I bought a lemon. How do I get some of the money back?

[Fay Chen]

I bought a duplex in TX late last year site unseen. As an out-of-state investors, I got hit by one of the unknown unknowns. It turned out the house didn't have proper drainage so all the water in the neighborhood drains to my property and sits on one side of the unit. That's not something I could've foresee even if I were to see the property in person prior to purchase. (I live in sunny SoCal, and holy crap! It RAINS in TX!) 

After $4000, I put in a french drain, rain gutters, and fixed the water damage. Now I'm looking for ways to recover some of the costs. So I identify several possibilities:

1. Seller. Seller did not disclose pre-existing drainage issues of the property. in the offer, we specifically told the seller NOT to do any work in the duplex. She replaced some drywalls prior to closing anyways. In hindsight, she probably did that to hide the water issue.
2. Seller's listing agent. The house was listed for a few months. The agent should know the water issues.
3. Inspector. The home inspector noted some water damage. But under drains, it was checked as "good." The house sits below grade and there were no drains around the house.
4. The city. This is what my handyman suggested. He said I can go after the city for the money if I can get several neighbors testify that the problems has been there for years. Not sure how this works.
5. My insurance. I'm trying not to file a claim because it would significantly increase the premium.

My property manager contacted the listing agent and the inspector. The listing agent denied any knowledge of the issue (of course). The inspector said he couldn't have known the drainage issue by looking at the house (I'm not sure I believe him).

My property manager suggested me contacting a real estate attorney. Is that the best way to go about this? 

[Joe Splitrock]

@Fay Chen I think you are out of luck. This is one of the dangers of buying a property sight unseen and without knowledge of the area you are investing. Never buy a property at the bottom of a hill, which you could have seen if you went there (if the problem wasn't visible then why are you blaming everyone?). Water and drainage is a major concern in most of the country. Just saying you didn't know because you are from California isn't a reason you can use to sue people. Guess what else is different in TX? The legal system. It is not like California where you can go after anyone for anything. By the time you hire a lawyer and travel there to deal with it, you will have incurred twice the expense. Here is what you need to prove:

1. You have to prove the owner knew about the problem and concealed it. Do you have witnesses that will testify she had first hand knowledge? How many months in court do you want to spend fighting this?

2. Why would an agent know about water issues? I think that would be impossible to prove.

3. The inspector can only tell you about what they see. He probably checked that the existing drains were working, but how is he supposed to know outside issues exist. Was it raining the day he was there? 

4. Why would you sue the city? This is a horrible idea. You are the one that bought a duplex at the bottom of a hill. How is that their fault? 

5. Most insurance will cover water damage, but it is your decision if you want to chance an increased premium (I would not). They are not going to cover the cost for prevention, just the damage inside.

Chalk it up to learning. There is really no way to recover your money. Someone on this forum may suggest you hire a lawyer, but after spending a couple thousand dollars you will wish you hadn't. The good news is you can take the costs as a repair expense, so that will help come tax time.