Home seller disclosure fraud. Please help.

[Timefortruth]

We recently bought a new to us house, since moving in it has been a fiasco, to say the least. We were diligent with inspection prior to purchase, but inspectors can't realistically be expected to identify deliberate fraud. The seller disclosure lied about significant problems with the home. Although there have been many problems, the last straw came yesterday when the wood floor started buckling perhaps because of water seepage.

A low brick dividing wall surrounds a brick porch behind the home.That wall runs directly into the brick exterior of the home at a 90 degree angle. The wall itself had a dislocated crack, caused by a tree which is foot from the wall, and four or five feet from the exterior wall of the house. That dislocation didn't concern us because the cause was obvious. Now that the floor has buckled (the house is on a slab) we took a closer look at the exterior wall. A cosmetic repair was made to that wall to conceal structural defects. There are cracks where the porch meets the house which were hidden by an ornament left by the seller (which struck me as strange because she left absolutely nothing else. Everywhere else the bricks in the home are uniformly spaced, but in the area of the artful repair the spacing is about twice as wide. The large window above this area now also shows bowing which wasn't apparent four months ago.

The seller owned the home for seven years before we bought it, and it is impossible that the repairs are older than that, particularly since the deterioration since we bought it is happening so quickly.

I'm so angry at this moment I could spit nails. Is there any way to prove that it was a deliberate fraud? Does anyone have links to sites where people offer advice in messes like this?

Yes, we know we need a lawyer, but we really need to prove the fraud before we spend money in attorney's fees.

Does anyone out there know how to deal with crooks like this seller?

[marybourg]

1. First you should do some research to

discover what the law is in your state. In some states the law is "buyer beware" and in some states the seller is liable for defects which they should know about but don't disclose and which the seller couldnt discover by using ordinary diligence. Other states may differ. The more you learn by yourself, the less you'll be surprised by what the lawyer might tell you.

[Timefortruth]

2. But the bottom line is that the seller

lied on disclosure. Before we can do anything we'd have to prove it. It would be obvious to a jury, but we can't afford to take it that far, so we need a slam dunk.

Who is the first expert we should call? Expense is an issue.

[The Velveteen Ocelot]

4. An independent housing inspector might be able to help.

Maybe you can find one here: http://www.ashi.org/ Then, depending on what the inspector finds, a lawyer. I know there will be some expense, but where will you be otherwise?

[msanthrope]

3. What state, and do you have a mortgage and an agent? nt

[Timefortruth]

5. Arkansas

The bank had a guy in charge of our mortgage, but he certainly was not out to protect our interests.

[msanthrope]

9. I am going to suggest you call your local bar association to get a low-cost consult to

an attorney who specializes in real-estate litigation. You should have home-owner's insurance, lender's title insurance, and Arkansas seems to have certain protections for homebuyers. The thing is, you will need an attorney to navigate who to pursue, and how. It sounds to me like the seller concealed a material defect, but you are going to have to get a lawyer to know your specific avenues of recourse under Ark. law.

Take loads of pictures, find all your paperwork from the contract, sale, and financing, and get yourself to an attorney. You can call your local bar association for a consult, or if there is a law school near you, it would be a good idea to call their legal clinic.

You do need a lawyer to sort this one out. This isn't the type of litigation you do in small claims. Good Luck.

[Digit]

6. I am not an authority, and these are merely my opinions so let me state that up front

There may have been another contract on your home before you purchased it and the other contract may have fallen through if these problems were discovered. It would make your case stronger since the sellers would have been alerted to the problem. The listing company (if it was the same one all along), will have this information. I would speak with an attorney before you let the listing company know what was up, but it is something to keep in mind. In one of my own situations when I purchased a property that had "issues", this is exactly what had happened.

I would call the real estate commission for your area and see what they say. Most likely they will let you speak to one of their attorneys. Sometimes they will really be helpful and spell out the steps you need to take.

Did you have a home inspection? Who picked the inspector? You might have recourse against them as well.

I am not sure, but I would think that you might be able to get a consultation with a real estate attorney for free.

You will possibly need to have a structural engineer document the extent of the problem.

I am a real estate broker and I have been on listing appointments where the seller asked for me to assist them in covering up problems. Of course I refused.
I suggested to the homeowner that they get a professional to repair the issue(s) so they would not have problems but they wouldn't listen.

Don't delay, start taking care of this now. Oh, and take pictures...plenty of pictures.

