Help! What can I do? Attorney screwed up title and other things?

Buying & Selling Real Estate
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Help! What can I do? Attorney screwed up title and other things?

Chris Y.
Burlington Vermont · Member since 2018 · 15 posts · 1 vote

We have used the same attorney for a few purchases and recently came to realize he screwed up many things. 

1. He failed to find out there is an open permit on the house. The previous owner applied for a permit to expand the waste water system from 2 bedroom to 3 B capacity, but he never finished the work, so the permit was not closed. The house is still a 2-b house. But we bought it thinking it was a 3 bedroom house. The seller disclosed it as a 3 bedroom as well. 

what can we do: go after the seller and seller's agent? 

What upset me the most is our attorney failed to find that out which is a very straight forward thing to do?  The town clerk said it is a matter of reviewing the town's records, which is like attorney 101. 

Can we demand compensation from the attorney for being negligent on that? what is the best way to proceed? Sue the attorney?

We do have title insurance, but not confident we can get compensation from the title insurance company. Does anyone have experience?

2. The attorney also failed to ask the outstanding balance on another property's water bill? We ended up having to pay $500 plus for the water bill. This is not enormous amount but the city said if the attorney asked about it, we would be able to press the seller to pay for it. 

Could anyone advise how I can go after the attorney? Do we really have to bring a suit against the attorney to get something back? 

thanks much.

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y

I consider checking for open permits and checking utility bill balances part of my DD.  O&E title searches will only show ownership history and recorded encumbrances / lis pendens.

Like you said, they are checked with a couple phone calls. I do it myself.  With the title of your post I thought your attorney  messed up the deed or something.

it's still worth checking any seller disclosures that were filled out to check if the seller disclosed or hid something, but I don't expect my attorney to check simple things with the city.

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  • Stanley Bronstein
    Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    7y
    Was the attorney hired (and paid) to do your due diligence for you, or were you supposed to do your own due diligence and they were supposed to answer your questions? What was the scope of their engagement with you?
    0Reply
  • Chris Y.
    OP
    Burlington Vermont · Member since 2018 · 15 posts · 1 vote
    7y
    Originally posted by @Stanley Bronstein:
    Was the attorney hired (and paid) to do your due diligence for you, or were you supposed to do your own due diligence and they were supposed to answer your questions? What was the scope of their engagement with you?

    The attorney was hired for the full service, including title search, closing, etc.. 

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    7y

    I consider checking for open permits and checking utility bill balances part of my DD.  O&E title searches will only show ownership history and recorded encumbrances / lis pendens.

    Like you said, they are checked with a couple phone calls. I do it myself.  With the title of your post I thought your attorney  messed up the deed or something.

    it's still worth checking any seller disclosures that were filled out to check if the seller disclosed or hid something, but I don't expect my attorney to check simple things with the city.

    1Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Open permits are not part of a title search, that’s on the buyer to do their own due diligence.  The water bill, yeah our title/closing company would catch that.

    1Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    7y

    These are both on you. Permits and utilities are not what I would consider part of closing, especially since utility bills can be unpaid but not yet a lien. Now if it was a recorded utility lien that was missed then that is on the attorney. My title company now actually has a form to sign that says something to the effect of "this does not include items that are not recorded or a review permits ect".

    This would be like running a Carfax to check that a car has a clean title, and then being upset it didn't reveal the owner halfway completed some repairs to the car. Their job is to make sure title is clear, not determine if the prior owner followed building codes or paid bills.

    1Reply
  • Russ B.
    Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
    7y

    Sounds like it's the seller that I'd want to go after, if anybody - they sold you a property that they knew was never up to code for the usage it was sold as. The permit thing is just how you happened to find out about it. 

    I have no idea though, whether the lawyer had any responsibility to look for that. I'm guessing no, but I really don't know. 

    1Reply
  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    7y

    Title company would never catch these things in my area. Water bill? Title company is for title things. Go after sellers agent? Are you kidding?

    Good lesson for next time. Make a checklist of things to check. Open board of health or code enforcement cases are a good one to add to that list too.

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