DEAR BARRY: We just purchased a foreclosed home. The seller, a large bank, did not disclose there was a mold problem. The mold was found during the final walk-through inspection, and the bank agreed to have it removed.
A week later, the bank reported that the removal was completed, so we closed escrow. But when we moved in, we found that the mold was only partially removed, and paint was used to cover the places where the mold was left. This has now been confirmed by a mold inspector.
According to the bank, this was an "as-is" sale. Do you think it is liable for the remaining mold removal? –Joan
DEAR JOAN: An as-is sale does not excuse false disclosure. If the bank hired someone to remove the mold and then reported that the work was complete, it should assume responsibility for completion of the work, as disclosed.
You should also find out who was hired to do the mold removal. Concealing mold with paint while claiming that the mold was removed could get those people in a lot of trouble with the state agency that licenses contractors. At the very least, those persons should be liable for professional negligence.
Furthermore, if they are not licensed to perform mold removal, the bank could be liable for having hired them.
DEAR BARRY: We sold our house several months ago, and the lady who bought it hired a home inspector. The gas service was turned off at the time of the inspection because the house had just been tented for termites. So the inspector did not test the furnace.
After closing escrow, the buyer called the gas company to relight the pilot in the furnace. The gas man "red-tagged" the furnace because he found a crack in the heat exchanger. He advised the buyer to have it replaced, so now she wants us to pay for a new furnace. We never had a problem with the heater while we lived there, so we knew nothing about a bad heat exchanger. Are we liable for this? –Julie
DEAR JULIE: The cracked heat exchanger was a pre-existing condition that might have been discovered before the close of escrow if the gas had been on during the home inspection. If the crack had been found at that time, the buyer would have asked you to replace the damaged furnace, and you probably would have complied with her request.
As unpleasant as this expense may seem after the close of escrow, the buyer’s demand is by no means unreasonable or unfair. If you were the buyer, you’d probably feel the same way that she does now.
It should also be noted that the buyer’s home inspector may be partially at fault in this situation. If the gas service was off during the inspection, the inspector should have recommended that it be turned on prior to close of escrow to enable completion of the inspection. That might have prevented this unpleasant surprise after the sale.