Help! Found Roof Leaking Before Closing.
My first investment property will close in 10 days. I just found from its walk-up attic that several places of the slate roof leak seriously after a heavy rain. Rafters are wet and there is water on attic floor. The owner doesn't live there. Before we signed P&S, I had asked the owner about the condition of the roof. He mentioned to me that one area leaked last year, but he had a roofer fixed it and it does not leak anymore. During inspection, our inspector told us that many roof slate cracked, but he could not tell whether it leaks or www.not.The owner lowered the price a little because of the roof and other problems. After we signed P&S, I asked the owner for warrantee or something like that from the roofing company who did the job. He reassured me that the roof does not leak and got me a letter from the roofing company. The letter says the roof system is watertight and in good condition, but there is no date on the letter. I will ask two roofing companies to come and give me estimate next Monday. I will ask the seller to pay for the leak repair expense. But what if he refuses? Can I ask my mortgage bank to hold thousands dollars for me at the closing? Can I get my earnest money back if I don't want to close?There are vinyl tiles on the attic floor just around the leak areas and the ceiling below the attic seems be painted recently. I am not sure they are there to cover the old water stain or the new stain. Can I sue the owner for misleading me if he can't give a satisfied solution? Any advice is appreciated.
Estate,
The legal remedy really depends on your contract. From what you said, it doesn't sound like you purchased the property as is, so you may have recourse. That said, it is probably not in your best interest to sue. Lawsuits are costly, and surely cost more than to fix the typical roof leak.
If your contract is contingent on inspections, etc, then you can require a roof certification to close. You can also discuss with your title company the possibility of withholding funds and putting those funds into escrow until the repairs are complete. Again, if your contract is contingent on inspections, you should also be able to cancel the deal and receive your earnest money deposit back if the seller doesn't fix the problem.
At this point, the best thing you can do is discuss the situation with your title company/attorney, find out the cost of repairs, discuss it with the seller, and determine if the deal is worth it to you or not.
Bnorton, thank you for your reply. I did not deal with a title company. Is that company like a mortgage company? My mortgage company and the closing lawyer takes care of all title search and title transfer stuff. The fee is included in the closing cost. In MA, it seems all mortgage company work like this. What does a title company do for a buyer? Do I need one?
A buyer in MA can cancel the contract with earnest money back if he is not satisfied with the inspection result within 10 days after his offer got accepted. If the buyer is satisfied or can reach an agreement with the seller within that 10 days, then they proceed to sign the Purchase and Sale agreement (P&S). The buyer will put 5% deposit and can only get the money back unconditionally if he can't get mortgage within certain days. In our case, the seller did not want to repair since he lives in another state, he lowered the price to cover some repair expense and we accepted. Then we signed the P&S. Now the point is, the price we agree to pay is based on a non-leaking roof. It is very expensive to repair slate roof. We still want to buy the house if the seller agrees to pay for the leak repair expense. I will give his agent the repair estimate. I don't know what to do if the seller refuses to do anything. I talked to my mortgage broker and she said they have no right to hold money at closing without the seller's pemission.
If your P&S Agreement doesn't give you clear right to walk, getting your EMoney back, weigh cost of roof repairs against your probable small loss if you do walk.
Even if you walk away from your EM now, it may be a lot better than buying a BIG fixer that you weren't anticipating and expecting to find.
Your chances of being sued as defaulting buyer? Very slim, as in 99'% of cases, S's lawyer isn't going to be very excited about suing you, and S isn't going to be thrilled with his lawyer's bill for same.
[addsig]
Perhaps owner (and roofer) thought it WAS fixed. Perhaps they were all hoping for a dry spell and a quick sale. Perhaps the new paint is just the final touch after the repairs and it wasn't intended to deceive. Lotta variables here. It's usually not a good idea to assume, though, deceit was involved, at least until you have more evidence.
Legal prerogatives aside, you came to an agreement already with the seller--meaning not only that you want to buy, but that he wants to sell--and it sounds like he's pretty relaxed about it all (from the sounds of his roof explanation). Figure out your bottom line and be prepared to say, "For whatever reason, looks like your roofer didn't fix the leak (note that you're avoiding blaming the owner for the problems, directly anyway)." Estimates in hand, tell him "I can live with you knocking $ XXX off of the price to take care of these unexpected repairs; after all, you'd probably agree that a good roof is pretty fundamental." If he's reasonable and doesn't want the deal killed, he'll be listening.
You obviously want the deal. If you finesse the negotiations and avoid any finger pointing, it should work out, and the seller may even feel sheepish or mad at the roofer. If the seller is hiding something (and if so, what else could he be hiding?) then he may show his true colours by getting mad, talking about lawsuits, etc. Good time to just say, "well, it looks like we've agreed to disagree for the moment. Looks like we'd better delay the closing a bit til we can come to an agreement. Should we talk again on Thursday?"
Good luck.
Thank you for all of your advice. It seems that you all think that I can't be out without losing emoney. Then I have to stick to the house since the emoney is 5% and much more than fixing the roof. I still want the house, just the unexpected expense(I believe it is close to $1000) makes me uncomfortable. I think it is reasonable to ask the seller to pay for it, hope he also thinks in the same way.
Loon - you are not such a loon after all. Great advice!
Estate - The best thing here is to keep an open line of communication with all parties. With patience and tact, you can get this worked out. Your closing attorney is the same as a title company. You need to work through him to explore all of your options.
estate168
Is your mortgage company requiring "2-year roof certification"? Most lenders require that before funding your loan and a condition of funding.
Since the roof is showing evidence of leaking even before close of escrow (10 day) ... go back to your mortgage company and ask about their requiring and certification. They probably are using that document from the roof company that you mentioned in your post.
If a 2-year roof certificate is required by your mortgage company and that was mentioned in your purchase contract ... should give you the leverage you need the seller to pay for the repairs.
Cheryl Lopez
WOW a good RE agent would come in handy right now..... OK....
First request the seller to extend the contract for a couple of weeks because of the newly found roof problem. This will smoke out if he knew of the problem - no extension = he knew. If no entension, are you willing to take it on, or walk. If you take it on, look closely at the estimates...they are just that, it could cost more. If the seller is unwilling to move toward fixing/contributing $ for repairs, contact the mortgage company. Was the Financing Contingency removed? Can you get out of the deal if the mortgage company will not grant the loan? This is why the contract and its language is important. Review it for options, and work with your RE agent. That's what they get paid to do. What does your Agent say?