disclosure issue

What is the name of your state? California

I recently sold a home in San Francisco that I owned for five years. There was a drainage problem at the rear, ground-level door. After numerous incidents of water intrusion I installed a catch-basin outside the door in December, 2003. The house did not flood after that. On the disclosure forms I answered "Yes" to each of the two questions re: drainage/water intrusion (ie: I said I was aware of problems). In the clarification section to the first question I said that there was a "rear door drainage problem in heavy rains" and that I had installed a new catch basin and didn't experience any flooding after that. To clarify the second question I said that the basin was installed without a permit. In a meeting with the buyers (after the inspection period but before the close of escrow) I was showing them around the house and told them (in person and in writing) that they had to maintain the basin and that they should "keep an eye on it during torrential rains." I also related stories about my wife and I bailing water away from the door in a particularly heavy rain, and said that although the basin seemed to work that I was still "paranoid" about it. We closed escrow, they went on vacation and unseasonable early rains flooded the ground floor. They were in the process of refinishing the wood floors and had stripped the finish off them so the bare floors sat under water for approx. two days and were badly damaged. This flood was also much worse than anything that ever happened to us (ie: the water went farther than it ever had before). In a subsequent conversation they asked how often the flooding had happened I told them I'd experienced a problem every year for three years. On the advice of their agent (and, I assume, an attorney) they are now claiming that because I didn't describe the frequency of the problem that this constitutes a failure to disclose and have asked me to pay for the damage to the floors. We've offered them a partial settlement because we don't want to get sued, but they haven't accepted it. They might still accept our offer but if not do you think they have a case?

[HomeGuru]

Originally Posted by bacon

What is the name of your state? California

I recently sold a home in San Francisco that I owned for five years. There was a drainage problem at the rear, ground-level door. After numerous incidents of water intrusion I installed a catch-basin outside the door in December, 2003. The house did not flood after that. On the disclosure forms I answered "Yes" to each of the two questions re: drainage/water intrusion (ie: I said I was aware of problems). In the clarification section to the first question I said that there was a "rear door drainage problem in heavy rains" and that I had installed a new catch basin and didn't experience any flooding after that. To clarify the second question I said that the basin was installed without a permit. In a meeting with the buyers (after the inspection period but before the close of escrow) I was showing them around the house and told them (in person and in writing) that they had to maintain the basin and that they should "keep an eye on it during torrential rains." I also related stories about my wife and I bailing water away from the door in a particularly heavy rain, and said that although the basin seemed to work that I was still "paranoid" about it. We closed escrow, they went on vacation and unseasonable early rains flooded the ground floor. They were in the process of refinishing the wood floors and had stripped the finish off them so the bare floors sat under water for approx. two days and were badly damaged. This flood was also much worse than anything that ever happened to us (ie: the water went farther than it ever had before). In a subsequent conversation they asked how often the flooding had happened I told them I'd experienced a problem every year for three years. On the advice of their agent (and, I assume, an attorney) they are now claiming that because I didn't describe the frequency of the problem that this constitutes a failure to disclose and have asked me to pay for the damage to the floors. We've offered them a partial settlement because we don't want to get sued, but they haven't accepted it. They might still accept our offer but if not do you think they have a case?

**A: yes, I think they have a case.

Originally Posted by HomeGuru

**A: yes, I think they have a case.

What would the basis of their case be, in your opinion?

[HomeGuru]

Originally Posted by bacon

What would the basis of their case be, in your opinion?

**A: you did not fully and completely disclose the past problems.

Originally Posted by HomeGuru

**A: you did not fully and completely disclose the past problems.

That doesn't clarify anything; it's the same reply as "yes I think they have a case." I know this is not a forum for argument and what I'm really after is more information so please don't mistake the following for gamesmanship. I would appreciate your help. Do you think the phrase "heavy rain" implies a rare occurence? Are you suggesting that if I'd said "annual drainage problem in heavy rains" (which isn't even true, it only happened 3 times in 5 years) rather than just "drainage problem in heavy rains" that this would have constituted a full and complete disclosure? How could they have failed to understand the phrase (which I gave to them in writing) "keep an eye on it in heavy rain" other than to mean that there was still a potential for problems? How could I disclose something that hadn't happened yet (the basin did not fail on me)? I thought the purpose of disclosure laws was to prevent sellers in my situation from saying things like "there's no drainage problem" or "that catch basin is guaranteed to work" or "don't worry, everything's fine." I think I see now why disclosure suits are such a growth industry.

