Suing the Seller, Small Claims Court Case?

[Ari Evans]

I am 22 and just purchased my first rental property, a $390k Duplex right out of Philadelphia in Montgomery County. It will also be my primary residence for the next year or more. The seller purchased the property as a flip and worked on it for 18 months. The seller's disclosure was squeaky clean - new roof, central air, water heaters, HVAC, windows, kitchens & bathrooms, etc. Everything seemed new and nice. Location is 10/10. And, after competing against experienced investors, cash offers, and waived inspections over the last six or seven months, this property checked most of the boxes and the numbers crunched phenomenally for me as a first-time buyer.

On the day of closing, however, several hours later as I was moving in, I encountered a severe sewage backup during the first load of laundry. Immediate inspection by plumbers revealed alarming deficiencies: a completely butchered and improperly installed kitchen sink and piping leading to a clogged and deteriorated stack, and more importantly, a severely rusted, cracked, and leaking sewage line that needed to be replaced from the stack to the street. I did conduct a professional home inspection with a local trusted company prior to purchase, who raised no major red flags. Astonishingly, come to find out, these issues were not only visible but also blatantly obvious from the crawl space and under the kitchen sink. When on-site, the inspector identified that there was a crawl space in the back of the house, acknowledged that there was only a small wooden board covering the crawl space, and yet did not go in, did not shine a flashlight around, did not even open it. While I am frustrated by the inspector, my attorney has advised me not to pursue legal action against the inspector as I signed a waiver with him that would make it difficult to see any return from a lawsuit. Lesson learned there.

However, I am planning on pursuing action against the seller, and I am looking to see if anybody has been in a similar situation, can share any advice, or offer any insights into representing myself in a small claims court versus working with an attorney and/or filing a major suit for negligence and fraud.

The fallout from these oversights has been substantial and costly. I have incurred $22,000+ in plumbing repairs alone, not to mention initial attorney fees, yard and patio repair from excavation, and cleanup in the apartment itself. The necessary repairs and ensuing legal complications have also delayed the rental of the property, affecting two months' worth of income. Additionally, these issues not only imposed a heavy financial burden but also a significant emotional and physical strain. As I am an owner-occupant, I faced (5) days without basic water and sewage amenities, and the stress of addressing these unforeseen issues has been overwhelming.

There is no question as to whether somebody knew about these issues. There is brand new drywall covering the stack in which problems were visible, and we can clearly see that new work was done in the crawl space where the majority of the concerns were visible and obvious. Upon receiving a $20k demand letter from me and my attorney, the seller insisted that he contracted out the entire flip and therefore had no personal knowledge of the problem. He admits that the contractor had some other instances of shady work, and suggested that I go after the contractor (which, as far as I know, makes no sense. I didn't hire the contractor). he also claims that he took a loss on this flip and has no funds to make a settlement, pursue a suit against the contractor, etc.

Can I sue the seller? Would I win in small claims court? Can I prove that he was negligent or had knowledge of these issues and did not disclose them? Has anybody had success proving something like this, or failed trying? I have been working with an attorney who thinks this is a winnable case but, candidly, if I were to file a small claims case, I would probably try to do it myself, and would only engage the attorney if I thought I could pursue a larger court case for negligence and fraud. I am aware the small claims court has a max of $12k in Philadelphia and it would cost between $2-5k in legal fees.

Any thoughts or advice would be appreciated.