Profile picture for JulieLamberth

Seller liability for inaccurate disclosure

I closed on my house 10/4. The seller's disclosure indicated a heat pump. The inspector couldn't test the heat because it was too warm, and it turns out now there is only an A/C unit and not a heat pump. It looks like the seller had A/C work done this past spring, and the installer may have either gotten him to agree to put in an A/C as a replacement without realizing it, or screwed him on the install. Still, there is a material inaccuracy on the disclosure. It's going to cost me $2,400 to get the heat pump installed - likely not enough that getting an attorney won't eat up the entire cost - but I'm happy to do small claims court if he's liable. I know that people usually say "contact an attorney," but I just can't find any solid information relating to the liability of a seller under these circumstances, and just need a feel for the general law rather than specific advice about what to do here.
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November 05 2013 - Durham
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Answers (14)

I just want to follow up on the question of intent.  Since we can't read minds, no one will ever know for sure whether a person "intended" something or not.  The only way to tell is from the circumstances surrounding the event.  In your case, they made a written representation there was a heat pump when there was none.  A jury could conclude from that that they intended to lie about it.  However, a good lawyer will sue for fraud and breach of contract.  Then, if the jury decides it was an honest mistake and not a lie, you still can sue for breach of contract.  It would be a breach of contract since they promised you a heat pump, but did not deliver one.  It is worth spending $2,000 for a $2,400 pump because with the attorney's fees clause, you can recover $4,400.  I don't know the laws in your state, but in some states, if there is any kind of attorney's fees clause, it covers all fees relating to the contract.  For instance, in Texas, if a contract says the seller can get attorney's fees, courts have held the attorney's fees clause applies to the buyer as well.  Again, check with a local lawyer.
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November 06 2013
I agree, Julie, and you know that you can't just "go after" the A/C contractor, they will tell you to go chill.

We are not attorneys, and not only can we not give you legal advise, but we really don't know what your legal recourse is.

All the best,
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November 05 2013
Profile picture for wetdawgs
Does the A/C unit not have a sticker on it for the installer?  
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November 05 2013
Profile picture for JulieLamberth
The disclosure definitely had heat pump checked off. I appreciate everyone's answers here although it looks like there is some conflict. I believe MLS just said forced air. The seller is not being responsive to me in giving the name of the party who did the repairs, which is frustrating, because obviously the easiest answer - if it works out - is to pin the A/C contractor for it. We were discussing section 4 earlier and whether that shuts off the remedies - obviously it would not protect me if I found out later that there was some unknown defect, but what's the point of a disclosure if you only have to make it until closing with the misinformation then you are in the clear? Obviously that's not a valid legal argument but it raises questions of the underlying logic.
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November 05 2013

Julie:

When you close on a home in NC, you are accepting it in its existing condition.  You should carefully read section 4 of your contract. 
Section 4(c) Repair/ Improvement Negotiations/ Agreement: Buyer acknowledges and understands that unless the parties agree otherwise, THE PROPERTY IS BEING SOLD IN ITS CURRENT CONDITION. Buyer and Seller acknowledge and understand that they may, but are not required to, engage in negotiations for repairs/improvements to the Property. Buyer is advised to make any repair/improvement requests in sufficient time to allow repair/improvement negotiations to be concluded prior to the expiration of the Due Diligence Period. Any agreement that the parties may reach with respect to repairs/improvements shall be considered an obligation of the parties and is an addition to this Contract and as such, must be in writing and signed by the parties in accordance with Paragraph 20. 

Section 4(g) CLOSING SHALL CONSTITUTE ACCEPTANCE OF THE PROPERTY IN ITS THEN EXISTING CONDITION UNLESS PROVISION IS OTHERWISE MADE IN WRITING. 

A claim against the seller may be a difficult path. 

If the MLS stated the home had a heat pump, your claim might be against the listing agency and agent.  If the inspector report stated there was a heat pump, but weather conditions did not permit testing, you may have a claim against them. Talk to an attorney.

We just had a client buy a home with an AC unit labeled as "AC only" on the manufacturer tag, but it was site modified to have a reversing valve, two metering devices and two bypass valves so it functioned as a heat pump.  I'd get a second opinion from an HVAC specialist. I'd ask the seller for the installing HVAC company name and have them demonstrate its operation.  If they billed for but did not install a heat pump, then they may make it right.


If there is no heat pump and you don't get anywhere asking nicely, you could file complaints against the firms professional associations and licensing boards.

