In this post we go down the stressful path of law suits, lawyers and legalities. Finding out what your legal rights are as a home buyer. And how the buyer versus seller legal game is played. As you may recall I postponed a couple of posts due to some legal action we had taken on. In Remediation – Down the Rabbit Hole and Demolition Continues – Dreams to Nightmares I discussed the issues we encountered with the house and eluded to us pursuing a lawsuit against the sellers of the property. Here I will tell you all the gory details of what we did, how we did it and how things ended up. Are you up for this intriguing tale?

Do you remember when we started this journey and I mentioned it would include an array of themes like comedy and horror. Oh, if I only knew how true that statement would be. Knowing what we know today, who knows what decisions we would have made. But I honestly never thought the journey would include the theme of legal drama.

As mentioned in Remediation – Down the Rabbit Hole and Demolition Continues – Dreams to Nightmares we have discovered nothing but horrors with this house. This house has so many health issues it is amazing it is still standing. Electrical, gas and water issues. Ah yes, water! A theme that had never even entered my mind when we started this journey. It has been in these moments that I wish I was sitting on the sidelines with you, eating my popcorn, drinking my soda and watching the show. Yelling at the screen ‘don’t do it, don’t go in there’, covering my eyes in fear. And then leaving the room to go get another soda.

Instead I am the character in the movie entering rooms and encountering the horror lurking around the corners, unable to run away. How do we get out of this unscathed? Why are we in this this horror story anyway? What have we done? How do we get out? Is there an escape? Forget the escape from the rat race. How do I escape this horror story… and battle these skeletons jumping out at us from every corner and still come out victorious? Oh I know…. let’s file a lawsuit against the sellers of the property. Did you just see the house’s jaw drop to the floor…. I am sure it did. Total shock and bewilderment.

But let’s explain why we would go down this path. As I am sure you are sitting there saying… you bought it… you own it… But there is a little more to this than meets the eye.

Let’s go back in time a bit. I had never included the full part of this story in my posts. At the time it did not really seem relevant… but oh does it ever set the stage. So sit back and get comfortable, as I take you into an edge of your seat legal drama like you’ve never read before. Where is Perry Mason when you need him. Ummm did that reference just date me?

Background Story

It was a beautiful sunny day, where my husband and I are sitting enjoying our breakfast at the island, dreaming about the life we are about to build. As tomorrow the deal on the new property will be going through. Smiling, laughing, talking of things to come. And then the phone rings… it is our realtor. Is he calling to congratulate us? Wish us well? Thank us? No he is calling to inform us the house has a leak in the bathroom that leaks down into the basement. What?

Well this is actually a good news story. Since we caught this before the deal was finalized and it fell under the seller and their insurance to fix. The owner did a quick fix and stated it was complete and all was well. However our brilliant realtor said that was not enough and made them bring in a remediation company to ensure there was no other damage or issues like mould. Is this now starting to sound familiar? Remember our journey in Remediation – Down the Rabbit Hole.

But this is where the story gets interesting and could have taken a very different turn. As based on decisions we could have made at this point, we would not be here today sharing these fun stories. Because at this moment we actually could have walked away from the deal. In hindsight maybe this is something we should have considered. AHGGGG! However we decided to take a different path. Where instead we decide to hold back money from the deal in case the seller does not cover the repair cost, and we are caught having to pay for it.

This part of the repair, included: opening up the walls in the downstairs bathroom, removing the flooring in one of the bedrooms and bathroom, removing the vanity, and repairing everything behind the scenes. Fortunately the seller did pay the bills and we did not have to use any of the funds that we held back.

Fast forward a bit now… as you may remember from Demolition Day – The Acorn Mystery we set our investigative minds in gear. Through our amazing powers of deduction and some forensic science work, we got a little nervous about what we were seeing around more evidence of moisture issues in the basement. This resulted in us demolishing the entire basement to the studs. We hired a remediation company to do the work due to the asbestos found in the basement materials. Work we had not originally planned on doing. Our sleuthing resulted in us confirming our suspicions…. mould and rot everywhere. Requiring more repair. Decades worth of moisture and tremendous health hazards.

But where was it all coming from… what was causing it? Our investigative forces back at work. As mentioned in Remediation – Down the Rabbit Hole the owner watered the foundation, the foundation had cracks, the windows had not been sealed and yes let’s not forget the annual waterfall that runs at the house every spring. Ok maybe that didn’t take much investigative powers, as the issues were quite evident. But what was also evident is that the owner must have been aware of all the issues… how could they not be?

