Seller Nondisclosure Issue in Minnesota w/ Active Lawsuit

Buying & Selling Real Estate
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Seller Nondisclosure Issue in Minnesota w/ Active Lawsuit

Meghan Roman
Member since 2021 · 6 posts · 4 votes

- We purchased a duplex in February 2021. In July 2021 we learned there is an active lawsuit tied to our property where our seller is suing the previous owner regarding substantial driveway grading and basement water flooding issues that were not properly disclosed to us during the purchase. We had an inspection and while there were some signs of water seepage in the basement (the house is over 100 years old) the recommendation was to keep an eye on it but nothing more. No mention of issues with the driveway during inspection or any other time during our purchase process with either realtor or seller.

- Our seller (plaintiff) is claiming that the previous owner (defendant) did not disclose these issues to him and is suing for damages upwards of $40k. The seller (plaintiff) was awarded damages but the lawsuit is now up for appeal on August 25, 2021. When we read the Court Order Findings, the lawsuit says the seller lost money on our purchase because we refused to pay more because of the repairs needed. This never happened, nor were we aware of the repairs needed or of an active lawsuit. Both realtors can verify this never happened. 

- At this point, we’re trying to understand our options/rights since we now own the home and are the ones responsible for making the repairs. We also would not have purchased this home if we had known that it came with repairs that cost between $20-50k (based on estimates we received)

- We have reached out to the seller and his lawyer basically told us to pound sand. Both realtors won’t touch us or their brokers nor the title company. Everyone has been paid on this deal and now we’re left holding the bag. Both realtors, title company, brokers say they are not liable for the seller not disclosing the damage/cost of repairs or active lawsuit. We paid thousands of dollars for these professionals to do their jobs during the sale and we aren’t sure what we paid them for....

- Does anyone understand our rights or have any suggestions on what we should do? - Does anyone know of a good real estate attorney in Minneapolis, MN?

- Trying to keep it short and sweet at first but happy to provide more details. 

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Tim SwierczekPro Member
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
5y

@Meghan Roman I have used @Brad Schaeppi for multiple reasons including an urgent situation that revolved around a buyer who tried to back out the morning of closing.  Because the funds from the sale were dedicated to a purchase that had a $50K earnest money that was now non-refundable the consequences were severe.  Brad not only saved the day he was transparent, and reasonable in his recommendations and charges.  Brad is a pro and should be your first choice in my opinion.

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  • Daniel Anshus
    Realtor · Bloomington MN (bloomington, mn) · Member since 2016 · 451 posts · 263 votes
    5y

    @Meghan Roman I will provide the most honest and best answer you could get from an online forum. Get your own real estate specific lawyer to handle this for you these are complex issues and can vary a lot based on what forms were signed as well as forms were used. If you need attorney recommendation your realtor should be able to provide that

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    @Jordan Moorhead

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
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    1Reply
  • Meghan Roman
    OP
    Member since 2021 · 6 posts · 4 votes
    5y

    @Daniel Anshus our realtor gave us a recommendation for a lawyer who had a conflict of interest and couldn't represent us. I think you are based in MN - do you have a lawyer reco? 

    0Reply
  • Kristina Kuba
    Tampa, FL · Member since 2021 · 383 posts · 389 votes
    5y

    Meghan,

    I would start with a demand letter from a robust real estate attorney who has litigation experience. This can carry a lot of weight even if you already reached out by yourself. It shows you are serious and have spent money retaining legal counsel. Local attorneys know each other and they know when an opposing party might take it further especially if that attorney has a track record.

    From what I gathered, the prior seller’s lawsuit is not of importance. Rather the focal point is that the seller fraudulently misrepresented the seller's disclosure.

    Kristina Kuba

    Keller Williams Tampa Central

    0Reply
  • Daniel Anshus
    Realtor · Bloomington MN (bloomington, mn) · Member since 2016 · 451 posts · 263 votes
    5y

    @Meghan Roman yes I can provide a couple

    0Reply
  • Bruce Runn
    Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    5y

    @Meghan Roman-I'll send you my Minnesota real estate attorney/law firm contact that has been very beneficial to me throughout the years.  Just connect with me and I shoot off a DM.

