Home Buying in Ladera Ranch>Question Details

Bertisbert, Home Buyer in Ladera Ranch, CA

In as-is purchase, is the seller obligated to fix a mold problem once discovered during inspection?

Asked by Bertisbert, Ladera Ranch, CA Wed Apr 29, 2009

I am about to close on a home purchase (my first), and our inspection found some mold in the kitchen area. We submitted a repair request for remediation before our deadline, and now the sellers (REO Property) are saying they will not pay anything for the remediation. They are claiming that the "as-is, where-is" clause protects them. I need some advice on how to proceed, and my agent does not seem to be confident about what we should do next. I don't want to lose the house, but I also don't want to be stuck with the entire repair bill. so, is the seller obligated to do the mold remediation - can they even sell the house now that they know there is a mold problem? any advice is greatly appreciated. Thanks!!

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Hi Berisbert!

Ok...lot's going on here! First.....no they are not required to do mold remediation.....but I'm surprised that they refuse outright. I have and home inspector I use BECAUSE he is a certified mold expert......honestly? I've never seen a lender refuse to do something on a mold issue.

The Where-is, as-is clause is the notification that they have no intention of fixing any problem, including mold...but unless you have released the home inspection contingency, you are within your rights to walk away. I realize that's not what you want to do....but it is an option.

If you do walk away, they are required to disclose that they are aware of a mold problem to any future buyers....and will probaly reduce the price or make concessions to a future buyer. So they have incentive to make sure it goes through with you. Perhaps they are just pushing back a bit.

You have a couple of choices.....1) go through with it or 2) threaten to walk away. I think it's time your agent plays hardball....I'm sure he/she is great...so will know what to do. But if you are ready to close and only need a bank concession to finish the transaction....I think they should handle it for you. I had a mold problem worth $15,000 on a home in Murrieta only priced at $199,000 and the bank took care of it. This is a problem most banks will handle..thougth sometimes it takes some hardball.

I know this is very frustrating and upsetting....if you would like to talk more privately..or your agent, since I have some experience with mold issues and banks...please shoot me an email directly? or have your agent do it and I would be happy to help in any way I can. I know the goal is to close this deal.

I wish you well...and please feel free to contact me directly for any advice I might offer.

Karen
4 votes Thank Flag Link Wed Apr 29, 2009
In simplet terms... no the seller is not obligated to pay for the remediation. You are entitled to cancel the contract though, so long as you have not released the home inspection contingency. Have you released this contingency?
2 votes Thank Flag Link Tue Jan 25, 2011
Bertisbert, first I agree with what Karen has posted 100%. I also use a Home Inspector that holds a Mold/Indoor Air inspection certification who also does air sampling to pinpoint what species of mold are present.

Only you and your inspector know how serious of an issue this is as there are different levels of mold concern tied to species and infiltration. I treat just about ANY health and safety issue that cannot be remedied with a hand tool within a hour to be a deal-breaker. Mold is definitely a hardball deal-breaker.

You might suggest to your agent, provided this is the only deal-breaker, to submit a removal of inspection contingencies, subject to, the REO taking care of this problem. I would give them one week to respond, after which, I would seriously consider walking away if this issue is not corrected.

One other potential option arises if you are using an FHA loan, as these REQUIRE that all health and safety issues be corrected before funding. Hence, if you still have your loan contingency, and are using a FHA loan, you have some additional bargaining power at your disposal.

Finally, it may be easier to negotiate a closing cost credit or price reduction to cover the remediation cost; however, this can be monetarily risky as one never knows the extent of the mold condition until the actual remediation starts.

Best, Steve
1 vote Thank Flag Link Thu Apr 30, 2009
How does your agent "weigh in" on this? Normally "AS IS" with right to inspect means the seller is not responsible for any repairs but your contract should offer you the opportunity to exit the agreement when major issues are identified. I would consider "mold" to be a significant problem.

Most will tell you that once an issue such as this has been identified it becomes their responsibility to disclose this knowledge to any future buyers. Thus, they can sell it but there should be stipulations attached. The best action they can take is to make the repairs.

If you are still within your "window" and the seller is unwilling to make repairs, your options are likely limited to either proceeding regardless or to back out of the agreement entirely.

