsh on their contractual obligations to replace or fix things:

• Shrug it off.
• Have the seller reimburse the buyer at closing.
• Extract a promise that the seller will make the repairs soon after closing.
• Set up an escrow account, funded by the seller, to pay for the work.
• Postpone the closing until the work is done.
• Sue.

It seldom goes as far as the last option. "I think most people tend to cooperate at the end of the day," says Neil Garfinkel, a partner with the Abrams Garfinkel Margolis Bergson law firm in New York. He specializes in real estate law. "Sellers want to leave with a good feeling and buyers want to leave with a good feeling. I don't believe that a real-estate transaction should be adversarial."

A common solution

That was the opinion of our attorney (he wasn't Garfinkel) when my wife and I closed on our house in Jupiter, Fla., on New Year's Eve 1999. All our attorney wanted was peace. But he was prepared to drop the bomb. He knew that our seller had scheduled back-to-back closings: the sale of his house to my wife and me, and then his purchase of a new house. A postponement of just two days might possibly blow apart his home purchase, and would crater everyone's homestead tax exemption.

Under this pressure, the seller wrote us a personal check that more than paid for the repairs. The closing took an hour longer than expected because of the time we spent negotiating the amount of the check, but we closed on the scheduled day.

Transferring money from seller to buyer is a common solution to the broken-promise problem, Garfinkel says. The seller doesn't have to write a check, and instead can give a credit against the buyer's closing costs. Usually, the agreed-upon amount "is a guesstimate," Garfinkel says. "But I've been doing this 15 years, and I think we've been pretty on-the-money when I've had a client guesstimate that it will cost X amount of dollars."

Sometimes an amount can be agreed upon at closing, and sometimes the closing has to be postponed. As Garfinkel puts it: "They fight it out outside the table, when cooler heads prevail, and try to come back and do it another day."

When the two parties can't set a price but can agree on a range, the seller can put an agreed-upon sum in an escrow account. When the repairs are made, the contractors are either paid directly from escrow or by the buyer, who then is reimbursed from the escrow account.

Lawyers generally prefer not to go the escrow route because it's unwieldy and time-consuming. Angry buyers and sellers sometimes hold up the escrow money out of spite. Garfinkel remembers a time when money was trapped in escrow for months because the buyer and seller were bickering over a crystal newel post. That's the bottom post of a bannister, and feuding over one is as low as some sellers and buyers will descend in a dispute.

Letting it all go

Some buyers take broken promises more or less in stride. When John Stump bought his 1,600-square-foot ranch house, he recognized that the sellers had not maintained it well. That was OK, because he planned to make extensive renovations.

He didn't expect what happened next.

Stump amended the purchase contract with a copy of an inspection report. The sellers agreed to make the repairs indicated on the inspection report.

"They indicated repairs they had made, but they hadn't made them," he says. "It wasn't that they did a shabby job of repairing them, they just didn't make repairs."

Among other problems, the inspection report mentioned that a joist had been cut through to make room for a bathtub drain. The sellers promised to fix it, and later wrote "repaired" on that line item in the contract. "But it had not been repaired," Stump says.

The rotted subfloor in the bathroom hadn't been repaired, either, and the toilet wasn't bolted to the floor -- it was merely sitting on the wax seal. An attempt had been made to fix the water-damaged base of the basement stairs. A medicine cabinet had been removed and replaced by a cheap mirror with a plastic border. Door stoppers had been unscrewed from walls.

"It wasn't spiteful," Stump says. "These people had inherited the house. I don't think they meant to do this. Somebody may have told them the repairs had been made, but they hadn't."

It was only after closing, and having someone crawl under the house, that he discovered that the hidden problems in the bathroom had not been repaired -- the cut-through joist, the rotted subfloor, the unsecured toilet. He asked the previous owners to make fixes, and they sent someone who did a substandard job bridging the joist.

This is on top of the feral cat that had been living in the attic and the backyard deck that had to be removed because it had been built improperly and without a permit.

"I looked at these people and realized that the behavior was so outrageous, they didn't understand the law," Stump says. He realizes that he could have taken legal action. Instead, he says, "I just laughed it off. Was it worth legal hell for me and the sellers? No."

 

DON'T GO IT ALONE!  - As a designated Realtor, I am trained in all faucets of home selling and buying.  I will get you answers, consult with professionals to get the work done, point out key factors in helping you to determine the price, condition and expense to buy.  I will make sure you are completely satisfied when making a decision to buy.  Your satisfaction is my success!

Most times using a Buyers Agent is of No Cost To You.  Check out the Link above on Buyers Agents.