Home Buying in Palmdale>Question Details

Peter, Home Buyer in California

Does the "as is" clause get negated if the Seller's Broker does not disclose water damage that occurred while in contract?

Asked by Peter, California Sat Aug 7, 2010

I have been doing some research and it seems very difficult to find the answer's regarding Real Estate disclosure laws.
I'm looking for the answer to the "as is" clause in our contract. Since having bought the home in the "as is" condition (thumbs up by inspector). And, finding out that while in Escrow and right before closing, 127 thousand gallons of water is somewhere in this house. Thank goodness for honest and wonderful neighbors, they are all coming forward with so much info and willingness to testify, it is truly a wonderful neighborhood.
To the Seller's Broker; you sir are a shameless scam artist. I'm hedging a bet that you will end up on the FBI white collar crime list, VERY SOON. I know you are reading this, so here is some free advice, you were notified on July 16th 2010. I suspect that you made some very broad changes regarding your finances, beware of the buyer you P-Off. Never mess with a man's money or family, you did both!! Ever hear of KARMA?? THINK BEFORE SCAMMING!!

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Did you have the house inspected? This is why our company carries infrared cameras and other high technology to locate hidden moisture and mold, every inspector should, you would not believe what we uncover that cannot be seen by the human eye alone.
Web Reference: http://www.CAcertified.com
1 vote Thank Flag Link Sat Aug 7, 2010
Hello Peter,

Sorry to hear that you and your family are going through this mess. Keep in mind that I'm not an Attorney, nor am I giving legal advice. But as a Realtor you must have an understanding of the contracts and be able to clarify what "As is" means along with the Disclosure guidelines. The "As is" clause simply means the Seller has no intentions of making repairs to the home. Now this has nothing to do with your right as a Buyer to inspect the property and submit a request for repairs. The Seller may reject your request for repairs. At that point, you as the Buyer can accept to go through with the purchase and pay for all repairs yourself or cancel the agreement and get your deposit back. This all typically takes place within 17 days after acceptance, unless otherwise agreed to in writing.

Every Seller, Listing Agent, and Buyer's Agent must disclose every known material fact regarding the sale of a home. A material fact is anything good or bad that could affect a Buyer's decision in the purchase of a home. I explain to my clients that "when in doubt disclose!" Disclosure and "As is" have nothing to do with each other. The "As is" clause does not remove the Seller, the Listing Agent or the Buyer's Agent from their obligations to disclose known material facts.

This issue should have been disclosed to you right away. This would have re-instated your right as the Buyer to a new 3 day period, as per the Transfer Disclosure Statement to back out of this purchase. The exception to this would be if the home was a Foreclosure. Also, you should have been given your final walk through within 5 days prior to close of escrow unless otherwise agreed to in writing? This might have given you an opportunity to discover this problem. I recommend that you seek legal council right away. Make sure your Attorney has experience in Real Estate Law. Good luck!

Matt
2 votes Thank Flag Link Sat Aug 7, 2010
Hey Peter, sorry to hear about the given situation. Believe it or not, this type of thing happens all the time whether or not the listing agent has any idea or chooses to ignore such a major issue with the home. The "as-is" clause is still does not protect any party from not having to disclose such issues with the property. It is the seller and their agent's responsibility to disclose all things which you would expect to be disclosed such as 127 thousand gallons of water in the home. I take it you're not talking about the pool...

The "as-is" clause is meant to tell the buyer that no repairs shall be made on the home and should an issue come about the home that no party was aware of- then the home is sold "as-is" and and no party is responsible for repairs. Again, it does not clear the seller of having to disclose such a major issue. Any seller or agent which does not disclose this to the buyer is either incompetent, at which point you can argue that they should or could not have mentally understood what they were signing when they released Title to you and therefore contract should be null/void, or if they are mentally competent then I would imagine that you would have a great case in front of any judge regarding the water issues.

Again, I would advise basing your argument around two points.

1. They were not competent enough to explain to their agent about the water issues=not competent to sign a listing agreement & disclosure statement
2. They knew about the water issues, did not disclose it. Once again, any home that has retained that kind of water within its walls/lawn/yard/crawlspace the seller will know about, unless #1 is happening.

For the first time ever on Trulia, I would recommend you seek the guidance of not just your agent but rather a lawyer is definitely due on this one. Find out who the listing agent is and sit down and talk to them and their broker and ask to record the conversation.

If home was purchased as a short sale which may have been the case, you still have rights as a buyer.