The Disclosure Statement

This is now where the legalities start to intertwine. You see, when you sell a house you must fill out a disclosure statement disclosing any known issues with the house. A few of the questions on the statement relate to the following: are you aware of any moisture and/or water problems in the walls, basement or crawl space; and are you aware of any damage due to wind, fire or water.

This becomes extremely relevant given what we have seen. The question being did they know about the moisture issues and not disclose them. This is what it looked like to us. In addition to all the mould and moisture issues we have found, there is also evidence in the main impacted bedroom that the carpet had been replaced and some wall repair had been done. Telling us that there probably was past moisture problems that had occurred and repaired. So obvious they have been aware. Right? How could they not be with this level of damage. So feeling like we have totally been taken advantage of and lied to, we decide to take legal action and pursue a lawsuit against the sellers of the property.

Hiring a Lawyer

Real estate lawyer

First step… we contact our real estate lawyer and inform them of the issues we have found and tell them we would like to pursue a lawsuit against the sellers of the property. We also state that we do not want to release the funds set aside from the leak issue until this is resolved. We ask… What course of action can we take? Do we have a case?

Here is where we start to learn about the different types of lawyers out there and that they do not all handle litigation. Our lawyer informs us he is strictly a real estate lawyer and that we need to hire a litigation lawyer. Unfortunately he has no recommendations for us, but does say to ensure we go with a larger law firm that has multiple lawyers. With his advise in hand, we now begin our search for legal help.

I am starting to think that maybe we bought this house just to provide some good writing material for this blog, as I swear you just can’t make this stuff up!

Litigation lawyer

After some research and phone calls, we land on a lawyer who specializes in these types of law suits. We have never been through something like this and in some weird way I am intrigued by the process. We set up a meeting and I start to visualize all the legal movies I have seen and picture us sitting there sharing our story of outrage and how we have been duped! The lawyer sitting there saying ‘this is horrible… you have an amazing case and we will do anything to right this wrong!’ So with my tissues in hand we head to our appointment… they always have tissues right… ok just joking, I am not that distraught… yet.

Well let’s just say the movies lie! We arrive and sit in a small boardroom and share our story. The lawyer seems good and attentive, but very non committal to the outcome of this process. He does say we have a case… stronger than most. But that it really becomes more of a he says she said moment. That the disclosure statement does not really do much and that it is up to us to prove they lied on the statement… that they knew the issues existed, which can be very difficult. Seriously? What is the point of a disclosure statement then. He continues to state the best chances are if you can settle out of court. Otherwise you would have to go to small claims court and try to prove the allegations and potentially spend more on lawyer fees than what you can claim in court.

Well that is comforting… I am not feeling overly confident or doing any victory dance at this moment. One thing we do learn is we have up to two years after purchase to sue the seller on issues found on our house. Who knew. So part of the conversation is, do you want to go down this path now or wait. If you do this now, you can’t go back later. Maybe you discover more that you want to go after. Well given that we have pretty much demo’d the whole house, I am not really concerned about that. And who wants to wait in this purgatory for two years! So we decide to move forward now and continue the process with the lawyer.

Upon review of our documents we brought, there is an email from the sellers notary that got a eyebrow raise from our lawyer. Interestingly this email got the same reaction from our real estate lawyer. The email uses one word that I guess in the legal world causes quite a stir… Undertaking. It meant nothing to us. But legally has quite the meaning. Where both lawyers said it could work in our favour, as it assumes that the seller is taking on all liability. But liability for what is the real question. How far would this one little word get us. As nothing is for sure in the legal world. But interesting to see the reaction from the legal front and how both said they would never let anyone on their team use that word. Who knew one small word could cause such a reaction!

Since we we truly did not understand what all the fuss was about, we googled it ourselves but still did not see the potential impact. The online legal dictionary definition of Undertaking is: A written promise offered as security for the performance of a particular act required in a legal action.

The Retainer – and the money continues to flow

We hire the litigation lawyer we met, signing a retainer and paying an initial fee for services. We decide to see how far we can get with the initial retainer fee and will decide later if we want to throw more money at the issue. But, the one thing we know for sure is we do not want to go to court.

