The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: joeco316 on May 20, 2017, 02:15:13 PM
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Sorry if this is a bit off topic, but its pretty much going to cripple my ability to save $ for the next 5 years and I figure this community may have some insights into real estate laws that other forums may not.
First, let me preface by saying that I know if someone has to ask if its worth talking to a lawyer, it probably is. I likely will be doing that either way. I'm mostly just looking to see if anyone has any experience with this problem/potential lawsuit and if so, if you have any pointers or recommendations about how to proceed. Sorry for the long post but the details are fairly important.
Fiance and I bought a stucco twin house built around 1996 in a Philly suburb in September 2016. At the time, we were not aware that stucco, especially stucco installed between the late 80s and early 2000s, and especially in PA and other places in the Northeast, is known to have been largely installed incorrectly (insufficient or nonexistent window and other penetration flashing, insufficient or nonexistent window sealant, insufficient/incorrectly installed house wrap/tar paper, not enough room for water to escape and therefore gets held behind the stucco causing rot, and just general corner cutting).
We did have a home inspection, the inspector mentioned that some stucco had been known to have problems, but said he didn't see any red flags and generally didn't seem to think it was a big deal, so we just kind of brushed it off.
The sellers did disclose that water had been leaking through the powder room window, but that it had been "professionally repaired." It had a big patch of different colored stucco over it so we definitely would have noticed it if they hadn't mentioned.
So, we settled, moved in, and everything seemed fine for a few weeks. Then I noticed some articles and news specials about stucco problems in our areas. Still wasn't too worried, didn't notice any issues. Then I started to see houses in the neighborhood having the stucco ripped off and there being huge patches of rotting wood, under windows and in other locations. The wood was then replaced and vinyl siding put up. About a month in, a neighbor saw me outside and came over to introduce himself. About the second thing out of his mouth was "do you know about the stucco?" He pretty much repeated what I listed above.
Then I started inspecting the house more and more and found evidence that a lot of the windows had been repaired/patched/band-aided with plaster, paint, caulk, etc and also found water damage to the wood sheathing of the house where it meets the foundation in the basement. Some of this damage had spray foam applied over it. Slowly but surely, these fixes have failed and now I have paint bubbling, visible moisture wicking in some corners, loose wooden sills, etc. to some degree on virtually every window in the house, plus some other evidence of moisture beginning to cause some paint issues in the basement. And as of last week, the "professionally repaired" powder room window began to split from the drywall and leak from the top and around the sides during rain.
All this, and the sense that everyone in the neighborhood seems to at least know somewhat that this is a systemic problem, lead me to believe that the sellers knew.
Then this week we had the same contractor we have seen other neighbors use come in to evaluate the leaking window and quote us on stucco removal, wood repair, and vinyl siding. Comes to about $25K!!! We're inclined to bite the bullet and do it so that we can sleep at night and enjoy the house we invested so much in already.
What is most interested to me, though, is that this contractor corroborated my suspicion that most of the owners are well aware and he said he would not believe that the sellers didn't know. He also said that when the first house in the neighborhood had the siding put on (approximately 4 years ago), those owners sent an email around to other owners advising them of the problem they too likely had. I'm going to go knock on some neighbors' doors this week to see if I can get my hands on that and see if our sellers were recipients of the emails.
So, has anyone else experienced a similar nightmare? And does anyone have any advice about whether we might have a case to get some sort of restitution from the sellers? I don't want to waste money on a lawyer fighting a case that I'm likely to lose, but if there's a good chance of getting substantial out of them to put towards this massive $25K remediation bill, I would be inclined to pursue it.
Thanks for any input and help!
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Hi Joeco316, I assume you're talking about EIFS? When done correctly it can last indefinitely, and is pretty popular in other parts of the world today. But doing it correctly takes some forethought on drainage and flashings and as you're finding out the hard way, a lot of installers didn't bother to think it through back in the day.
I'm not much help on the legal side of things, but if you're handy at all, I would remove the EIFS yourself. It's simply a stucco finish applied over foam board that is applied with windlocks over your sheathing. Punch a hole in it and start breaking off sections with your hands and pulling fasteners until the house is fully exposed. Could be a lot of fun, actually ; ) Then you can examine what needs repair and both you and the contractor can gauge the expense of siding. In the interim, you can apply a housewrap (again, can be done in a day or less by two people with scissors, housewrap tape and a stapler) and shop around for siding quotes.
If you want to pursue the legal route, of course, you're better off not touching a thing until the legal matters draw out to a close.
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Going to be tough to recover damages after 21 years. 21 years ago, the extent of future damage would not have been known anyway. The seller did disclose the repair they made and may not have known about the extent of stucco issue. In addition, you could have replaced the stucco earlier in your ownership, as many of your neighbors did. The damage would not be as great if you had done that. My guess is the attorney will tell you that you are out of luck.
In your shoes, to prevent additional damage, I would get the work done ASAP. If the owner of the other half of the structure has not replaced the stucco, it would be a good idea to get both sides done at once. Take lots of pictures of the damage, in the event recovery is possible.
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Hi Another Reader, I think you might have misunderstood my post (I don't blame you, its quite the essay). We just purchased it in September 2016. It was built in 1996. I have no delusions about being able to get anything from the builder (if they even still exist). I do think the seller who sold it to us knew about the problems and covered it up, though.