Ramin Lavi
rlavi@eqemail.com
#01797965
2 votes Thank Flag Link Sat Aug 7, 2010
Hi Peter,
Below is the link for the CA Dept of Real Estate( which you may already have).
As-is does not give anyone a free pass to commit fraud and deception or to be negligent or oppressive. So even though I am not a real estate attorney(which you may need!); the short answer to me is YES, if there is an as is clause, it can go out the window for a number of reasons. It sounds like you need a great RE attorney NOW if you know or believe you have or may have damages.
You have been through a lot and typed a lot; I'll curb my temptation to ask you any more questions for my own curiosity and simply wish you a swift and appropriate resolution to this situation.
1 vote Thank Flag Link Sun Aug 8, 2010
Peter ,
That Broker is why real estate agents rank lower than used car salesmen on consumer trust. (Its sad but true,look it up) I personally hope you nail this guy as hard as the law allows. Brokers and Agents like the one you are dealing with, I hope are getting driven out now due to more consumer knowledge on real estate. It will become harder to fool and or scam clients, as people gain knowledge on real estate transactions from sites such as this site. This will be better for all .
I hope your situation will be concluded to your satisfaction. And then you and your family can relax and enjoy your new home as you should have from the start
Good luck Peter and Thanks for putting your story out there.
1 vote Thank Flag Link Sun Aug 8, 2010
Hi Peter,
The Best advice is to consult with a lawyer. There are remedies to your situation. Your lawyer will be the one to best inform you of these remedies.
It is the sad that there are such disreputable people in the industry when it is so easy to conduct business in a fair and equable manner.
Luckily there are many laws to protect consumers from situations like this. I hope all works out for you . good luck Peter
1 vote Thank Flag Link Sat Aug 7, 2010
Peter,

Thanks for the additional information. Based on what you mention, you certainly have a good case for rescission, and, perhaps that may be the best way to make you whole since, from the sound of it, you're learning more and more negative things about this home every day. Rescission, of course, would reset all parties to the beginning (prior to the contract).

Obviously, as a seller/broker, his level of obligation and duty to the seller is greater than would be that of a "regular" home seller, so there will be consequences. Hopefully, you can resolve these problems via arbitration and mediation to mitigate legal fees. Good luck!

Sincerely,
Grace Morioka, SRES
Area Pro Realty
0 votes Thank Flag Link Sun Aug 8, 2010
I have wrote in 2 questions, this one being the second. The first one was Fraud by the Broker/Seller. Michele Hunt was very helpful with her answer and I followed up with a call to her. Thank you again Michele Hunt, you are very knowledgeable and a very honorable Lady.

To Grace, my wife is a Ret. Fed Investigator. She is the one that is finding out everything and boy is it getting deep around the Broker/Seller aka the previous owner.

Each and every one of the Statements are true and can be proven, bet WASTE is not liking me too much.

1. This was not a REO, Short Sale or Foreclosure. with that said the broker is/was the owner of the house. We came in with 20% down, had it been 3% we would have walked away....not happening now. An Aside; we did over pay, for the piece of mind that the home was taken care of.

2. According to the mental midget aka the Broker/Seller- he claimed no one and I mean no one lived in this house. Not so, according to neighbors who are very willing to testify and describe the vehicle and persons, that were in the home during Escrow.

3. We moved from Northern CA to AV. We were here every other week from March to the beginning of May. It was raining almost everyday here during that time period. We had our home inspected the last week of April while I was here. The only smell was fresh paint and yes there was old mold but it was taken care of.

4. Broker/Seller has been caught lying on numerous occasions, not forthcoming with any info about who did what work in the house....very odd since by law he is to supply us of who and what was being done in the home. Please correct me if I am wrong.

5. We gave him the chance to come clean and he feigned ignorance and had the gall to threaten us with Attorney fees and court cost..gee, more times than not, guilty people unwilling to answer questions, will Lawyer up as they say and try the good old scare tactic. One word for him--WASTE.

6. This occurred on July 15, exactly 15 days after we moved into the home (127K of water occurred between May 6th and June 7th). We found out about that from the local water company when we tried to turn on service before our move. Broker was on vaca (probably from the money he made off of unsuspecting hardworking people) and the other agent in his office told us it was a running toilet no big deal. Naive on our part?, perhaps. But in the end we did put two and two together.

7. It would take 18.4 days (24/7) with NO bathroom breaks to flush away 127K gallons of water. Yes we did the math. Waste called us and another lie, the pool needed water. Okay and why?, by the way the pool is only 18K gallons of water, so where is the other 100K??? Had they used that from the start they could have gotten away with it. TOO LATE!

