Home Buying in 20892>Question Details

Kate, Home Buyer in Bethesda, MD

House flooded after inspection but before settlement

Asked by Kate, Bethesda, MD Tue Sep 13, 2011

Hi All,

I am buying the house, the house was flooded during latest long lasting rain, basically the basement had water for couple of days. My question is who is responsible for the repair? According to the specialist who did an estimate for the repair the current drain system simply does not work, new one should be installed, so whose responsibility is it typically? Seller or the buyer?
Also, can the seller simply quit if the buyer insists the repair is the seller's responsibility? Thank you all for your responses!
Kate

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Answers

11
Bruce Lemieux’s answer
Kate - if your contract is a Regional or MAR contract - which I'm sure it is - the seller is responsible for delivering the home in the same condition as it was as of the contract date. The condition has obviously changed, so you would not be required to take ownership of the property in its current condition.

Although this seems straight-forward, I would still get council from an attorney. If both parties want to cancel the contract and return your escrow, then it's no problem. It can get tricky, however, if either party still wants to go to settlement. If you want the contract to settle, then the owner must make all necessary repairs to return the home to it's original condition. If the owner makes the repairs, he could argue that you must still settle - even if you don't want to. Again, if both parties agree to part ways, then no problem. Otherwise - you need specific legal help. Good luck.
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0 votes Thank Flag Link Tue Sep 13, 2011
Definitely the Seller. The seller can say no to the repair and effectively kill the deal but why would they? They have to fix it no matter who buys the house. And if the agent has been informed tha the current drainage system isn't adequate that becomes a material fact that must be discloses to any future buyers. One caveat...it is difficult to find a trustworthy basement repair person. If this is the ONLY time the basement has ever leaked (under catastrophic conditions) then requesting that the seller install a completely new system might be excessive. Be fair and it should all work out.
1 vote Thank Flag Link Tue Sep 13, 2011
Kate,

If you used a "Regional Sales Contract" or a MAR "Resale Contract" there is a property condition clause which covers two situations that may be applicable to your situation. The first is that the seller will convey the property to you in substantially the same condition that it was in at the time you contracted to purchase it. The second is that the systems, which would include plumbing, will be in working order at the time of settlement.

These two provisions could be compromised if your contract includes an "As-is" clause (on the addendum of clauses) or a separate "as-is" addendum, bank addendum (foreclosure sale or short sale) or corporate relocation addendum. Check these things out and consult an attorney.

The other question is do you want the home.  I wouldn't expect that there is any situation here that can't be fixed to resolve the issue if you want the home. Then if you don't want the home, if the seller doesn't want to rectify the situation, you may have the ability to get out of the contract. If the seller wants to sell the home, they will need to fix it for you or the next buyer.

I am not an attorney and I'm not a contractor or home inspector and I haven't seen your contract or the damage. Therefore nothing in my statement here is legal advice or qualified opinion.

Lastly, if you want the home fixed remember that the seller is probably interested in getting it done as inexpensively as possible whereas your interest is in getting it done properly. You might want to have a contractor of your choice examine the problems for you and work out a credit from the seller so that you oversee the repairs so that they are completed to your satisfaction.

Good luck.

Terence Michael McCarthy
Real Estate Broker
0 votes Thank Flag Link Tue Sep 13, 2011
Kate,

I'm sorry for your troubles, but they really shouldn't be YOUR troubles. Most sellers would have the decency to remediate any issues prior to your settlement. Your contract will make things clear but since you have not settled yet, you are likely in a position of power!

All the best,
Annette Wagner
0 votes Thank Flag Link Tue Sep 13, 2011
Kate,

The fact that the transaction hasn't closed is in your favor. Since it hasn't closed the property and its multitude of problems still belong to the previous owner.

This is a most unfortunate turn of events but the purchase agreement should contain language that clarifies this issue. Indeed, if the seller really wants to sell this property.....and they have the means(including insurance), they should make this right.....

Best wishes,

Bill
0 votes Thank Flag Link Tue Sep 13, 2011
Wow, that's tough and really inconvenient. I think I would talk with a real estate agent and see who is in charge of the flood clean up. I think both parties have rights to claim it's not their problem to clean up. You might need an outside source to help decide who gets to be in charge of the flood clean up. http://www.cdmcesspool.com/floodbegone.html
Flag Wed Apr 15, 2015
Kate,
Your contract will contain the answer to your question, but chances are the others are correct; it's the seller’s responsibility. Assuming the seller is a responsible home owner, they should have some insurance which may cover this. Flood is always a difficult issue, because not all homeowner policies necessarily protect against flood damage.
Have the sellers investigate this and let you know if they have coverage. This may solve most of the problems for both of you.
Now, if the flood had happened the day after settling, the problem would be yours. Are you prepared to address the non-functioning drain system or are you better off walking away? That decision is up to you.
0 votes Thank Flag Link Tue Sep 13, 2011
The sellers are still responsible for any eventualities involving the subject property until the title to the property is signed and delivered to the new owners. Even a property sold as is does not alleviate the sellers from this responsibility. When a property is accepted in as is condition, the buyer accepted the condition of the property at the time the contract has been accepted. Documentation of the condition of the property is essential part of the process. This takes due diligence on the part of the buyer's representative and reliance on the home inspection report.

When this fortuitous event happened, a room for potential renegotiation opens up.

I wish you the best of luck.
0 votes Thank Flag Link Tue Sep 13, 2011
In California the purchase contract states that the seller is responsible for maintaining the prioerty in the same condition it was as of the date of acceptance of the contract. Legally, it is still the seller's property until close of escrow.
If you had a realtor represent you in the purchase offer, ask him/her what your remedies are if the seller doesn't perform.
0 votes Thank Flag Link Tue Sep 13, 2011
More often than not the sellers are responsible for the repair, but I would advise you to be in touch with your buyers agent and a real estate attorney to make sure all goes smoothly for you.

Good luck!
0 votes Thank Flag Link Tue Sep 13, 2011
That must be frustrating, but better now than after you move in! ;o)

The answer really depends on your contract and what point you are at with contingencies. The seller is definitely responsible for the clean up, but repair is not as clean cut. If the house is being sold as-is, then you may be responsible for the repair. If you have a property condition paragraph in effect, you could argue the drain system falls under plumbing and it must be in normal working condition. In that case, the seller is responsible. Also, if you are getting a loan, the lender may require the repair as a condition. (Depending on the contract, the seller may refuse to make lender repairs, but you can void the contract if they won't do it.) If they "quit" and default on the contract, then you may be able to pursue legal action.

I would think the seller would try to work this out with you. If you walk away, they are going to have to disclose the problem to any future buyers. Those buyers will either want it fixed or a huge price discount.

Good luck!
0 votes Thank Flag Link Tue Sep 13, 2011
It is typically the owners responsibility until the property changes hands at settlement. It could however alter the sellers ability to turn the property over to you in the condition it was at contract signing, if they are unable to make repairs. There is a lot more info needed here to give more than an opinion. Your Realtor and or a Real Estate attorney should review your options with you.
0 votes Thank Flag Link Tue Sep 13, 2011
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