Best of luck to you.

[Timefortruth]

7. Thank you for the suggestions, some questions

The house looked so good we made an offer the day it was listed. We'd been looking for months and were at the end of a timeline that would have forced us into an interim rental if we didn't make a decision. Clearly a stupid reason to make such a large choice.

isn't the real estate commission basically the group who represents the real estate industry? Or is it a separate, ostensibly independent, state agency?

We did use a well regarded inspector who was suggested by a friend outside the transaction. What we could find independently about him was all positive. Would it be ill advised to call him at this point?

What is the best way to find an attorney who is good, but represents plaintiffs?

[Digit]

8. In reply

I googled "what does the real estate commission do" hoping to find a good synopsis and the first thing up was for the state of Texas:

"TREC exists to protect and serve the citizens of Texas. The Commission's programs of education, licensing and industry regulation ensure that real estate service providers are honest, trustworthy and competent.

TREC requires that all real estate brokers and salespersons meet and maintain specified levels of education to hold a license to act as a real estate agent. Agents are required to follow the provisions of The Real Estate License Act and the Rules of the Texas Real Estate Commission in all transactions and to deal with the public in a competent and honest manner. The Commission also licenses real estate inspectors, residential service companies, real estate schools and registers timeshare properties."

So you can see your local real estate commission might be useful to you, at least giving you some direction in which to go. I would just call them and state when you purchased the property using a Realtor and there was a disclosure form signed by the sellers that did not disclose the problems. I don't know if a statute of limitations would come into play as seven years is a long time. Ask them if a statute of limitations applies and what you should do. I don't know if they will need to know your address or if you can ask as a hypothetical question.

I also don't know if it will make a difference if the misrepresentation was by omission or deliberate cover-up. I would mention that to the attorney and/or real estate commission.

Was the inspector a member of the American Society of Home Inspectors (ASHI)? Another poster I believe posted their website, but here it is again http://www.ashi.org/

I personally would not call the home inspector just yet as you may have a cause of action against him and you don't want to hurt your case should you have one.

Actually, any real estate attorney YOU hire would be supposedly representing you since you are the one who retains him. You may have to go with your gut instincts on this one.

I am merely a broker in my own state and these are just my own opinions.

Good luck!

[bhikkhu]

10. I would learn to do masonry work, myself

which is exactly what I did after buying an older brick home many years ago. We found some foundation problems, but I was young and better with my hands than with paperwork, so I learned how to fix it, then I fixed it.

I believe there was much more satisfaction in learning a skill and doing it myself than there would have been in trying to get the former owner to pay up for a contractor to do it (assuming that were possible).

[hunter]

20. I agree with you to a point.

I can do any kind of home construction work myself. For most problems I wouldn't involve lawyers or insurance companies, that's just asking for expensive trouble.

"Fraud" to me would have to be on the level of known unstable land underlying or threatening the house (which happens a lot in California), toxic materials bubbling up out of the ground (trichloroethane, hexavalent chromium, gasoline...), etc.

Anything else I'd have probably noticed myself in my own inspection and accounted for in my purchase price.

Most home inspections, even honest ones, seem pretty shallow to me, but that's because I've got experience repairing all sorts of crap. I've broken open sagging ceilings full of pigeon droppings, ripped out bathroom walls full of termites, and seen knob-and-tube wiring hidden behind modern Decora sockets that were "grounded" with bailing wire.

A lawyer or an insurance company can be as crooked or as negligent as any seller, and once they've latched onto you, they can be harder to remove than ticks. They have their uses, but not for the small stuff.

[JFN1]

11. Start with your home inspector.

See if he has a relationship with the sellers or the realator who sold you the house.

If he comes out clean, call him back to the house - be prepared to pay his usual fee. With his inspection report in hand, go over the problem areas, ask him how he missed them. You will know by the end of this if he performed his job with due diligence, which it sounds to me like he might not have.

If he missed the problems and it is reasonable for him to have missed them, he can become your best witness to the seller's fraud, as he will be able to tell you WHY he missed them - this will provide the proof of fraud you need to proceed with an attorney.

[sendero]

12. I think many here have given good advice..

.... but I have one bit to add. CUT DOWN THE TREE. You will have ongoing problems if you don't.

Of course, wait until you have finished with your recourse on this issue

[SmileyRose]

13. a hope inspector that did not find "significant problems" failed to do their job.

By your account the owner attempted repair, even if shoddy and it was found easily enough by moving the ornament.

