An interesting situation
I received a call the other day from a former agent of mine (now a Broker of her own shop) with an interesting situation that she thought I could shed some light on. I’m always eager to talk with a fellow professional and I’m particularly excited to help someone for whom I was once their Designated Broker.
The circumstances to her problem stemmed around a recent sale where she represented the Buyer. The conversation took a turn when she told me the new homeowner tried to turn on their furnace during a recent cool evening here in Seattle (seems we are getting our share of those lately).
Oopsy #1
The problem occurred when the furnace that was (presumably) working fine before these new homeowners bought the house, now seemed to be on the fritz! My former agent told me they asked to have the furnace serviced as part of the inspection response (let me preface by saying that inspections are not a pass/fail thing here in Washington) but never received any invoice or receipt from whoever serviced the furnace (oopsy #1).
Oopsy #2
I asked her if she knew who had performed the service by contacting the seller but it appears the seller is nowhere to be found (oopsy #2). Aside from the relaxed nature of the furnace service on the buyer’s side, our inspection contingency forms clearly state that all repairs agreed to by the seller are to be performed in a “Commercially reasonable manner.”
Help- what recourse is there?
So my submission to you all is this… although there appears to be no “paper trail” the furnace was serviced, if in fact it was serviced at all, and the inspector appeared to give the furnace a “thumbs up” during the inspection, what recourse does the new homeowners have if they want to pursue remedy for the cost of a new furnace?
Your comments are encouraged and any similar situation that can help is also highly sought. Oh, and please, no one beat up my former agent…she feels bad enough as it is!
BawldGuy
May 25, 2010 at 12:37 pm
The contract is the contract, meaning that it covers this expressly one way or the other. Either the seller signed something saying it was done, or the inspector did. If neither happened, then I suspect the agent may have a potential problem. The central issue is what the contract says about repairs as it relates to buyer/seller agreement on the inspection report results.
If, for example, it called for written proof of completion, and the escrow was allowed to close without it, who in your state is held responsible? Or, is it implied that all work was completed if the sale was allowed to close? Those are just a couple ways it could go, cuz as you’re well aware, it varies widely from state to state.
Regardless, if the solution can’t be found in the contract itself, shame on the state board of Realtors.
Pat Hallesy
May 25, 2010 at 12:59 pm
This is where a good home warranty would have come in handy.
markbrian
May 25, 2010 at 1:21 pm
Pat hit the nail on the head. A home warranty is always a good idea on top of an inspection.
Benn Rosales
May 25, 2010 at 1:46 pm
Sometimes we get stuck in the past. I’ve seen air conditioner compressors go out on day 3 of ownership. Doesn’t mean it wasn’t inspected, it was working, but it failed. Thank goodness for a great home warranty that covered compressor not to mention there was some life left on the compressor warranty as well. These things happen. I’ve seen brand spanking new cars not start or stall. In other words, the solution is getting it repaired, rather than finding fingers to point.
Bruce Lemieux
May 25, 2010 at 8:25 pm
If the buyer’s agent is actually representing the interests of the buyer, then he/she must make sure the seller does what he agreed to do. If the seller was responsible for servicing the furnace, then the buyer’s agent must insure the seller has an invoice *before* settlement. And – the day before / day of settlement, the buyer’s agent should walk through the home and check out all of the appliances and systems, so if there’s a problem on the day before settlement, money can be escrowed to protect the buyer.
For two of my listings that closed this week, the buyer agent has looked around the house with their clients, checked home inspection items, and that’s it. They didn’t turned on the A/C, run the dishwasher, nothing. If you are a buyer’s agent, represent the buyer. Go through a detailed walkthrough checklist before you close. After settlement, all issues become the buyer’s issues — and, by default, the buyers agent’s issues.
Getting a home warranty is often a good idea, but it’s not a replacement for a buyer’s agent doing his job.
Stephanie Crawford
May 27, 2010 at 2:26 am
My company requires that we add additional language to all offers that essentially says that the seller will provide a receipt for any work/repairs resulting from negotiations, inspections and/or appraisals. Our general contract only calls for repairs to be completed in a “professional and workman-like manner” so we go the extra mile. It’s a great policy that has covered my @ss on more than one occasion. The trick, of course, is actually getting the receipts before closing. I’m not sure there would be a recourse unless you could prove a seller’s deceit in open court – a difficult thing to do.
Patrick
May 27, 2010 at 8:21 am
Thank you all for your great comments. It’s pretty clear the agent should have been more diligent to insure the furnace service and any paperwork was provided. I also agree that a home warrantee is a nice fail safe in this instance as things like a furnace do have a tendency to stop working…often at the most inopportune times.
Ken Montville
May 27, 2010 at 8:33 am
I came across something similar to this recently. I was the listing agent and the inspection went fine, everyone signed off on everything and we all went to settlement. About 3 days after settlement some plumbing pipes that were embedded in the concrete slab of the house started to leak. The home warranty company had a maximum they would pay for stuff in concrete and there was no way the inspector could have foreseen something was going to happen.
This is a case of a) the age of the house and the natural deterioration of the systems of the house and b) the joys of home ownership. So many times, new home owners that run into challenges right after they move in think they can just go back to the Seller for a remedy — like calling the landlord to make a repair.
I’m sorry. As far as I’m concerned (and I’m not a lawyer), when the ink is dry at settlement the new home owner is responsible for the house and all the systems of the house.
Fraud is a bad thing, of course. But if the Realtor makes a good faith effort to find the Seller and cannot or the Seller is unwilling to offer a remedy after closing then it’s up to the [new] home owner to take care of their home.
Ashley Howard
May 27, 2010 at 5:21 pm
I would like to agree with most that have commented, and say having a home warranty would have cleared this up efficiently. If there was seller’s coverage in place then the home warranty company would have been the ones to dispatch service on the furnace and would most definitely have record of the service. If the buyers have a home warranty then I would assume(depending on coverage details in your state) it would be covered regardless, as most home warranty coverage does not require an inspection.
Agents may want to be on the look out for a clause that home warranty companies are adding to their policy called “unknown pre-existing conditions”. Some contracts you will find cover “unknown pre-existing conditions” and some will not. The ones that do NOT cover it, will most certainly try to use it as a reason to deny coverage.
On the upside, the buyers always have the option of adding a home warranty outside of closing that would take care of any additional “joys of home ownership”!