Lying Home Seller Found Liable for Hiding Mold
This is one of those stories that is surprisingly not too common. Christopher Geary (formerly with Koeller, Nebeker, Carlson & Haluck, LLP), from Construction Litigation Law Blog, points us to a recent case ruling in Connecticut that is worth noting. The summary of this sordid tale goes as follows – an unscrupulous seller put in new carpet and paint to intentionally conceal serious water intrusion and mold in order to sell a home. The seller did not disclose that there were any problems to the buyer. A lawsuit ensued.
“The court specifically found that the seller could not have been unaware of the serious water problems and resulting mold throughout the house. Carpet which had been installed just before the sale was soaking wet when lifted. There was black mold in the utility closet, obscured by boxes and storage items. Wood support beams were visibly stained and rotted through, in areas where sheet rock was missing from the walls, so the seller could not have missed it. The evidence appears to have been overwhelming that the house was in terrible condition. The court did not discuss the contents of the home inspector’s report. It appears that the defendant’s deception and untruthfulness was hugely significant and overcame any argument that the home inspector should have noted these deficiencies.”
The Connecticut Superior Court judge that heard the case ordered the seller to compensate the buyers for not only the repairs but additional money. Sounds good, right – justice was served. The reason that this is surprisingly not too common has to do with what we like to refer to as the Construction Defect Lawsuit Life-cycle. Most homeowners join construction defect lawsuits because they have genuine concerns over the construction of their home. The first step in the process is for the attorney representing the homeowner to pay for an expert to thoroughly investigate the home to produce a preliminary defect list. The next step is the investigation and mediation phase whereupon myriad attorneys, insurance adjusters, experts and others representing plaintiffs (homeowners or HOA generally) and defense (developer, architects, general contractors, subcontractors, etc.) evaluate and debate the nature and extent of any construction defects. Following this, the case is eventually resolved through one of (at least) three ways: either the case is dropped, settled out of court, or decided in trial. If the homeowner comes out ahead and receives money at the conclusion of the case (their attorney usually gets 30 – 40%), what happens next? That is the part that hasn’t been addressed in any meaningful way yet.
Here is the homeowner with a fairly large check (depending on the plaintiff attorney and various factors the homeowner will average $10,000 up to about $60,000) and a home that according to many experts, is riddled with construction defects. Does the attorney provide the homeowner with a punchlist of items to be addressed by a reputable contractor with references to contractors specializing in those types of repairs? I should think not. Does the expert that testified on behalf of the homeowner oversee repairs to the home that they recommended under oath perhaps? Hardly ever. Following a trial, the homeowner could theoretically obtain transcripts and try to piece together the testimony and reports of the various experts, but ultimately, the homeowner is usually left with nothing but a check and a vague notion of the major defects. Without a lot of direction, addressing truly defective or improperly installed components and associated damages is very difficult. Often times homeowners try to address some of the major issues as best as possible. Often they end up upgrading some of the finishes. Sometimes they spend the money on other things (or so we’ve heard). According to many Southern California realtors, rarely if ever do homeowners disclose during a sell that their home was involved in a construction defect lawsuit – especially if it was settled out of court. The homeowners that were plaintiffs in a construction defect lawsuit have profited, their attorneys profited, the experts hired by their attorney profited, often (strange as it seems) the defense attorneys profit (they are paid by the hour), the experts for the defense profit and even the mediators profit. Insurance carriers recoup their expenses by raising premiums, developers charge more for their homes and the cycle begins anew at a different location. And the house is still defective, no repairs have been made, and yet for some reason, none of this is disclosed to future buyers.
Perhaps this scenario will change in the future, but regardless it is clear that there is a definite gap in the life-cycle. And just to clarify: this isn’t the fault of anyone in particular, and the integrity of the industry as a whole (both the construction defect industry and residential construction itself) has definitely improved over time.
15 September 2007 | Construction, Construction Defect, Construction and Law, Experts, Litigation | Comments
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