Water Damage in basement not disclosed. Who's at fault?

Guest

Hello, I recently purchased a duplex in Indiana less than a month ago and when they finally had their large rainfall the basement flooded through the walls. (not really flooded flooded, but puddles, water seeping through the walls)
Now, we did not have an inspection on the house because we were not told that we could have one by our mortgage broker, so we did not know. We also were unaware of the basement flooding previously.

Apparently, this is a common thing in Indiana. We contacted the previous owners and they responded with:

"The husband patched the inside walls himself, and were going to have the gutters re-routed"

well this still will not fix the problem with the water leaking into the walls.

What legalities do I have here?
Should the old owners pay to fix the basement right?
Is the mortgage broker responsible for not being disclosed?

Now there are laws that say any issues with a house need to be disclosed before purchase. Does this include/exclude Indiana?

thanks for all the help

Niicss · Posted: Fri Mar 31, 2006 8:30 am Post subject: RE

Hi Dwayne

Few things are there in your situation, you should have done the inspection and over relying on your broker has put you in this trouble.

Sometimes, brokers hide these kind of things to close the deal for high commissions. The law says that its the responsibility of the seller to disclose all the details before selling it and i think your broker has misguided you.

For indiana, like most other states, requires sellers to complete the disclosure form and give it to the buyers before an offer is accepted. Any violation of this law will lead to some serious penalties even it can lead to the transaction reversal also.

Consult with you local attorney.

Thanks

Niicss

Guest

Niicss....

So our mortgage broker should have a disclosure form that she received from the owners which should have been given to me with all the paperwork. I will look over my paperwork, and also contact her about this. Now what if the mortgage broke has one but did not give it to us upon signing?...would it be the mortgage brokers fault at all?

thanks

Niicss · Posted: Fri Mar 31, 2006 9:05 am Post subject: RE

Yes, he should have the form with him and if he has not given you befor the deal then its all his fault and you can take legal action against him.

Niicss

Bill · Posted: Fri Mar 31, 2006 11:14 am Post subject:

Dwayne,

Sorry to hear you found out about this problem after the purchase.

A home inspection is an option that the homebuyer may exercise for their own peace of mind when making a final decision as to whether or not purchasing the home at the agreed upon purchase price is a good idea. Generally speaking a home inspection is completed after an offer to purchase has been agreed upon by all parties with an accepted Contract to Purchase.

The accepted purchase contract should have included a Home Inspection Contingency paragraph that would have to be agreed upon by all parties – allowing you a certain amount of days to acquire a home inspection. This agreement would have given you recourse in that the sale would be contingent upon a satisfactory home inspection with the Seller agreeing or not agreeing to make recommended repairs up to a certain dollar amount.

With respect to your "mortgage broker" not advising or requiring you to have a home inspection … if the Contract to Purchase does not require a home inspection, then a home inspection is not required – it's really that simple. The mortgage broker is providing you the money to purchase the home under the terms of your agreed upon purchase contract.

The only property inspection required for lending is a home appraisal. The appraisal is utilized primarily to determine the home's value. The appraisal does include a cursory inspection of the property to ensure it is in livable condition and there are no noticeable property defects. However, the appraiser is NOT a home inspector, a pest inspector, a structural engineer, a roofing contractor, etc., etc. The appraisal is never meant to take the place of a true home inspection.

You have no possible legal action against your mortgage broker. It would have been nice if the broker suggested that you might want to have a home inspection … but again, this is an optional service you could have elected (like having a car checked-out by a mechanic prior to purchase) but is not required for the mortgage.

As Niics mentioned, there are certain laws (that vary from state to state) that require Sellers disclose known property problems or defects. In Illinois, Sellers are required to complete and sign a Seller 22 point Residential Real Property Disclosure Report that covers possible known issues such as water leakage, flooding, etc., etc.

If such a disclosure is required in the State of Indiana and the Seller did not properly disclose this property condition, you may have legal recourse against the Seller. Seek the advice of a reputable real estate attorney regarding your rights and possible solutions to this issue.

Best of Luck!

Guest

I just purchased a house in Indiana. There is a bathroom in the basement with a floor drain in the center of the room. I noticed that when the toilet is flushed that you can see waste floating by, while looking down through the floor drain. Apparently there is no trap for the floor drain. The drain seems to be teed in. This cannot be up to code. It's unsanitary, and sewer gas could escape. I'm wondering if there was a construction permit obtained when the work was done. Do I have any legal recourse with the sellers?

Samantha · Posted: Tue May 02, 2006 2:35 pm Post subject:

Hi Chris,

Welcome to MortgageFit Forums.

Well, that's a horrible condition that you are facing. Did you have the inspection done from your side prior to purchase?

Now, the seller should have disclosed the known defects to you and I don't think the sort of defect that you are talking about is hard to notice.

I shall advise you to take the help of a real estate attorney and give him all the detail. He can definitely help you to take legal action against the seller.

God bless you.

For MortgageFit,
Samantha

jameshogg · Posted: Tue May 02, 2006 2:45 pm Post subject:

Hi Chris,

The seller should be sued if the defect was known to him and he didn't disclose it to you. Since this involves laws related to disclosure so, you should contact a real estate attorney for the purpose.

I think you will definitely get justice regarding the problem. Wish you good luck.

James

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