As-Is Sale - What about when you find something they didn't disclose?

[CTNative]

I made a very aggressive offer on a house and they took it with an 'as-is' caveat. I had a full inspection done and lots of items were found, but nothing major and nothing immediate. All stuff I can live with and knock out over time. Except for one thing.

When they made the 'as-is' comment it was in regards to some termite damage they had a couple years ago and that it had been remediated and their two year maintenance contract was ending soon. This was all in one conversation. Fine. I am having a separate inspection for that, but neither the first inspector nor I found anything horrible looking.

What we DID find however, was a furnace (one of two) that was recalled from a company that had gone out of business. The gas company had turned the gas off to it, and tagged it in March of last year with a warning not to turn it on, dangerous, etc... Replacement estimated around $4,000.

This was not in the disclosures from the sellers.

To be honest, I don't think they knew about it. For one, it's obvious this would be found by a home inspector. Second, it's a trust sale and I think the person who passed away was the one living in the house at the time and would have known, but they may have forgotten to mention it to their kids, or the kids forgot. There is a second furnace that is fine in the lower level anyway, so the now-gone person probably thought it wasn't worth the cost to replace. So, I am extending them the benefit of the doubt.

I "feel" like the as-is was in reference to all of the termite information they provided at the time they said 'as-is' and whatever they knew they would be disclosing. But what about when something was not disclosed and then found? Does that still automatically get the 'as-is' granite-like blanket of protection?

My options: I could ask for a cash settlement at close. I could withdraw the offer. Or I could eat it.

If I were the seller, I would probably repeat my 'as-is' caveat. I would also feel bad that I didn't know about the heater and just stuck the buyer with another $4,000 in repairs. But this is business and not playground baseball card trading. Is there a moral or ethical element to this on the part of the seller that matters here?

Is "as-is" really as impenetrable as Bernanke's Keynesianism? 

Thanks all.

 

[usctrojancpa]

I made a very aggressive offer on a house and they took it with an 'as-is' caveat. I had a full inspection done and lots of items were found, but nothing major and nothing immediate. All stuff I can live with and knock out over time. Except for one thing.

When they made the 'as-is' comment it was in regards to some termite damage they had a couple years ago and that it had been remediated and their two year maintenance contract was ending soon. This was all in one conversation. Fine. I am having a separate inspection for that, but neither the first inspector nor I found anything horrible looking.

What we DID find however, was a furnace (one of two) that was recalled from a company that had gone out of business. The gas company had turned the gas off to it, and tagged it in March of last year with a warning not to turn it on, dangerous, etc... Replacement estimated around $4,000.

This was not in the disclosures from the sellers.

To be honest, I don't think they knew about it. For one, it's obvious this would be found by a home inspector. Second, it's a trust sale and I think the person who passed away was the one living in the house at the time and would have known, but they may have forgotten to mention it to their kids, or the kids forgot. There is a second furnace that is fine in the lower level anyway, so the now-gone person probably thought it wasn't worth the cost to replace. So, I am extending them the benefit of the doubt.

I "feel" like the as-is was in reference to all of the termite information they provided at the time they said 'as-is' and whatever they knew they would be disclosing. But what about when something was not disclosed and then found? Does that still automatically get the 'as-is' granite-like blanket of protection?

My options: I could ask for a cash settlement at close. I could withdraw the offer. Or I could eat it.

If I were the seller, I would probably repeat my 'as-is' caveat. I would also feel bad that I didn't know about the heater and just stuck the buyer with another $4,000 in repairs. But this is business and not playground baseball card trading. Is there a moral or ethical element to this on the part of the seller that matters here?

Is "as-is" really as impenetrable as Bernanke's Keynesianism? 

Thanks all.

It's not uncommon for trustee sales, REOs, and estate sales to be sold on an "as-is" basis since the asking seller has not lived in the home so they don't know the condition of it.  When dealing with "as-is" properties it is important to quantify what the repair costs may be and be on the look out for those "deal breakers" since it is buyer's responsibility to do their due diligence (which means like you have done).  The difficulty is proving that acting seller knew about some kind of major damage/defect...that's easier said than done.  So unfortunately in your case the undisclosed but found repair items do fall under that "as-is" blanket.  That being said, you do have the right to exercise your inspection contingency card and try to negotiate with the sellers with what you found but I would guess they may not budge so you may be able to pull the rip cord and cancel escrow.  Good luck and keep us posted.

 

[daedalus]

Check me on this, but I believe it is a HUD/FHA requirement that all living areas have heat.  This may not translate directly into a legal requirement (or maybe it does--I don't know), but I can tell you from experience that this may also work its way somewhere into a contractual obligation of the seller (e.g., lender contract). 

 

[Nous]

I would think that if they want to make the sale and now know about the issue, you should be able to argue the 4k off the price.  Unless they are trying to get lucky a pull a fast one on someone they should be will to make up the difference.  If not, I'd wonder what kind of people you are buying from.  Everyone who seriously intends to buy should find this and ask for the same amount off.

 

[CTNative]

Check me on this, but I believe it is a HUD/FHA requirement that all living areas have heat.  This may not translate directly into a legal requirement (or maybe it does--I don't know), but I can tell you from experience that this may also work its way somewhere into a contractual obligation of the seller (e.g., lender contract).

You may be right. My agent asked me if there was another heater in the home, which I said yes. If that translates into "one is enough" then maybe there is no legal issue. If that translates into "is that single heater connected to the vents for every 'living area' in the house" which no it isn't, then maybe there is a legal issue.

Maybe it comes down to simple regulatory math...square footage divided by BTU = enough or not enough.

I am thinking the legal outcome will be that "one is enough."

 

[irvinerealtor]

Regarding the heating source: One is enough. 

It never hurts to ask for something you want, and think that is fair.
They can always say, "No" but may choose not to.

Your realtor may also have other good ways to get what you want done. 
I would recommend checking with him/her and working together towards your best solution, whether that be accepting no credit, having them fix it, getting a credit in lieu of repair, or walking away entirely...

Good luck in all cases,
-IR2