Inadequate SD and Incorrect Home Inspection reports

[Saritha Reddy]

I bought my first rental condo back in February/March, and just now realizing the gaps in how things were identified to me both by the seller/realtor and the home inspector recommended by the Seller agent. Besides realizing it is a biggest mistake to go with the seller recommended inspector, here is the exact situation. I am at a loss and wondering if there is anything I can do at this point[including legal action] in seeking damage/replacement:

1) A couple of huge flooding situations to the Unit below from my unit [they had to file claims with Insurances, call Utah disaster recovery for clean-up, had to live elsewhere for 2days] were not reported in the seller disclosures. I learnt from the Owners below later. 

2) Air Conditioning section of the listing is blank. Unit has a Swamp Cooler. The agent told me during a walkthrough there is a central AC installed, and that the Swamp Cooler vents in the ceiling[that were broken and left a hole] can be replaced/closed if I so choose, which I did - only after my home inspector report AC was working in a good condition. Two things here - there has never been an AC in the Unit which I have now learnt. Agent now denies he ever commented on the central AC to me, and is now defending the inspector saying he must have passed Swamp Cooler in working condition as it qualifies for an AC. I am told by technicians I call in for repairs, Swamp Coolers cannot be turned on during February in Utah, and there is no way an Inspector would have been able to test it in being working condition. 

Sorry about the long description but I am at a loss, and need to understand if I have any Options in going after the seller, selling agent or the home inspector for mis-representing the property and giving false reports on AC. This is a huge expense to me ~8K if I need to install AC [and they won't install it on a 24 yr old furnace, so need to replace that as well]. Thanks in advance.  

[Jeffrey S. Breglio]

Interesting situation. But there are too many unanswered questions about the post for me to formulate a response. I also can't provide legal advice on a forum. The poster would need to contact my office and I'd have to review the all the documents. Some educational tips:

1. This looks like an "out of state" purchase. BE EXTRAORDINARILY CAREFUL when doing this! Buying a property you can't physically enter is very risky and for seasoned investors. The biggest problems I see as a lawyer arise from people buying out of their state or far away as they can't inspect or over see the property. Relying on others also doesn't seem to help either. No one will look after your property better than you.

2. Yes. In Utah and most states to a varying degree, sellers can be liable for fraud, misrepresentation or failing to disclose AFTER closing. Granted, Utah is a "buyer beware" state. But that doesn't absolve sellers in every case. There are many lawsuits on this and buyers do win them, or at least get some compensation! Typically they end up in arbitration and I've sat in a lot of those representing clients and arbitrate for others. These issues can be difficult to prove, but arbitration is a very "what's reasonable" arena and legal standards of proof don't apply. And remember, neighbors will ALWAYS rat on you.

3. Having done a lot of arbitration on these kinds of disputes, it's ALWAYS my recommendation to fill out COMPLETELY the seller disclosures. Writing in "I don't know" is better than leaving blank. And be HONEST, even if you think it might scare a potential buyer (it rarely does). Do this on your flips and even when you say "sold as is". 

4. Going after the inspector will probably be more difficult than the seller, but you can. Inspectors waive off a lot in their contracts. Agents can also be liable! Both are licensed so you can also go to your division of real estate to file complaints, which might spur action.

Hope that helps!

Happy investing!

Jeff