QUESTION: A couple of years ago we sold our house, and one of the conditions of the sale was a home inspection. The deal went through and a few months after possession we received a letter from a lawyer requesting that we pay for repairs to our old house due to water leakage into the basement or further legal action would follow. We told them that we knew nothing about basement leakage and would not pay them anything as the deal was finalized quite a while ago.
A few months later, we received more correspondence informing us that we were being sued for damages, along with the realtors and the home inspector. The claim was that the leakage should have been disclosed to the buyers and they will have had to spend thousands of dollars to stop the leakage and fix the basement.
After receiving this letter, I have retained a lawyer to act on our behalf, and this has now dragged on for over two years with no resolution. I get a notification every few months from our lawyer stating that more papers are being filed, but no court date has been set. This is costing us quite a bit of money in legal fees and we don't know what to do. The lawyer said that we may have to hire our own inspector or a professional engineer to go through the house and give an opinion about the leakage and whether we might have known about it or not. This will cost us even more money, especially if we have to hire these experts to testify in court on our behalf.
Is this a common occurrence, and is there anything we can do to make this go away or at least stop the bleeding? -- Sued Sammy
ANSWER: I have used a pseudonym for this hypothetical question because I recently received a phone inquiry of this nature and the case is ongoing. Also, I have consulted on at least one other similar case that may still be unresolved, as well. I guess that answers the first part of the question, but the second part of the inquiry is much tougher to deal with.
When someone asks me for information or advice regarding property disclosure statements or other legal advice with anything related to an inspection, I normally let them know my simple view on all these type of matters: If you have to go to court, you have already lost.
Whether you are the one suing another party because you think they misrepresented something about a property sale, or are the one being sued, you will be in for a long, costly process. These matters are rarely settled quickly, and often can rack up thousands of dollars in legal fees and disbursements before anything is resolved. Unfortunately, once you are involved in a situation like this it may be difficult to walk away without significant emotional and financial scars.
The first advice I can give anyone being accused of something like this is to consult a good lawyer. Sometimes, people will try using a threatening letter from a law office to attempt to get a settlement from a seller for a problem that has arisen after possession. Often, a reply from your own legal representative, possibly with a threat of your own legal action, may halt the claims.
Unfortunately, there's nothing preventing an individual from making a frivolous claim and pursuing it in court. In that case, it may be up to you to provide your own defence and dispute their claim at your expense.
Your only course of action, other than a good defence, is your own legal efforts to recover some of your costs should the claims not be proven in court. Regardless, your lawyer should be the one deciding on how to proceed in the quickest way to make this go away.
The dilemma is that the longer the situation drags on, the more time the lawyer will have to spend on your file, and the more you will be billed. It's important that you do everything you can to speed up the fight or it may drag on indefinitely. Regular calls to you legal representative to keep your file in the forefront may prevent it from getting forgotten in a mountain of other legal actions.
Because the buyers have taken a shotgun approach and named everyone remotely associated with the sale, there are other interests at stake. It may actually slow down the process, as the other defendants' lawyers file motions and you have to wait for all the parties involved to wade through the paperwork. Encouraging communication between the legal teams, rather than completely independent strategies, may also prevent needless delays.
The final piece of advice I can offer may be too late for your home sale, but may help others prevent the same scenario. Full disclosure of all known issues by you and your realtors to potential buyers is your best defence. The more information that buyers get about the home prior to purchase, the less likely they are to claim that you wilfully misled them. That's why home inspections and property disclosure statements can not only be a benefit to the buyers, but also to the sellers as well.
This is not to say that you can totally avoid a frivolous lawsuit by providing this information, but it will be harder for a buyer to justify legal action if you do.
Ari Marantz is the owner of Trained Eye Home Inspection Ltd. and the President of the Canadian Association of Home & Property Inspectors - Manitoba (www.cahpi.mb.ca). Questions can be e-mailed to the address below. Ari can be reached at (204) 291-5358 or check out his website at www.trainedeye.ca.
trainedeye@iname.com
