A missing bedroom in the house

[anavi8r]

Hello,

We were going to buy a 4br house in New Jersey, a cash deal, fairly expensive. There were supposed to be 3 bedrooms on the 2nd floor, and one in the basement.

A day before closing, it turned out the room in the basement, advertised to us as a bedroom, is not a legal bedroom due to the lack of a big-enough egress window. So a 4br house turned out to be a 3br one. We naturally cancelled the closing and demanded our deposit back. The seller has refused and we are now facing potential litigation.

Clearly the seller is in a breach of contract and there are potential fraud allegations according to NJ Consumer Fraud Act. I was hoping someone may cite some precedents, preferably in NJ, or any other state, we could use in court.

Thanks a lot.

 

[Zigner]

Hello,

We were going to buy a 4br house in New Jersey, a cash deal, fairly expensive. There were supposed to be 3 bedrooms on the 2nd floor, and one in the basement.

A day before closing, it turned out the room in the basement, advertised to us as a bedroom, is not a legal bedroom due to the lack of a big-enough egress window. So a 4br house turned out to be a 3br one. We naturally cancelled the closing and demanded our deposit back. The seller has refused and we are now facing potential litigation.

Clearly the seller is in a breach of contract and there are potential fraud allegations according to NJ Consumer Fraud Act. I was hoping someone may site some precedents, preferably in NJ, or any other state, we could use in court.

Thanks a lot.

How big is your deposit?

 

[quincy]

Hello,

We were going to buy a 4br house in New Jersey, a cash deal, fairly expensive. There were supposed to be 3 bedrooms on the 2nd floor, and one in the basement.

A day before closing, it turned out the room in the basement, advertised to us as a bedroom, is not a legal bedroom due to the lack of a big-enough egress window. So a 4br house turned out to be a 3br one. We naturally cancelled the closing and demanded our deposit back. The seller has refused and we are now facing potential litigation.

Clearly the seller is in a breach of contract and there are potential fraud allegations according to NJ Consumer Fraud Act. I was hoping someone may site some precedents, preferably in NJ, or any other state, we could use in court.

Thanks a lot.

Did you have a realtor helping you with the house purchase? Did you personally inspect the property prior to submitting an offer to purchase, or did you have an inspection done on the property?

Does the basement bedroom have at least half of it above grade level? Was the window one of the two required means of egress - or were there two other ways to exit the bedroom besides the window?

You should be able to get your earnest money back IF there was a material misrepresentation of the property but it can depend on how exactly this basement bedroom was advertised (among other factors).

 

[anavi8r]

How big is your deposit?

Significant, in 6 digits.

 

[anavi8r]

Did you have a realtor helping you with the house purchase? Did you personally inspect the property prior to submitting an offer to purchase, or did you have an inspection done on the property?

Does the basement bedroom have at least half of it above grade level? Was the window one of the two required means of egress - or were there two other ways to exit the bedroom besides the window?

You should be able to get your earnest money back IF there was a material misrepresentation of the property but it can depend on how exactly this basement bedroom was advertised (among other factors).

Yes, there was a realtor helping us. But he failed to indicate a potential problem with the basement room. We did inspect the property but had no knowledge of an egress window requirement. The basement is almost entirely above ground, so if the window were bigger this room would qualify as a bedroom.

The listing on Zillow said the house is a 4br, and it explicitly mentions a bedroom in the basement. Also during showings, there was a queen-sized bed in that basement room. It was advertised to us as a 4th bedroom unequivocally by the listing agent.

There were other things I did not mention in the original post: once this problem became known, the seller changed the MLS from 4br to 3br (otherwise they would be denied the certificate of occupancy) but they did not inform us of that change. We found out by accident. Also, after we refused to close, they attempted to convert an office on the 1st floor to a bedroom without our consent. Their efforts failed, the building department still refused to recognize that room as a bedroom. But this reeks of fraud.

 

[LdiJ]

Significant, in 6 digits.

With a six figure deposit involved you cannot afford to not be consulting a real estate attorney. That is too much money to rely on the advice of an internet message forum.

 

[anavi8r]

With a six figure deposit involved you cannot afford to not be consulting a real estate attorney. That is too much money to rely on the advice of an internet message forum.

I am working with a serious litigation attorney. I was hoping that maybe someone could cite some relevant precedents.

 

[quincy]

I am working with a serious litigation attorney. I was hoping that maybe someone could cite some relevant precedents.

The attorney you are working with should know the laws and the relevant cases to cite. You should rely on him/her to do the research necessary based on all of the facts.

The reason I asked about the advertising, by the way, is that basement bedrooms will often be described in advertising as “bonus rooms” and state that the rooms are currently being used as ____(fill in the blank). That would not be false advertising. Also, Zillow and MLS descriptions are not legal descriptions and should never be relied upon when purchasing a house. That is why personal inspections are important.

Did you have any contingencies listed on your purchase offer (e.g., contingent on inspection report, contingent on financing)?

I see a possible failure by the realtor in not knowing the requirements for a basement bedroom, especially since you made it known to your realtor that you wanted a four-bedroom house (at least, I assume you made that known to your realtor). It is possible that your lawyer can get your earnest money deposit back based on this failure.

 

[adjusterjack]

The basement is almost entirely above ground, so if the window were bigger this room would qualify as a bedroom.

It shouldn't take much to enlarge the window to meet the requirements of a bedroom.

Would probably cost less than the cost of litigation.

And would enhance the value of the property when you sell it someday.

 

[quincy]

It shouldn't take much to enlarge the window to meet the requirements of a bedroom.

Would probably cost less than the cost of litigation.

And would enhance the value of the property when you sell it someday.

That might be a solution if the basement can accommodate a larger window and the seller agrees to pay the cost of replacing the window or reduces the price of the home to cover the cost (and inconvenience to the buyer).

The attorney anavi8r sees might suggest other options as well.

 

[Taxing Matters]

But this reeks of fraud.

It's potential fraud if the seller knew that the basement room didn't meet code for a bedroom and intentionally misrepresented it to buyers. Do you have any evidence that indicates the seller knew it didn't qualify? It's quite possible they didn't know it didn't meet code, especially as you say the basement sits nearly above ground and that a larger window is all it would take to remedy the code issue.

Did your contract give you the right to have it inspected and get your deposit if it failed to meet minimum building code requirements? If not, then that was a flaw in the contract. While you might not have a solid fraud claim, you still may have a good breach of contract claim. With the money at stake here you really need to discuss it with a real estate attorney. Sometimes all it takes to get that deposit back is a firm letter from your lawyer threatening to take them to court if the money is not returned promptly.