Home Buying in 90039>Question Details

Soniaeliz, Home Buyer in Houston, TX

is a gas leak considered a health and safety issue and if so is this covered under a seller's non disclosure?

Asked by Soniaeliz, Houston, TX Tue May 5, 2009

My husband and i are in the process of buying a forclosed home. Our contract includes a seller's non disclosure and as is stipulation. However it also included a section that stated the seller had no knowledge of any health and safety issues in the home. Come to find out that the selling agent was aware of a possible gas leak in the home that we did not find out about until we tried to have utilities turned on for appraisal. Is this ethical? Were they under any obligation to notify us of a possible gas leak?

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Answers

8
Marc C. Yu’s answer
Sonia,

The Lender or "Owner of Record" are exempt from a few items like TDS (Transfer Disclosure Statement), Mello Roos, NHD (Natural Hazard Disclosure), Improvement Bond Act, Supplemental Property Taxes, and Private Transfer Fee when dealing with a purchase of an REO (Real Estate Owned)/Foreclosed property.

BUT!!!!!!!!!!!!!

It does not exempt them for not disclosing material facts that involve endangering the overall well being of the buyer. The gas leak is a serious issue and if you plan on moving forward with the purchase, at least ask the Lender to reimburse you with the cost of repair. If you were getting an FHA loan with this property, FHA will require you to repair the issue before approval of the loan. You will need a licensed contractor to give you a quote for the repair. Your Realtor should guide you from there.
1 vote Thank Flag Link Tue May 5, 2009
"as is" does not exempt them from telling you issues with the home that they know about. It just means that if they accept your offer you take it "as is" with no credits but you can still do an inspection. If they lived in that home then they more than likely knew about it.

This is a very serious situation and these are certain things that a home buyer should let an experienced agent deal with so you are not fooled into purchasing something that has a lot of issues.

Give me a call or email me and I can help you out with this transaction and answer all of your questions. :)
0 votes Thank Flag Link Thu Mar 7, 2013
Dear Sonaeliz,

This is precisely the reason why it's so important to retain your own "Buyer Agent" when purchasing a home. Your buyer agents job is to protect your interests while the listing agent is obligated to do the same for the seller. So you can see, how going without proper representation can really cause problems.
Since it is a foreclosure, the bank can't know the defects only the previous owner will know..and maybe the listing agent..but not necessarily. Inspection is recommended for just this type of situation. Now you have some decisions to make regarding this house, once your inspection is complete.
0 votes Thank Flag Link Sun May 27, 2012
Hello Soniaeliz,

A gas leak is a major safety issue not only for the occupants but also from anyone even near the property. A gas leak also makes the home uninhabitable until repaired. This is not legal advice but instead plain and simple practical opinions. According to your statement:

"My husband then called the gas company again and found that the selling agent called the gas company b/c the interior of the house smelled of gas, the gas company came out and said that there could be a leak in the house, turned the gas off and took the meter. This all happened 1 week before we made and offer on the house."

According to the rules of the Texas Real Estate Commission (TREC) and the Texas Administrative Code (TAC) http://info.sos.state.tx.us/pls/pub, the responsibilities of the Agent are :

RULE §531.1 Fidelity
A real estate broker or salesperson, while acting as an agent for another, is a fiduciary. Special obligations are imposed when such fiduciary relationships are created. They demand:
(1) that the primary duty of the real estate agent is to represent the interests of the agent's client, and the agent's position, in this respect, should be clear to all parties concerned in a real estate transaction; that, however, the agent, in performing duties to the client, shall treat other parties to a transaction fairly;
(2) that the real estate agent be faithful and observant to trust placed in the agent, and be scrupulous and meticulous in performing the agent's functions;
(3) that the real estate agent place no personal interest above that of the agent's client.

AND

RULE §531.2 Integrity
A real estate broker or salesperson has a special obligation to exercise integrity in the discharge of the licensee's responsibilities, including employment of prudence and caution so as to avoid misrepresentation, in any wise, by acts of commission or omission.

Since you are able to prove that the gas leak was known before your offer then you certainly should have been told about this significant safety threat. Unfortunately a Bank in possession of a property has no responsibility to notify a potential buyer with a disclosure form. However, this does not release an Agent from notifying anyone and everyone of a potential for a life threatening situation on a property. Yes, the gas serving company did pull the meter and shut down service. However, your choice to not make a bid on the property was usurped by not making this condition known. You have expended time and money on purchasing this property when potentially you may have chosen not to. Additionally the extent of the leak is unknown and had the purchaser used a loan source not requiring activation of the utilities prior to a loan approval then the buyer could have been handed a potentially major issue to deal with after loan closing.