    2Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    5y

    Brad Schaeppi is well known and get's good reviews @Meghan Roman

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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  • Meghan Roman
    OP
    Member since 2021 · 6 posts · 4 votes
    5y

    @Jordan Moorhead Thank you Jordan! Much appreciated. 

    1Reply
  • Tim SwierczekPro Member
    Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Meghan Roman I have used @Brad Schaeppi for multiple reasons including an urgent situation that revolved around a buyer who tried to back out the morning of closing.  Because the funds from the sale were dedicated to a purchase that had a $50K earnest money that was now non-refundable the consequences were severe.  Brad not only saved the day he was transparent, and reasonable in his recommendations and charges.  Brad is a pro and should be your first choice in my opinion.

    2Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    You could certainly tell your seller they don’t need to proceed with their lawsuit against previous seller since you are going to be a witness for the previous seller that they did not lose $40k because they did not disclose the repairs, as your disclosures will show. Since in their minds they have already won that money, and I assume paid for their lawyer, the threat of losing all their money should get their attention. 

    Ps. A lawyer could probably tell you if your seller’s lawyer has to tell the first seller’s lawyer about his/her discovery that there was no actual lose. I’m no lawyer but it seems like there’s a discovery rule/law but that might only be criminal cases?

    0Reply
  • Jeff Vesel
    Attorney · MPLS-ST PAUL, MN · Member since 2020 · 8 posts · 8 votes
    5y

    Props to Daniel Hanshus for taking his valuable free time to give you advice. My thinking, however, is a little different. Your realtor has closed out the sale and has at least a potential conflict of interest. You might want to contact the Hanbury and Turner law firm (Chris Kalla at 612-340-9860)  http://hnclaw.com He is a good lawyer whose firm might help you or could point you in the right direction. Or find a small-ish firm/solo practitioner that specializes in real estate litigation (not just drafting deals) such as Greg Lang https://www.langlawoffice.com/

    Whenever you contact a lawyer like this, be prepared to ask them for a referral if they don't want to handle your particular matter. That referral can save you valuable time. It is too hard to just search for lawyers online because there is no feasible way to price shop. Comparing billable hour rates is only marginal helpful because some attorneys bill more lean than others.

    1Reply
  • Meghan Roman
    OP
    Member since 2021 · 6 posts · 4 votes
    5y

    @Tim Swierczek @Bill B. @Jeff Vesel - thank you all so much for the valuable recos and input. We will look into them all! 

    2Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    5y

    @Meghan Roman you're welcome! Thanks @Russell Brazil!

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
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  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    I also recommend reaching out to @Brad Schaeppi at his website to schedule a consultation https://minnesotalandlordlaw.c...

    I suspect the seller waived disclosures and you both signed that they were waiving disclosures?  If so you may be out of luck.  You would essentially be purchasing the place as-is and your inspection was to be relied upon.  Unfortunately - many inspections are rather worthless.  

    Both the previous owners owned it without ideal grading.  This may be an item that is an expensive fix but don't overall limit the enjoyment/use of the property.  

    0Reply
  • Meghan Roman
    OP
    Member since 2021 · 6 posts · 4 votes
    5y

    @John Woodrich Appreciate it. We didn't waive any disclosures - which I confirmed with my realtor as well. But hopefully, @Brad Schaeppi can help us get to the bottom of this. 

    0Reply
  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Meghan Roman:

    @John Woodrich Appreciate it. We didn't waive any disclosures - which I confirmed with my realtor as well. But hopefully, @Brad Schaeppi can help us get to the bottom of this. 

    You don't waive them per se - the seller either gives you a seller's disclosure form disclosing many things about the house or they give you a "Seller's Disclosure Alternative" form and waive disclosing information.  I suspect you received and signed a waiver during your purchase of the property.  Here is some online information about it: http://www.stevenhong.com/home-buyers/sellers-disclosure-alternative-and-why-a-seller-would-use-one/#:~:text=The%20Seller%27s%20Disclosure%20Alternative%20is%20a%20way%20for,of%20information%20in%20order%20to%20purchase%20the%20home.

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