Sky-high water bill a red flag to buyers

Q: I just bought a home two weeks ago. On the day we closed, when I met the sellers' agent at the house to get the keys and move in, there was a tag on the door from the water company.

The tag was a warning that the previous month of water usage was very high and there must be a leak on the property. I have now verified that there is a leak. It is somewhere between the meter and the house.

The sellers' agent told me she would look into it. I still have the form that has the date of the meter reading and time. The time of the reading was before we actually closed on the property.

This is clearly an existing condition that nobody knew about until the city posted the warning. Should the sellers repair the leak because it was present before I closed on the property?

A: The answer to your question depends on the terms of your contract. If your contract provides that the seller must make repairs to the property for issues that are evident prior to the closing, then the sellers might be obligated to make the repair.

The real question is why didn't you get something in writing from the sellers indicating their agreement to make repairs? Or, why didn't you delay closing until you investigated the issue further? And finally, why didn't you hold back money to make sure that the sellers actually fix the problem?

Many states have seller disclosure laws, but the sellers' responsibility for disclosure is generally for matters known to them. You indicated that nobody knew of this issue, which would mean that the sellers did not know, couldn't disclose to you, and probably have no obligation to make a repair under many state seller disclosure laws.

Because you'll have to make the repair yourself, you should get three estimates and hope that the repair isn't too extensive. The listing agent told you she would look into it but didn't agree to make any payments or promises. It's likely that you'll end up having to pay for the repair yourself.

You should obtain copies of water bills from your local municipality for the prior two years to see when the increase in water usage was evident. You then should take that information, along with your real estate contract and the tag placed on your door, to a real estate attorney in your area to determine whether you might have a case against the seller.

If the fix is minor, you may decide to take care of it yourself. If the repair is major, you might want to move forward (so you're not running up an enormous water bill) and meet with an attorney. If the water bill shot up so high at one specific bill, the sellers would have known there was a problem with the house and probably would have had an obligation to disclose the issue to you.

But if the problem arose on the bill just before the sale, it might not be enough for the sellers to have known they had a problem with their water main.

Q: While attempting to sell my condo last May, I put down earnest money on another condo. My condo didn't sell, and I was very honest all along with the builder of the new condo about the status of my condo.

The builder said all along not to worry about the contract, but it was just stringing me along. Now the builder said it doesn't have to give me any of my deposit back. The Austin, Texas, market is still strong, so the builder should not have a problem reselling my unit. Can you please help me get my money back?

A: You need to review your purchase agreement for the condominium you are purchasing. I might even suggest that you talk to a real estate attorney to review your contract and any other documents you have from the builder of your condominium.

There may be something in those documents that may allow you to back out of the deal.

However, you signed a contract and agreed to buy the new condo. If the contract doesn't give you the right to cancel the deal if you don't sell your current home, you would be required to close on the purchase whether or not you have sold your home, or even if it would put you into bankruptcy.

The builder's remedies would be set forth in the contract. If the contract specifies that the builder gets to keep your deposit as the builder's remedy, then it may be entitled to keep it unless there is case law or a state law that would require the builder to give all or a portion of the money back.

Please take your documents and go to a good real estate attorney who is familiar with new construction laws in your area.

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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