At the very least I would approach the Broker of the listing agency and request compensation for your losses. You do have rights and remedies through the Texas Real Estate Commission. They are outlined on their WEB site.

Good luck!

Emmanuel J. Scanlan
PS Inspection & Property Services LLC
http://www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor

Knowledge is power, but sharing knowledge brings peace!!
Web Reference: http://www.psinspection.com
0 votes Thank Flag Link Wed May 6, 2009
This all came to light 1 week before we were supposed to close. We did not realize that because we were getting an FHA mortgage we had to have the utilities inspected. When we had the property inspected initially weeks before we were told it would be extremely difficult to get the seller to turn the utilities on and had everything but gas and water inspected seeing as the house is only 4 years old and the had been lived in not 3 months before. So when our lender called to inform us that we had to have the utilties turned on i called the gas company to have the gas turned on and they told me that the gas had been on in the agency's name but the meter had been removed because of a possible gas leak. I was told that i would have to pay for a gas line test and fix any leaks found before the gas could be restored. My husband then called the gas company again and found that the selling agent called the gas company b/c the interior of the house smelled of gas, the gas company came out and said that there could be a leak in the house, turned the gas off and took the meter. This all happened 1 week before we made and offer on the house. We have the name of agent who spoke to the utility worker as well as the time and date he called in the possible leak. Initially the selling agency made no attempt to help us remedy the situation so we could make it to closing. However after my agent told them they would hear from my lawyer they did a 180 and payed for a gas test on the house and had the house dewinterized (which they had initially told us could not be done until after closing). To my knowledge no leak was found, but if there was they had it fixed. This whole process has delayed our closing by a week and so cost us $800! Had the selling agent simply told us there was a possible leak we could have had this looked at weeks ago, but the choice was made to conceal this and they know they are guilty. Yes i know we should have had the gas and water inspected but we are first time home buyers and were told it would be extremley difficult to get the seller(Jp Morgan Chase) to have the utilities turned on, not to mention we only had something like a week after we made an offer to have the house inspected. I do not know if the bank that owns this property was ever made aware of this problem but we have proof that the real estate agency listing and showing this property was aware of a possible gas leak.
0 votes Thank Flag Link Wed May 6, 2009
Can you prove this listing agent had knowledge? If yes, then I would inform their broker, the DRE, sue them, hold their feet over fire, key his/her Lexus and buy a full page ad in the local newspaper to expose this person. Just kidding (mostly).
0 votes Thank Flag Link Tue May 5, 2009
Sonia,

The Lender or "Owner of Record" are exempt from a few items like TDS (Transfer Disclosure Statement), Mello Roos, NHD (Natural Hazard Disclosure), Improvement Bond Act, Supplemental Property Taxes, and Private Transfer Fee when dealing with a purchase of an REO (Real Estate Owned)/Foreclosed property.

BUT!!!!!!!!!!!!!

It does not exempt them for not disclosing material facts that involve endangering the overall well being of the buyer. The gas leak is a serious issue and if you plan on moving forward with the purchase, at least ask the Lender to reimburse you with the cost of repair. If you were getting an FHA loan with this property, FHA will require you to repair the issue before approval of the loan. You will need a licensed contractor to give you a quote for the repair. Your Realtor should guide you from there.

One more thing, it can be a simple human error when something like this is missed. But if you are positively aware that the selling agent was aware of the situation but did not disclose it, you may want to consult an attorney. In California, it's illegal, but make sure you get your facts straight and document everything...
0 votes Thank Flag Link Tue May 5, 2009
Hi Sonia,

In California a seller and their agent must disclose any known material facts that could affect a homes value or desirability. If you're still within your due dilligence period and have not waived your contingencies than you can always send the seller a request for repairs asking for a percentage or all of the costs to repair the gas leak to be paid by the seller or in this case the bank. If the bank (seller) ignores or rejects your requests for repairs you have the option to instead of waiving your contingencies to walk away from the purchase and get your deposit back. Consult with your agents Broker since you have reported they were not honest with you up front. If you're not satisfied with your Brokers solution then consult with a Real Estate Attorney asap. Good luck!

Matt
0 votes Thank Flag Link Tue May 5, 2009
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