Last fall, one of my clients purchased an historic home that had been completely renovated, in a great neighborhood, on a fabulous lot with a new garage and bonus room. The buyers paid $50,000 over the asking price as they were four other offers, and they really wanted the house.

  They had a thorough inspection, verified the city permit records, the home appraised for the purchase price, and they purchased a home warranty.

  Soon after they moved in, they could smell gas in the new laundry room. They contacted the home warranty representative, and a contractor came out and determined there was a gas leak behind a wall on the 2nd floor where the sellers installed a new washer and gas dryer. This appeared to be a workmanship problem, so it wasn’t covered by the home warranty.

  We checked the Seller’s Property Disclosure and the sellers stated that there were permits pulled, if required, for all work done. Then we checked the building permit records and found a contractor that pulled a permit for heating and plumbing earlier in the year. The buyers contacted the contractor, but they told that the contractor didn’t install the new laundry room.

  The buyers had to have the gas line disconnected as the location of the gas leak couldn’t be determined without removing the sheetrock, run electric for a new dryer, and purchase a new electric dryer. The total cost to repair the problem was about $6,000.

  Once the buyers new the extent of their damages, they planned to hire an attorney to get reimbursed by the sellers. I recommended that we reach out to the sellers through their agent before taking legal action. The buyers draft a demand letter for $6,000, outlining the problem, lack of disclosure, and associated repair costs.

  The sellers quickly agreed to reimburse the buyers for $6,000, to avoid litigation, without admitting fault, and the buyers signed a release for any future claims. 

  It is important to pull a building permit, when required, in order to avoid future liability, after you sell your home. If you know work was done without a permit, you must disclose the information to the seller, so they can decide whether to move forward, have further inspections, or renegotiate the purchase agreement prior to closing.

  An experienced real estate agent or attorney can answer disclosure questions, prior to putting your home on the market, to help avoid claims after closing.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.