Home Buying in Chicago>Question Details

Trina, Home Buyer in Chicago, IL

earnest money return

Asked by Trina, Chicago, IL Wed Oct 3, 2007

I put a contract on a home, received home inspector and the disclosure of propery stating that seller is not aware of flooding. During the inspection the inspector asked about flooding and the caretaker stated the first of the year we had about 2 steps filled with water. Can I received my earnest money back because seller lied on the disclosure, got caught and the inspector wrote it in his report? Now seller attorney is stating that the seller has made inspection correction but did not respond to the flooding issues.tharri25@csu.edu

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CJ and others outside of illinois and Trina:
Here in IL having a RE Attorney is expected in RE transactions. The standard Northern IL Realtor's Contract to Purchase has an attorney review period as well as inspection time periods. Once you have the inspection, if there are any concerns, the buyer's attorney notifies the seller's attorney. There is then a standard period of time (3 days or 5 days?) for a response or resolution. My understanding is that this keeps extending the option of nullifying the contract. I am not an attorney and cannot give legal advice. This may not be accurate but it is my understanding of how things work.

For example (and JUST an example, time spans my be different), you negotiate a contract finalize it on the 1st of the month. By the 5th of the month your attorney either accepts, rejects or modifies the contract. If nothing has happened between attorneys by the 5th, that attorney review contingency is gone and your contract is in full force. If you have 10 days for the inspection, you hopefully scheduled it for the 6th. You are with the inspector and become concerned about flooding. You tell your attorney and he notifies the other attorney on the 9th. If he does not receive a response back on the 11th, your inspection contingency is still open to nullify the contract. It is just like when you were negotiating the original contract, if initials are needed for a change, it is not valid until everyone signs off.

On the other subject, flooding is common in this area. Heavy downpours and 100 year old homes and sewers, water in the basement isn't necessarily serious. Grading, gutters, sump pumps and a variety of other things can be done to minimize DETERIORATION of the home. One time I remember being in the street at 2:00 a.m. with at least 5 neighbors in the pouring rain. All of us were in our robes clearing leaves away from the drains. You might get two steps worth of clean rain water a couple times in ten years and some water several times each year. As long as the water is gone within a day, it's not catastrophic. You just don't want to have carpet or anything on the floor that could get damaged.

I would be more concerned (as your inspector was) if the disclosure said "no" regarding flooding. You mention that the "caretaker" stated that there was water. If the owner hasn't lived there and the caretaker didn't notify the owner of this water because he TOOK CARE of it, then the seller may not have lied. Technically, if the owners hasn't lived there, he doesn't need to fill out any of the disclosure items but merely disclose that he hasn't lived there to witness the items.

Checking yes on water in the basement (in Chicago which was built like Venice) is like signing the lead paint disclosure. Unless you are buying a newer home, it's expected. If the whole house has obvious 1970 peeling paint and you have a two year old, you wouldn't buy that home. If the inspector said, flooding has caused deterioration to the foundation or a mold problem, you wouldn't buy that house either.

I hope this helps. Your attorney should simply state that you want to nullify the contract due to an unsatisfactory inspection and get your earnest money returned.
Good luck,
Ruth
Web Reference: http://www.oak-park-il.com
1 vote Thank Flag Link Thu Oct 4, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
The first thing I noticed on your posting was that you stated "Now seller attorney is stating that the seller has made inspection correction..." I've been in the business since the 70's and I can tell you that as soon as one of the parties to a real estate transaction brings in an attorney into the dispute then the other party should get one too. It is obvious that the seller felt that your allegations were sufficient for them to get legal protection and I recommend you do the same.
Now as to the issue of what was stated in the home condition disclosure, although some states require that a property condition disclosure be provided, all states recognize that a homeowner is not qualified as a professional inspector or a construction professional to accurately describe the actual conditions and that is why your agent properly asked for a licensed inspection of the property. That inspector uses the disclosure to ascertain any potential red flags during his/her inspection in addition to their procedures. Your inspector was wise enough to ask and his/her concern obviously came from either something said in the disclosure or something noticed during the inspection.
If your contract to purchase has the contingency allowing you for termination of the contract premised on the findings of the inspection then I would see no reason why you can not terminate the contract and get your deposit back after completing a termination agreement and disposition of earnest deposit agreement. If on the other hand the contract is silent as to termination based on inspection report, I would again direct you to my advice to seek legal counsel if the seller and or seller's attorney refuses to allow you terminate the contract and receive your deposit back.
Whether the seller lied on purpose or innocently is no longer the issue, the issue is how you should go about terminating your contract and getting your deposit back.
If you can not convince the seller and or the seller's attorney to allow you terminate the agreement and get your deposit back and you can not afford legal counsel I might suggest you look into the following site for potential assistance.
Free legal aid search for all states: http://www.lawhelp.org/
If on the other hand you can afford legal counsel but don't have any idea who to contact you might want to visit the following site for direction
American Bar Association: http://www.abanet.org/about/
I hope you get satisfaction to your concern
1 vote Thank Flag Link Wed Oct 3, 2007
You need legal advice. You should start with your Realtor's Broker with these questions. If you are not represented by a Realtor or licensed RE Professional, then you need to seek out a RE attorney. That being said, I would think that you should be able to void the contract and have your escrow deposit returned.
1 vote Thank Flag Link Wed Oct 3, 2007
Ha! I just answered this question a minute ago and afterwards read the date of the original question. Hopefully things were resolved from last October. Oh well....maybe this will help someone in a similar situation.
0 votes Thank Flag Link Sun Mar 2, 2008
Trina...if your contract has the attorney review and inspection contingencies and you are within those time frames and the seller did not disclose material facts you have a great case ot void the contract and get your earnest money back. I would follow up your question with providing these details as it will help us answer your questions better:
1. Do you have a REALTOR?
2. Do you have an attorney working on your contract?
3. Timeline? When did you purchase? When was the inspection? When were facts disclosed to you? Are you reacting immediately to those items disclosed or is it some time after?
4. Is this new construction/conversion? Is seller a developer?
5. What contract did you use? Did your REALTOR use?