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November 05 2013
Julie:

When you close on a home in NC, you are accepting it in its existing condition.  You should carefully read section 4 of your contract.
Section 4(c) Repair/ Improvement Negotiations/ Agreement: Buyer acknowledges and understands that unless the parties agree otherwise, THE PROPERTY IS BEING SOLD IN ITS CURRENT CONDITION. Buyer and Seller acknowledge and understand that they may, but are not required to, engage in negotiations for repairs/improvements to the Property. Buyer is advised to make any repair/improvement requests in sufficient time to allow repair/improvement negotiations to be concluded prior to the expiration of the Due Diligence Period. Any agreement that the parties may reach with respect to repairs/improvements shall be considered an obligation of the parties and is an addition to this Contract and as such, must be in writing and signed by the parties in accordance with Paragraph 20. 
Section 4(g) CLOSING SHALL CONSTITUTE ACCEPTANCE OF THE PROPERTY IN ITS THEN EXISTING CONDITION UNLESS PROVISION IS OTHERWISE MADE IN WRITING. 
A claim against the seller may be a difficult path. 

If the MLS stated that the home had a heat pump, your claim might be against the listing agency and agent.  If the inspector report stated that there was a heat pump, but that weather conditions did not permit testing, you may have a claim against them.

We just had a client buy a home with an AC unit that was labeled on the manufacturer label as "AC only", but that had been site modified to have a reversing valve, two metering devices and two bypass valves so it functioned as a heat pump.  I'd get a second opinion from an HVAC specialist.
I'd ask the seller for the name of the installing HVAC company and have them demonstrate its operation.  If they billed for but did not install a heat pump, then they may just make it right.

If there is no heat pump and you don't get anywhere asking nicely, you could file complaints against the firms professional associations and licensing boards.
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November 05 2013
What does the sellers disclosure say with regard to heat?  That is the document you have to refer to.  If a lawsuit takes place after the sale that's the document which will prevail.

You find no verbiage in the sales contract for post sale remedy because the contract is completed the day of closing.

If the seller signed a disclosure which states there is a heat pump plus air conditioning that is where you start.  What did he check in regard to heat?
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November 05 2013
In Washington you'd have to prove that the seller lied or committed the fraud intentionally. That's extremely difficult to demonstrate.

It looks as though your only course is to file the small claims and see what happens.  How much is your time worth; forget the attorney's time?
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November 05 2013
Profile picture for JulieLamberth
My realtor has been trying to run interference with the seller's agent, thinks the contractor screwed up and that is where I should start, but I can't get the seller to get back to me with the info as to who did the work. The seller's agent was apparently a real jerk to my agent about it so we're trying to del directly with the seller. The seller, though, definitely had a heat pump as he had it put in right after he bought the house in 2005 - I'm almost positive that the repair person in the summer replaced the existing heat pump with an A/C only unit and the seller didn't realize (either because he was not paying close attention or because the contractor was dishonest). The home inspector mentioned a heat pump but could not test it - the unit is a model that has two versions, one that is a heat pump and one that is A/C only, and without actually knowing the serial numbers it's impossible to tell which is which. I looked at the inspection contract and it looks like his liability is limited to the cost of the inspection, which is about 1/5 of the cost of the heat pump. It wouldn't be a big deal if there was SOME sort of heat system other than just the emergency strips (which will cost me a fortune if I have to use them to heat all winter) - I'd be fine with "oh, it's actually a gas furnace instead of a heat pump." And if the heat pump were here but not working, that's on me for not having had it tested. But here the seller admits he's not really sure what the repair person did this summer, he was busy with the birth of his son, and that he didn't ever test out the unit. 
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November 05 2013
Sorry to hear about this.
 Its why I always suggest to my buyers to double check.
Reason being, sometimes home sellers actually do not know what they have, they don't know the kind of pipes, what their heat systems are etc yet they fill out these disclosures and the agent instead of checking writes it down on the MLS sheet.
 On your home inspection, did your home inspector mention a heat pump?
Your Realtor is well versed in the purchase of this home, call her/him first and ask what their suggestion is.
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November 05 2013
Profile picture for JulieLamberth
Well aware of that - I'm one myself though I don't practice real estate. But none of my friends who are attorneys do RE either, and I certainly can't spend $2k in fees to recover $2,400. I don't have access to the legal databases and haven't been able to find anything on point in the sources I do have access to, so was asking here where someone with experience in these matters could say "same thing happened to me and here's how it worked out. . . " or something similar. If I could afford to pay another attorney the fees, I could just spend the money to buy the heat pump. And if the answer is "no, you're SOL once the closing has occurred unless you can show intent" or something like that, there's no point for me to waste my time, or that of another attorney. 
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November 05 2013
Julie, that's what lawyers are for - to find applicable law, whether in statute or case law, and advise you accordingly.

All the best,
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November 05 2013
Profile picture for JulieLamberth
Thanks - there is an attorney's fees clause for recovering my deposit/escrow if I terminate the contract, but that's the only one I can find. Nothing that applies to a later action relevant to the sale of the house.
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November 05 2013
If they represented in writing there was a heat pump when none existed, that is a material non-disclosure.  You should contact an attorney since most real estate contracts have an attorney's fees clause which means the fees will be added to your judgment if you win.
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November 05 2013
 
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