Seller Didn't Disclose a Major Issue - Now what?

Question

Hello, we recently bought our first STR cabin in Gatlinburg.  After the plumbing backing up three times in the last two months with just normal use, we have had two plumbers confirm that the main line is clogged with broken pieces of toilet.  This cabin burned down during the Gatlinburg fires and was rebuilt using the original plumbing lines.  The toilet most likely exploded during the fire and pieces of it fell into the main line.  The cabin was rebuilt in 2017 so there is no way that the sellers didn't know this was a problem.

The plumber is not able to remove all the pieces because some of them are large and won't make it around a curve in the line.  The solution is to excavate (under a massive storage building no less) and replace the entire line to the tune of $3,000-4,000.  This is in addition to the almost $1500 we've spent already.

I'm not sure what my next steps should be?  Any suggestions?

Stacey

Jon Crosby · Answer

@Stacey Lancaster I'm so sorry this happened to you, been there before when we had to rip out an entire section of our newly installed hardwood floor and jackhammer thru 17 inches of concrete to fix a broken sewer line in our new property.  It was a nightmare and we were certain the previous owners had to have known something about it.

In the end though, there is not much you can do because you have to actually prove they knew about and you will likely spend more in legal and investigative expenses then this fix will cost and still not be guaranteed any retributions.  You could however start with a simple letter from your attorney that 'makes a claim' and see if they flinch and maybe offer to help pay some of it.  I don't think it would hurt to try that but I would not go down the path of a full legal battle over this.  Best to just get it fixed and move on with your business and life.  In a few years you will be successfully cash flowing  and  it will just be one of your real estate investing war-wound stories to share with others. ;)

Sorry again and best of luck on your project.

Russell Brazil · Answer

next steps, get the problem fixed.

Amanda Williams · Answer

These are never fun situations to deal with! I have dealt with 2 situations where the seller did not disclose something fairly major and was able to get them to both pay for it retroactively. The key is having evidence that they knowingly did not disclose it and having access to a good litigation attorney if needed. The best way to gather evidence is to try to find out and speak with the builder and plumbing company they worked with. If you can track them down, then they can tell you if they knew about the issue and whether or not it was discussed with the previous owner. In one case, i was even able to get the plumbers previous quote to fix an issue that had the sellers signature on it. No way they could deny that. The seller ended up paying for the fix and reimbursing me for all emergency repairs and water damage to the unit. Once you can prove that they knew about the problem and intentionally didn't disclose it, I would consult with a litigation attorney. They can give you the language to use and can be available to draft a letter demanding payment if you aren't able to resolve the situation yourself. In both of my situations, once I had the undeniable evidence and stated that I was willing to file a suit against them for damages -- which would result in 2-3x's the dollar amount of the actual fix -- I didn't have much issue getting reimbursed. Please feel free to reach out to me directly if i can help in any way!

Lydia S. · Answer

@Stacey Lancaster

Sorry to hear about your issue.  This is why I recommend sewer line scopes as part of the inspection period.

Ruth Blue · Answer

@Stacey Lancaster

I know another buyer had a similar situation but with a well that was dry and a known issue not disclosed. Your selling agent should be notified as well as the Greater Smoky Mtn Association. You can file a grievience and the Association is there to assist members of the community when issues like this come up. They will work with you and the professionial agents to come to a resolution. If the sellers hide something like this it is a violation of contracts they had with their representatives as well.

Hope this helps.

You definitely want to have the situation fixed so you can start earning income.

Sorry this is happening to you.

Nathan Gesner · Answer

It's the buyer's responsibility to inspect and confirm what you are buying. Unless you can prove they knew the problem existed and hid it, you're out of luck.

i had something similar happen with my first rental in 2004. I spent nearly $6,000 in my first three months of ownership on a property that rented for $375. It sucks but you have to take the risk with the reward.

Julie McCoy · Answer

@Stacey Lancaster I'm so sorry this happened to you!  How frustrating, and I know it's not how you wanted to begin your STR investment.  While it may lead to nowhere, the first step is to reach out to the sellers and see if they will assist; if they refuse, get an attorney involved, though I agree that should be more about taking a strong position and it wouldn't be worth actually litigating the issue.

There is no purpose in approaching the local association - they do not get involved in disputes between buyers and sellers, and neither agent is at fault here if the seller concealed/did not disclose the issue.

Best of luck getting this quickly resolved so you're cash flowing great this summer!

Braden C. · Answer

Like others have said, *proving* that the sellers knew about the issue is going to be difficult. Even if you can prove it, you're going to spend WAY more than a few thousand dollars on attorneys if they decide to defend themselves. If it was me, I would send a letter explaining the situation and ask them to help cover the costs, let them know you don't want to get attorneys involved. If they ignore or say no, an attorney would probably send a demand letter for a couple hundred dollars. If you still don't get anywhere, give up on getting anything from them and just eat the cost of the repair.

Michael Gessner · Answer

First, sorry your going through this, next what makes you assume the seller knew their was an issue, and did not disclose it ? I recently sold a flip where the buyer contacted me within days after closing his sewer was backing up. Turns out during demo one of my guys must of accidentally dropped some debris down the sewer causing a back up. I'm on good terms with my buyer so I helped him out and snaked it out only to find out the line needs to be replaced under the driveway. I had no idea of this issue, we never once had an issue with the sewer. However as a family takes foot hold and more water and paper start being used that's when the problem surfaces. He fully understands I wont be fixing it and it's his responsibility now to get it fixed. Same in your case, things get dropped all the time during reno, contractors do their best to plug the lines but some things happen, and if your not using the utilities the way a family would, well then u guessed it you would never know unless u send a camera down them.

Julie McCoy · Answer

Sure, if you're having difficulty with your *Realtor*.  This is a totally different situation - a conflict between buyer and seller.  It has absolutely nothing to do with the agents themselves, and therefore, there is no purpose or benefit in getting the association involved.

Seller Didn't Disclose a Major Issue - Now what?

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