Winter 2019 One-Two Punch: Record Snow Followed by Thaw, Heavy Rains

[Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.  If you need legal advice, please consult an attorney.]

In the wake of this week’s soaking rain and relatively mild temps — on the heels of record February snow —  it’s a good bet that thousands of formerly dry Twin Cities basements and previously well-functioning roofs have sprung a leak (or two) this week.

Statistically, it’s further likely that at least a couple dozen of those homes are currently under contract (“Pending” on MLS), but haven’t closed yet.

leakHow are Sellers supposed to handle their not-so-timely moisture problem(s)?

The quick answer: it depends on how big it is.

It’s also the case that the Seller’s duty to disclose is ongoing; that is, if there’s a change in their home’s condition prior to closing, they’re obliged to let the Buyer know.

Two Options

With that as prelude, Option #1, I suppose, is for the Seller to simply do nothing.

The basement puddle will eventually evaporate, the wet ceiling will dry, etc.

Ditto for most other types of moisture intrusion.

But, Sellers have to presume that Buyers will do a walk-thru inspection prior to closing.**

Dealing with the aftermath of a newly stained ceiling or wet basement the morning of closing ” with an upset, justifiably distrustful Buyer who just found the problem ” is a lot bigger headache than dealing with the same problem proactively, with the luxury of time and cool(er) emotions.

Of course, if the little problem wasn’t so little and the closing is still weeks (months?) away, there’s always the risk that a neglected, little problem will become . . . bigger.

That’s especially so when water is involved (see, “mold remediation,” “dry rot,” etc.).

Option #2 

All of which is why the better, smarter course of action is for the Seller to expeditiously fix the problem.

molehillPost-repair, it’s appropriate for the Seller to update their disclosure (“after 2 inches of rain on March 13-14, 2019, small stain found in northeast corner of Living Room ceiling. Roofing contractor repaired approximately six damaged shingles, small area of ceiling re-painted”).

The last step is to have the Buyer initial the updated Disclosure after reviewing any repair documentation the Seller has provided.

Mountain or Molehill? Puddle . . or Lake?

All of the foregoing presumes a finite, fixable problem.

But what happens when a tornado barrels down the block, damaging (or destroying) dozens of homes?

Just such a nightmare scenario occurred in North Minneapolis several years ago this Spring, affecting dozens of pending homes sales.

Then, the issue is governed by the “force majeure” clause in Minnesota’s standard purchase agreement (and I presume, other jurisdictions as well).

In plain English:  if there is a material (read, “significant”) change in the home’s condition prior to closing, the Buyer has the option of canceling the Purchase Agreement or renegotiating it.

See also, “Wet Basements:  Who’s Responsible?“; and “Storm Damage and Pending Home Sales:  Buyer’s Call.”

**What happens if the Buyer misses the issue during the walk-thru, but instead discovers it soon after closing and taking possession?

In a nutshell, the bar is then higher.

Specifically, the Buyer has to prove two things:  1) the problem existed prior to closing; and 2) the Seller knew ” or should have known ” about it.

Even if the parties have agreed to Arbitration, there are still costs (and time) associated with resolving disputes post-closing.

Practically, that usually means forgetting about it unless bigger dollars are involved.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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