Thanks!
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Ooops, my bad. Missed that. Now that I re-read the post, yes I would consult with an attorney familiar with the stucco problem and the litigation associated with it. If the sellers owned the property for 20 years, you might have a case. If they owned it for a year and the repairs were done before they bought it, maybe not. Whether you can win and then actually collect damages should be discussed with that attorney. Ask around the neighborhood, yours might not be the first lawsuit.
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I have a friend who bought a house in Malvern, PA with stucco issues. The neighborhood started noticing problems a few months after they moved in (back in 2011), There was talk of a class action suit against the builder, but I don't think that ever happened.
They ended up spending $75k to fix the problem. I believe the original estimate was around $45k, but once the stucco was removed, there was some serious damage found.
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I bet your real estate contract says "as is", in which case you bought it faults and all with no warranty or guarantees. Your inspector probably also has a disclaimer in his contract. So I doubt the legal route will yield any fruit.
IMO the mustachian thing to do now is learn all you can about putting up vinyl siding and lining up suppliers. For about $8k in materials and a crap-ton of hours, you could fix this yourself one wall at a time. Replacing rotten wood and tacking up vinyl siding in a level manner is not rocket science - just physical labor. You can do it.
I just did the whole back wall of my house, which had rotted due to water intrusion not related to stucco. Spent maybe $1200 and 100 hours (half the hours were research). Looks great, despite my minimal experience.
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I bet your real estate contract says "as is", in which case you bought it faults and all with no warranty or guarantees. Your inspector probably also has a disclaimer in his contract. So I doubt the legal route will yield any fruit.
I bet it does, too, but I'm sure that Pa. has disclosure requirements in connection with home sales, and often the way those laws work is to impose liability on the seller to correct undisclosed, known material defects. Essentially, a seller doesn't get to hide behind "as is" language after defrauding the buyer by failing to satisfy disclosure requirements. The question of whether there was a known, material problem beyond what was disclosed less than a year ago seems entirely like a question for a lawyer experienced in that area, who would likely also have a view on whether it's worth it to pursue the claim.
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(1) Was this an "as-is" transaction?
(2) What exactly did the prior sellers disclose? I'd ask you to quote the actual language they used on their disclosure form.
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(1) Was this an "as-is" transaction?
-I'm far from a real estate expert, but this was about as standard as a transaction as there could be in PA. To the best of my knowledge, it was not an "as-is" transaction.
(2) What exactly did the prior sellers disclose? I'd ask you to quote the actual language they used on their disclosure form.
-In the "Seller's Property Disclosure Statement" which, if you're unfamiliar with PA laws, is a document filled out by the seller when listing a property. It is a series of questions and the seller is required to disclose any "material defect" that they are aware of. In section "7. Structural Items" they answered Yes to "Are you aware of any past or present water infiltration in the house or other structures, other than the roof, basement, or crawl spaces?" and then in the 'Explain any 'yes' answers..." section wrote "Window leak in powder room - professionally repaired"
That is the only thing that was disclosed related to this issue. And, it was an obvious repair so I think they felt they were better of mentioning it rather than us noticing the large mismatched patch of stucco ourselves and possibly being led to investigating further.
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(1) Was this an "as-is" transaction?
-I'm far from a real estate expert, but this was about as standard as a transaction as there could be in PA. To the best of my knowledge, it was not an "as-is" transaction.
(2) What exactly did the prior sellers disclose? I'd ask you to quote the actual language they used on their disclosure form.
-In the "Seller's Property Disclosure Statement" which, if you're unfamiliar with PA laws, is a document filled out by the seller when listing a property. It is a series of questions and the seller is required to disclose any "material defect" that they are aware of. In section "7. Structural Items" they answered Yes to "Are you aware of any past or present water infiltration in the house or other structures, other than the roof, basement, or crawl spaces?" and then in the 'Explain any 'yes' answers..." section wrote "Window leak in powder room - professionally repaired"
That is the only thing that was disclosed related to this issue. And, it was an obvious repair so I think they felt they were better of mentioning it rather than us noticing the large mismatched patch of stucco ourselves and possibly being led to investigating further.
The issue is going to be whether they had actual knowledge about these issues. That's a harder standard than you think.
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We had a similar issue with LP siding in Georgia back in the mid 1990s. The stuff was such garbage that it was rotting off the house which was only built 6 or 7 years before that. We ended up selling the house for a loss and moving to the other side of the USA (which turned out to be a good move so...)
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1. Talk to a lawyer. Most of the lawyers who will do this work on contingency fee, so no out-of-pocket cost to you. Question will be whether a @$25K recovery will be enticing enough.
2. Other posters are correct that the key is the disclosure and proving knowledge -- "as is" is meaningless in face of disclosure laws, but you need to prove that they actually knew.
3. From your story, the key seems to be the evidence of all of those past "hidden" leaks that had previously been repaired: if you can prove the sellers lived in the house when those things happened and use caulk and insulation and the like to cover them up, you should have a reasonable case. OTOH, if they had only been there a few years, they could claim that none of that happened during their time there and they were just innocent victims as well.
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I've removed stucco before, you just use a big sledge hammer. Maybe you could remove the stucco yourself, then get a contractor in for the rest of the work.