I guess what I'm saying is that I hope your lawyer takes a good look at the inspector as well as the seller if you decide to sue to recover some of your repair costs.

[JFN1]

14. Damn right.

That is what a home inspector's only function is - to find problems, big and small. IMHO, no excuse exists for a home inspector missing major problems...

[DiverDave]

15. We had a similer problem

the inspector was blind AND we paid him 250? I think.
We had a lawyer, the state of Delaware requires one on home transactions.
In all of our paperwork, there wasnt an inspection report.
Calls to the lawyer went unanswered. And we paid her a lot too.
The inspector basically said "sue me"
The law was passed (covering home inspections) but no money was budgeted for enforcement (we called our state rep).

All around FUBAR.

I hope you don't get what we had...call a lawyer, your inspector AND the state agency over seeing house inspections.
And dont forget your state Reps.

In the end we were out 12k getting the things fixed that werent up to code.


I hope it works out...

[TroglodyteScholar]

16. "...we really need to prove the fraud before we spend money in attorney's fees."

This is what you're paying a lawyer to do. If you could prove it by yourself, you wouldn't need a lawyer.

[OneTenthofOnePercent]

17. See the home inspector. Also, did you get a home warranty? Does insurance cover it?

Been there, done that. We had a pretty crappy inspector and it cost us a few thousand dollars within the first year of living in our house. There are 3 things I would do BEFORE calling a lawyer (expensive)...

1) Talk to the home inspector about the problems. Check their background and any relation/connections to the seller and listing agency. Maybe have them check the problem (there will be an inspection fee). Do not be aggressive, hostile, or interrogative... you don't want to tip them off about a future lawsuit and allow them to lawyer-up before you do (should they be culpable). On that sentiment, I may even have a DIFFERENT inspector look at the poblem if you suspect the original ispector is screwing you.

2) If you got a home warranty, see what it covers. if the inspector did not note this issue prior to sale then it may likely be covered under the home warranty.

3) Check your house insurance. Read the insurance paperwork (grab a Snickers... it's gonna take awhile). The issues may be covered if you were to file a claim.

Find documentation for everything you've seen/done and document everything from here on out.

[yellowcanine]

19. Cracks etc are not going to be covered by insurance unless the cracks were caused by an earthquake

and there is coverage for that. And in that case it would be the previous owner who would have had to file a claim on their insurance. If it is preexisting the current owner's insurance is not going to cover it.

[crazyjoe]

21. Home owners Ins does not normally cover foundation problems.

[Remmah2]

22. Home inspector qualifications?

In some states home inspectors are supposed to be qualified, licensed and insured. The home inspector should be a third party person and have worked for you, not the buying or selling agent (conflict of interest.)

If your state does not have specific laws regulating home inspectors, there may be county, city or local rules/regulations.

Many years ago before my states requirements, any contractor could moonlight for a few bucks as a home inspector. Even a licensed architect needs to have significant training and experience before they might be qualified as a home inspector.

[yellowcanine]

18. For one you contact the seller's broker. The broker has a responsibility as well. Depends on the

state, but in some states the broker can be held liable if they knew or should have known about the defects. Hopefully it was not listed by the owner. This is actually a good reason to stay away from such listings.

[Whiskeytide]

23. I don't know much about the law in Ark...

... but in Ala you would have very limited remedies. A used home is sold "as is", meaning that you buy it in the condition it is in and are not relying on anything the seller told you about it. This essentially means a seller lying on the disclosure is generally ok. (Welcome to the legacy of a 9-0 Republican State Supreme Court). The Real Estate Agent for the seller is also protected from liability. If you had a buyer's agent working for you (rare the way they do these contracts these days), they could have some liability, but it is also pretty limited. Home inspections are pretty worthless here, and they limit their liability as well - courts enforce those terms. Your H/O insurance also will not cover, and home warranties typically cover only major appliances.

I suspect Ark is similar in most ways.

Sorry to be the bearer of such bad news, but tort reform has hit most southern states pretty hard in the last 20 years or so - Republican governors and state legislatures have push hard to close the courtroom doors, and the real estate industry has a powerful lobby that got them near the front of the line on modifying the laws to be less consumer friendly.

See a lawyer quickly, and make sure its a lawyer who is experienced in real estate litigation (NOT real estate closings - those guys work for them). They should not charge you much to review your case and tell you if you have something to take forward. Good luck.