Timeframe is going to help you answer the majority of your questions. Who's involved should answer the rest.

Good Luck!
0 votes Thank Flag Link Sun Mar 2, 2008
CONGRATULATIONS! Your home inspection was a good investment! It usually is.

Being a Chicago area home inspector, I come across this type of problem all the time. First off, let me tell you that you should consult a qualified Real Estate Attorney. Like your independent home inspector, they are 100% on your side because their fee is set whether you buy or don't. They have your best interest at heart!

In my experience, 90+ percent of all contracts in Illinois and near Chicago contain standard verbiage that allows for a 5 business day window for getting out of your contract. Some people will have their attorney add days to this period to get more time for inspections completed. I think this is a good idea.

I my non lawyer expert opinion, if you want out, you should be able to get your earnest money back or renegotiate the deal. Good Luck!
0 votes Thank Flag Link Thu Feb 28, 2008
In the Great State of California, as soon as a Seller makes a material disclosure, in addition to his inital Transfer Disclosure Statement, this kicks in the 3 day recission period as per the Transfer Disclosure Statement. You can also disapprove the property as per your inspections clause. Do any of you buyers work with competent Realtor/Agents out there!!
0 votes Thank Flag Link Wed Oct 3, 2007
Hi Trina. It sound like you are still within your inspection period. The buyer's due diligence inspections and the seller's disclosures are mutually independent. That means that the seller has to disclose all material facts regardless of whether an inspection would reveal the defect and the buyer has to do inspections even when the disclosures do not give rise to concerns. In your particular instance, you discovered something that should have been disclosed by the seller. The question you have ask yourself, do you still want the house? If you don't want the house because of the risk of flooding, you'd cancel the contract and get your deposit money back (unless you removed all your contingencies). If you still want the house, you may want to renegotiate the price in light of the risk of flooding that was discovered during the house inspection. If you want to cancel, the only real question that I see is whether you'd have a claim agains the seller for reimbursement of the money you spent on inspections and perhaps an appraisal because the seller's disclosures did not reveal the past flooding. That's a question for an attorney, but most likely it would be a small claims court matter.
Web Reference: http://www.go2kw.com
0 votes Thank Flag Link Wed Oct 3, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
Hi Trina:
I can't find a timeline in your question. You stated that during the inspections it was "discovered" that the seller stated the two steps had been filled with water. I actually worked the floods of 1993 with the American Red Cross - and there was significant damages from just a few inches of water - while I don't know your particular area of interest - I can tell you that flood damage is the worse kind of water damage there is. You need to ascertain whether the water "entered" the home.

If it was exterior water - then you don't have to be as concerned. But it sounds as if you need a more thorough report from the inspector.

I would seriously get into contact with your agents broker - and see if they can advise you on whether the timeline has passed &/or if you have legal recourse.

Of course, you have to ask yourself why you put a bid on the home in the first place. If this is the home for you and the damages are minimal and to the exterior only - them you could probably negotiate for the seller to "fix" any area's that were affected.

However, it sounds as though there isn't any visible damage, just a verbal "slip" by the seller. You should get to the bottom of this - and give us an update on the progress.

Good luck to you!
0 votes Thank Flag Link Wed Oct 3, 2007
Trina,
I would seek the advice of a real estate attorney. In most contracts there is an inspection clause which gives you a set number of days to perform inspections and get out of the contract if inspections are not to your satifaction. Read your contract carefully and get legal help. Good luck to you!
Web Reference: http://carriecrowell.com
0 votes Thank Flag Link Wed Oct 3, 2007
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