8. Neighbors have been watching over the house since it was empty and even reported tagger's that got arrested. No disclosure about that! No draining of the pool either. He just keeps digging, next he'll say he was on the grassy knoll just to divert attention away from the scams he pulled on others.

9. Every possible thing was asked to be disclosed. Yet nothing was!

10. My wife was out walking our dog and ran into the man and owner of the company that took care of the yard and tree's. He informed her that he installed the drain pipes and sprinkler system in the garden box, along with the whole back & front yard. Had contractors in today for an estimate to make us whole (per our Attorney). Their opinion is that someone recently re-shored up the walls and cemented over the drains. NICE!

Total cost= Over $50K because we are unable to use the kitchen and our child needs a special diet which is impossible with out a stove. That amount was just to make the house whole--wood floors not just any wood floors, Parquet floors are about $12.00 a sq.ft. for just the material.

Look on Broker/Seller's Face getting Served---PRICELESS. Any amount of money spent for the wonderful and very well known in the Real Estate Law Community, will be worth every single penny he gets paid.

Beware House Flippers, if you don't know something it would behoove you to find out because the next house you flip for a profit maybe your last. BTW: Meeting with the Commissioner of the State Board of Realty in Sac. Now let me ask one and all, just one question. Is losing your livelihood worth a measly $50K profit for a flip??? In today's world anything less than $1 billion is not worth taking away the livelihood that one becomes accustom to.

What a shame, if the same amount of time and energy was used in a positive way, this guy would be a rich man inside and out. Now he's just a scam artist that will see the light of day when he gets served and stripped of his livelihood. hope his wife works, cause she'll need to after this. Guess his "Get rich scheme" didn't pan out now, did it? "Get broke fast scheme" is more like it.
Thank You in Advance, you all have more info now.
0 votes Thank Flag Link Sat Aug 7, 2010
Did the seller collect insurance or file a claim?

Talk to lawyer. "as is" , I once learned - may mean "as is" a point in time.

Find a lawyer - and have them the date "as is" means and who is responsible for damages from contract date to closing.
Web Reference: http://www.rentlaw.com
0 votes Thank Flag Link Sat Aug 7, 2010
Hello Peter and thanks for your post.

As the other Realtors have noted, having problems such as leaking pipes, gas leaks, and even (in California) earthquake damage after the inspection and before escrow closes is not unheard of--it's not terribly common, but it does happen.

Unless the Sellers tell their broker or agent what happened, the agent may never be advised of the damages. Remember, the agent doesn't live in the home owned by the sellers and is only aware of the activities within the home made known to the listing agent by the seller. In most cases, damages during the escrow period become the responsibility of the homeowner/seller to repair and remedy. The seller should tell his agent and, thus, the buyers about the damages, but sometimes this does not happen. If the listing agent was advised, however, and the agent failed to disclose this problem to your agent, then there certainly is a cause of action and it is a matter to be discussed with your attorney.

More importantly, buyers and their agents usually complete one last inspection of the home prior to close of escrow. A discharge of 127,000 gallons of water within the home should have left obvious visible marks on the drywall and the strong smell of mold in the home within approximately 48 hours of exposure. While I can appreciate that your neighbors have been forthcoming with information about a water leak, unless you observed signs of water damage in the home, perhaps the water leak was outside of the home and on the property so as not to actually damage the home. Working with the listing agent and the sellers will help you determine exactly what happened and how the water was lost.

Finally, it is not surprising that real estate disclosure laws are difficult to find on the internet. Because real estate transactions can be very unique and the circumstances of one case dissimilar from others, the need for and impact of disclosure is often determined based on the unique facts of the case. While most of us here on Trulia will advocate disclosing as much as possible to the buyer, there can be something small that no one noticed during the transaction that later becomes a much bigger issue and there is no way that either the seller or the Realtor, without unique knowledge often possessed of other professional, would have been to anticipate the problem.

My suggestion, before you jump to any precipitous conclusions that may damage you and your possible remedies at a later date, is to begin by asking questions about what happened, when it occurred, and what was done to make repairs. Again, given that you did not see any problems or notice any mold immediately, it's worth taking a more "investigatory" approach with the other party to see what must be done to make repairs, if any.

Good luck!

Sincerely,
Grace Morioka, SRES
Area Pro Realty
0 votes Thank Flag Link Sat Aug 7, 2010
For an accurate answer as it relates to your specific situation, do consult with an attorney who specializes in real estate--he/she will be your best source of advice.
0 votes Thank Flag Link Sat Aug 7, 2010
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