If you have never worked with a lawyer before… let’s lay out a bit about how this works. You see they charge you for everything. I do mean everything. From a five minute phone call, to a photocopy, to postage, email time, etc. Basically any minute they dedicate and any material used… you pay for. This is not just for them but for their legal aid as well. So the dollars can rack up pretty quickly.

Now the positive is this retainer includes some initial cost for this and we only pay more when the funds deplete and before work is completed. Which at least is better then getting the big bill at the end and having to go get a second job to pay the bill. This way we can manage the costs and ensure we are not paying more then what we are hoping to get. Kind of defeats the purpose.

Lawsuit Against the Sellers

Next step is to make the case. Here we accumulate all the costs of the repairs, pictures and story of what we encountered, so that our lawyer can put a letter together to the seller to inform them of our course of action and what settlement we are looking for. You would think this would be a fairly quick process but it took us a few weeks to compile. As this required us compiling info and sending back and forth to the lawyer to ensure we had all we needed to proceed with filing a lawsuit against the sellers of the property.

The Demand Letter

Our lawyer sends the letter with our demands to the owner and their legal representative. They had four weeks to respond. I know I have been joking throughout this post, but this is in fact a stressful process to go through. This is not something we typically do or want to do. And we continually question ourselves along the way. Should we do this? How far do we take it? But there is something about making a point and standing up for yourselves when you think you have been wronged. We set our expectations low, and prepare to get nothing out of this but still have some hope to be somewhat vindicated.

It takes till the last day of the response period before we hear back from our lawyer. The seller has hired new legal counsel who is of course challenging our claims. Their counsel stating our claims our unfounded and that we are taking advantage of the seller. Basically attacking our character. Now this is more like the legal shows on TV… us versus them. Their counsel states we waived the disclosure statement by having a house inspection done. What? Ah so this is how the game is played. Disclosure statement versus home inspection. Well I guess you are damned if you do, damned if you don’t.

Now keep in mind a home inspection does not go behind the walls, so they never would have found these deficiencies. But the report had one statement about moisture by a pipe, that their lawyer latches onto. Thought to be a potential pipe leak by the inspector, in a completely different area, not entire foundation issues. But I guess this is how it starts to play out. Who can prove more than the other. Now wouldn’t this be fun to play this game in court! I think not. We have enough on our plate without that.

The Counter Offer

Apparently against the advice of the their attorney, the sellers counter our original monetary ask. As the seller just wants this to go away. It is definitely lower than where we wanted to land. You see what we were truly hoping to get was the full amount of the money originally held back due to the original leak. They came back at half. Our first reaction was to counter but our attorney advised we accept it. He felt that if we countered we may lose the original offer and that it may go to court. And if we went to court we may get the amount that we originally wanted but that the legal fees would outweigh the win. Well now that sucks!

Do We Accept?

So after a lot of discussion and weighing our pros and cons, we decide to accept the offer. We don’t want to go to court and don’t want to run up more legal fees. At least we feel somewhat vindicated and our walking away with something. Now I actually think we probably could have pushed it further and gotten a little more. But decided that the stress of fighting this just is too much at this point in our lives.

The Release

You would think that this is where the process ends, but no there is more. In order to release the funds and split the held back money 50% / 50%, we now have to sign our lives away. We receive a document from the sellers lawyer laying out the terms of the settlement: funds released based on the fact that we can never pursue any further legal action with the seller on the house and that we waive all requirements to the leak repair in the bathroom. So basically washing our hands of any further interaction with the seller. We sign the letter which has to be done hard copy with a witness and mailed. Old school! We send by registered mail. Even this process took a couple of weeks.

It was received and we were informed that everything should be processed shortly. However this too took almost a month to release the funds. Unbelievable how long something like this takes to release money that is already there.

The Legal Battle Against Sellers Ends

We did not end up with what we originally wanted, but at least we got something. It was truly the principle of it, feeling we were wronged. And now… We feel at least somewhat vindicated!

So now more legally smart and a better understanding of real estate law, I can say I feel we have turned a corner and that I am not afraid about what I may find. I now go home no longer looking under the bed for what monster may be laying in wait or what might jump out of the closest. I truly feel the horror story is morphing into a feel good story and that I can now sleep a peaceful sleep and dream once again about what this house can become. The house has recovered from its initial shock and has now settled into a moment of peace and anticipation as its makeover continues.