Good luck,

Bill
0 votes Thank Flag Link Mon Apr 28, 2014
Everything Karen said is correct, I had the same thing happen to one of my clients as well. My client didn't want to lose the house and although the seller wouldn't pay to fix it we did get him to lower the price a bit so that everyone was happy. This way my client didn't lose the house and the seller didn't have to start over and put the house back on the market. Good luck!
0 votes Thank Flag Link Mon Apr 28, 2014
Generally, when sellers list "as is" they will not make any repairs. Your options are to either withdraw the offer using the inspection contingency or request a credit to cover cost of repairs.
0 votes Thank Flag Link Mon Apr 28, 2014
When a listing says "As-Is" the seller generally means it. In simple terms... they don't have to fix it and you don't have to buy it (assuming you have not released contingencies). After you discover an issue with a home you can utilize your inspection contingency as a legitimate method of withdrawing from the contract if the seller refuses to fix/address the issue.
0 votes Thank Flag Link Mon Apr 28, 2014
Short and Simple. "as-is" basically means that if during your inspection you discover something wrong they don't have to fix it and you don't have to buy it.
By the way, what kind of mold are we talking about in the kitchen? Mildew is mold and most inspectors will note it. So. are we talking life threatening Ed McMahon level mold or Scrubbing Bubbles. Ask for some clarity from the inspector and you may save yourself a lot of heartache.
0 votes Thank Flag Link Tue Aug 9, 2011
As-is in California is simply a up front declaration that they do not intend to make any repairs. It is not binding. You can still walk away from the property because of something you discover during the inspection period, and you can still request repairs from the seller. The inspection period is your opportunity to discover what the "is" is in "as-is."

I agree wiith Karen, mold is the one of the things that banks usually will fix since it is such a big liability issue. That has been my experience as well. I'm sure they don't want to go back on market as a stigmatized property -- it is in there interest to fix it. Some banks won't even allow a property to be shown when it has mold in it without buyers signing a waiver. You will have to threatened to walk and see what they will do if it is an important to you. Good luck!
Web Reference: http://MintProperties.net
0 votes Thank Flag Link Sat Oct 30, 2010
Hi Bertisbert,

The bank is not required to do any mold remediation but it would be wise of them to try to work something out with you. If they don't want to pay for the entire repair, maybe they would be willing to split the cost with you 50/50.

Look carefully through both the contracts and addendum's you signed, you may find a clause in the bank's addendum's that releases them from all liability regarding the condition of the house (to include mold) and makes you fully responsible.

I agree you should play hard ball now. The bank is trying to see how far you will go so its time to show them exactly how far you are willing to go. If they don't want to work something out then threaten to walk away and see what happens. Usually they are more willing to work something out if they know they are going to lose the sale.

Best Of Luck To You,

Michael G. Grimm
0 votes Thank Flag Link Sat Oct 30, 2010
Even though this question came up a while back and I am sure that Bertisbert's situation has been totally resolved, there may be others out there working through mold issues in today's Orange County Real Estate Market.
1. The CAR Residential Purchase Agreement states that the home is sold in its "as is" condition. Disclosure is required, but the neither the bank nor their listing agent has ever lived in the home and in the proverbial words of Sergeant Schultz "they know nothing" and therfore have nothing to disclose. This what Bertisbert calls a clause does "protect" the seller - and makes it clear to the buyer that they get what they get.
2. Will the bank make an accommodation once the mold has been detected, validated, and and estimate for remediation provided? Yes. In most cases.
3. Here's how make a case for the bank to cut you some slack:
Have a certified mold inspector do an inspection.
If mold is "suspected," have test samples pulled and sent to an independent lab for analysis
Do the lab results show high concentrations of toxic mold?
Then get a mold remediator to bid on the demo, remediaion, and restoration.
Then pull samples again to prove the areas previously impacted are now clean.
All 4 parts. Becuase that's what you'll have to do to get the ick out of your house.
4. Work with your Realtor to submit an addendum to the Purchase Contract to either credit you back the total amount for demo, remediation, and restoration, and clearance testing, or ask that the bank do it all, prior to close of escrow.
Make sense? This is a very precise process, not really diffucult, but time comsuming and requires experts.
Hope this helps!

Leslie Eskildsen
Realtor, Altera Real Estate
949-678-3373 http://www.LeslieEskildsen.com
Leslie@LeslieEskildsen.com
in the Orange County Register: tp://www.ocregister.com/articles/room-265036-home-rule.html
0 votes Thank Flag Link Wed Sep 15, 2010
The first property that piqued our interest last year was an REO with a mold problem and the bank would not do anything to remediate. Even though the price was very low, we walked because you really won't know how much the repairs will be until they start ripping out drywall. This experience led me to choose an inspector who was also a mold expert. One place that he found a problem in the kitchen with would have been a minimum of $10K to fix.

Bottom line is if the bank is refusing to cover the costs, be sure you know what the total costs to remediate will be before making a decision on whether to proceed.
0 votes Thank Flag Link Sun May 3, 2009
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