[HomeGuru]

Originally Posted by bacon

That doesn't clarify anything; it's the same reply as "yes I think they have a case." I know this is not a forum for argument and what I'm really after is more information so please don't mistake the following for gamesmanship. I would appreciate your help. Do you think the phrase "heavy rain" implies a rare occurence? Are you suggesting that if I'd said "annual drainage problem in heavy rains" (which isn't even true, it only happened 3 times in 5 years) rather than just "drainage problem in heavy rains" that this would have constituted a full and complete disclosure? How could they have failed to understand the phrase (which I gave to them in writing) "keep an eye on it in heavy rain" other than to mean that there was still a potential for problems? How could I disclose something that hadn't happened yet (the basin did not fail on me)? I thought the purpose of disclosure laws was to prevent sellers in my situation from saying things like "there's no drainage problem" or "that catch basin is guaranteed to work" or "don't worry, everything's fine." I think I see now why disclosure suits are such a growth industry.

**A: you should have given a full history of the problems etc. as part of your written disclosure statement.

Originally Posted by HomeGuru

**A: you should have given a full history of the problems etc. as part of your written disclosure statement.

Full history? The CA disclosure form doesn't ask for a "full history," it asks if you are aware of a problem (I said "yes" to both questions about drainage or H2O intrusion) and then asks you to "explain" (I did). Nobody ever said anything about a "full history." There's no limit to that term. Wouldn't a full history require you to recreate each of the occurrences down to the minutest detail? Anyway, what's so incomplete about describing the conditions that caused the problem as opposed to telling them how many times it happened? Is the term "heavy rains" that vague? Does it really come as a surprise to learn that there were heavy rains every year for three years? Is this what disclosure laws are for? More importantly, is this how they're enforced? Does the standard require an attempt to deceive the buyer or is anything less than everything worthy of a lawsuit? I think I know the answer. Thanks for your help, Home Guru. I feel much better now.

[HomeGuru]

Originally Posted by bacon

Full history? The CA disclosure form doesn't ask for a "full history," it asks if you are aware of a problem (I said "yes" to both questions about drainage or H2O intrusion) and then asks you to "explain" (I did). Nobody ever said anything about a "full history." There's no limit to that term. Wouldn't a full history require you to recreate each of the occurrences down to the minutest detail?

**A: no, not at all, but the full history or close to it with respect to disclosue issues would create a mutual undertsanding or meeting of the minds as far as the TDS is concerned. If the Buyer's understanding of the disclosure statements were not the exact same as yours, then you did not fully disclose the material facts. In addition, there is no law that requires you to use the disclosure form the Realtor gave you. You had the option of providing a 50 page book if the need arose to comply with the law and protect your interest and reduce your liability.
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Anyway, what's so incomplete about describing the conditions that caused the problem as opposed to telling them how many times it happened? Is the term "heavy rains" that vague? Does it really come as a surprise to learn that there were heavy rains every year for three years? Is this what disclosure laws are for? More importantly, is this how they're enforced? Does the standard require an attempt to deceive the buyer or is anything less than everything worthy of a lawsuit? I think I know the answer.

**A: good, I am gald that you already know the answer. If you review the actual CA seller property condition disclosure law together with past cases similar and relative to your seller disclosure issues, you would have a better idea of your liability.
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Thanks for your help, Home Guru. I feel much better now.

**A: no problem.

Originally Posted by HomeGuru

**A: If you review the actual CA seller property condition disclosure law together with past cases similar and relative to your seller disclosure issues, you would have a better idea of your liability.

If you have any specific cases in mind (or even a good general site for reference materials on this subject) I'd love to know how to find them.

I was only able to Google up one CA case re: drainage/flooding and the seller won because the buyer was ruled to have been given a sufficient opportunity to understand the issue while he still had time to do something about it. Whether he actually understood the issue or knew what his options were seemed to be irrelevant. This runs contrary to your contention that if the buyer's understanding of the issue is not the "exact same as (mine)" that this constitutes a failure to disclose the material facts on my part. Your position eliminates the buyer's responsibility to interpret the disclosure in a reasonable way and act accordingly. I know we've come a long way from "caveat emptor" but buyers are not inert vessels into which sellers pour information, are they?

I still maintain that I disclosed this issue with great specificity and voluntarily provided more information than the disclosure form could hold. I described the frequency of prior incidents in terms of the conditions that caused them rather than calendar time, but I provided the information nonetheless. I guess I should start writing the history of my new house now in case I ever try to sell it. I wonder what would happen if I provided so much information that the buyer could not read it all before the close of escrow. Might be trouble, eh?

Here's the actual wording re: disclosure from the State of CA real estate code:

"The overall intention is to provide meaningful disclosures about the condition of the property being transferred." To me this is far more limited (and attainable) than a "full history" that results in the "exact same" understanding of disclosed issues by all parties.

You also wrote: "...there is no law that requires you to use the disclosure form the Realtor gave you." I checked and the CA civil code requires sellers to complete the state sanctioned disclosure form and says local jurisdictions may have their own forms as well.