Monthly Archives: June 2013

REAL ESTATE BUYER RISKS

Many real estate purchasers consult an attorney after it is too late to take action against the seller, the realtor, the home inspector, or others that may have had a hand in the transaction.  It is good to be aware of the issues that arise upon closing the transaction, and generally to take action promptly when the other party does not promptly resolve or remedy the situation.  For example, a builder /seller may offer a “one year warranty” on new construction.  Failure to remedy the problem within the first year of the sale means that the buyer can no longer make the claim under the warranty, but must then resort to alleging that it constitutes a breach of the contract.  That could be difficult.  It shifts the burden of proving what went wrong, and how it was caused, from the builder (who bears the burden of proving it WAS NOT defective construction under a warranty claim) to the buyer (who bears the burden of proving that the issue constitutes a breach of contract).  Furthermore, even defective construction may not constitute a breach of the contract.  Most real estate sales contracts favor the seller, and the realtor.

Breaches of a written contract must be brought within the first six years after the breach, and in construction cases, there is a “statute of repose” requiring that the claim actually arise within the first six years.  Therefore, when a property buyer brings an attorney a case stating, “I didn’t find out that the sewer was improperly built until now, and I purchased this house seven years ago….”  this is too late to bring a claim against the builder vendor.

Claims against inspectors are particularly difficult.  Most of the contracts have language limiting the damages that could be recovered severely.  These are typically enforceable in Washington, if they are of reasonable type size, fairly clear that they limit your remedies, and are in the same language as the rest of the contract!  Given the typical prices of the inspections, and the limited nature of the inspections (most inspectors do not crawl under the house, and cannot pry boards loose or dig to inspect sewer lines), this is usually a reasonable limitation.  Do not believe that because you hired and relied upon an inspector you can then wait a couple of years while the sewer backs up, the house doesn’t heat or cool properly, and water pours in through the windows.  The longer you wait, the harder it is to give your attorney a reasonable chance of success.

Even if you do not miss a statute of limitation, however…you may still wait too long for your attorney to take reasonable action.  People die, move away, retire, and go bankrupt.

If you ARE a builder / vendor, keep these same principles in mind.  Returning to fix issues within the first year may be a part of a written warranty that you have chosen to offer.  However, if there is no contractual promise of a warranty, there is no “automatic” one-year warranty.  Second, unreasonable ongoing demands to come out and replace light bulbs need not tie you down from pursuing new work.  Many claims are actually the result of the homeowner’s failure to perform normal, customary, and routine maintenance.

If your contract documents are not clear, this office can help you clarify your obligations and your buyers’ remedies for future transactions.  A happy buyer is important, but we all know folks who continue to demand long past the expiration date of logic or reason.  Contracts should be clear, and fair to both parties.  Honor your reasonable obligations, and seek advice if a particular customer shows no indication of behaving reasonably toward you.