Life is full of transitions, and real estate transactions are often a part of those changes. Here are some tips on dealing with the unexpected.
Molding the Case for Truthful Property Disclosures
Frequently flooded basements? Black mold? Sump pump problems? All are common annoyances, and become even more problematic when you decide to sell your house. When faced with completing the Disclosure Report, it can be all too easy to check the “N/A” (“Not Aware”) box when it comes to leaks, flooding and material defects. Better to feign unawareness than to be faced with big repairs before a closing, right?
Wrong. And this recent Illinois Appellate Court opinion shows just how expensive it can be to deny the existence of messy, expensive problems when selling a house.
Beautiful rehab, happy buyers.
In 2013, the home-buying plaintiffs, Meredith and Jason Kroot, purchased a single-family home on the north side of Chicago for $1,136,000.00 from defendants Shu B. Chan and Yvonne Lau. The defendants bought the property in 2002, conducted extensive renovations, and resided there until 2011.
When Chan and Lau listed the house for sale, they checked the “N/A” disclosure box for basement flooding/leaks, material basement defec
ts, or material defects in the floors or walls. A sale contract was signed by all parties.
Uh-oh. Not as advertised?
Next, the Kroots had the home inspected. Although the inspector did not discover any problems with mold, leakage or material defects, he did find other issues requiring repair. Chan and Lau agreed to credit the Kroots $5,000.00 at closing. Contractor Scott Elliott, who the Kroots engaged to make the inspection-related repairs, arrived at the property. He noticed that basement sported a fresh coat of paint and brand-new carpeting in the finished area.
On May 22, 2013, the Kroots visited the home again, this time with their realtor and the defendants’ realtor. The Kroots and their realtor later testified that they noted a discoloration in the paint near the sump pump wall. The Kroots told the defendants’ realtor they were concerned that the discoloration might have resulted from mold or the entry of water. Jason Kroot returned to the house again shortly after, and noticed the discoloration had been painted over. The Kroots’ realtor confronted Chan about the paint job, and Chan replied that he simply wanted the wall painted so it would look good for the buyers.
The Kroots’ attorney, when notified of this situation, asked that Chan and Lau execute a letter confirming their assertion that they had never had problems with mold or water damage during their ownership of the home. The defendants’ attorney produced such a letter as an amendment to the real estate contract.
When it rains, it pours – into the basement.
On June 25, 2013, less than 24 hours after the property sale closed, heavy rain fell over Chicago. The next day, contractor Elliott arrived at the home to make the repairs outlined during the home inspection. Elliott discovered water actively leaking through the basement walls and onto the floor where the sump pump stood. Elliott immediately contacted Jason Kroot, who then came to assess the damage.
The Kroots had Elliott locate the source of the water. Elliott opened up the wall in the sump pump area, and witnessed water entering from two sides of the house’s foundation. Elliott pulled back the carpet in the finished room, and noted that the floor suffered substantial water damage that, in his opinion, had been there for some time. It got worse: Elliott found black mold, standing water, rotting plywood sub-flooring, and mold on the lower 18 inches of the room’s drywall.
Now come the plaintiffs.
The Kroots, astonished at their sellers’ deceit, filed suit in November 2013. Among their trial witnesses was their next-door neighbor, who testified he saw trash cans filled with water-stained carpet around April to June 2013, before the Kroots took ownership. The neighbor also testified that he saw a discarded leather recliner on the property, bearing heavy water stains.
Chan’s response? He never saw any water damage or mold. He testified that upon the advice of his realtor to “spruce up” the house, he had a home improvement company come in to do several projects. Those projects, according to the owner of the company who visited the house prior to repairs, included the installation of new carpet and painting of the sump pump area wall. The owner testified that he personally saw the stained carpet and wall.
His testimony was all wet.
The Cook County trial court found for the Kroots, the judge stating he found their realtor’s and next-door neighbor’s testimonies to be highly credible. He noted he did not find Chan’s testimony to be credible. The judge entered a judgement for $64,518.67 in the Kroots’ favor and also awarded them $28,130.16 in attorney fees and costs. That’s a total of $92,648.83, all because someone chose to lie about the condition of his home.
The defendants appealed, but found no sympathy with the Appellate Court. When sellers grossly misrepresent the condition of their homes, legal remedies are available. The attorneys at the Homer Law Firm have many years worth of experience in helping buyers attain their dream homes at fair prices. We also help sellers negotiate the best possible terms when the unexpected turns up during inspections. Contact us to put our team to work for you.
Dealing with Your Property During a Divorce
We like these articles on how to manage your real estate when things do not always go as planned.
Handling Real Estate During a Divorce – Chicago Tribune, March 2, 2017