In or out of hot water?
January 6, 2011 6:50 AM   Subscribe

Exchanging a water heater with previous home-owner to avoid loan on unit, am I opening myself up to trouble later?

We just bought a house. The owner tried to pass off the loan he had on his tankless water heater to us. The total loan value was going to be about $4500. I flatly refused knowing I could get a unit for under a grand. We signed papers saying we would not buy the house unless he left it to us with no responsisbility for the loan or took it away causing no damage to the property. Well, he wants it back. Fine. I went and bought the exact same unit for well under a grand, but offered to give him the new unit to save us all the hassle of taking out the old one. I will get him to sign a receipt showing he has accepted the new unit in place of the old one, but am worried now if he defaults on his loan, someone will come looking for that particular unit, regardless of any papers I show them that we struck a deal for an exchange with no liability for outstanding loans.
Am I right to be concerned ?
posted by Frasermoo to Law & Government (18 answers total)
 
Loan is likely tied to the serial number of the unit in the same way a car loan is tied to the VIN of the car. If he doesn't pay and the loan gives the lender re-possession rights (which I am not at all certain would be the case here) then lender could come and take the unit.

That said, other than that rather remote possibility I see no real problems. BUT if the plumbing is already done swapping the unit out is rather trivial - why not keep the brand new never used unit you bought?
posted by BrooksCooper at 6:58 AM on January 6, 2011


He owes them money on a unit that is in your house. Giving him a new unit and expecting him to pay the loan... Well I should hold my tongue, but Are You Nuts? Call a plumber and swap them out. Make notes of serial numbers or other identifying marks on the old unit.
posted by Gungho at 7:00 AM on January 6, 2011 [2 favorites]


Yes, you are right to be concerned.
The water-heater is owned by the mortgage holder on the loan - not by the guy selling the home. There is nothing that he can sign that will alter the rights of the mortgage holder.

And when he defaults - the mortgage holder has no right to take his new water heater. The only interest that the mortgage holder has is in the water heater in your home.
posted by Flood at 7:01 AM on January 6, 2011


Keep your new water heater with its warranty, pay a plumber not much money to swap them.
posted by jeather at 7:06 AM on January 6, 2011


Yeah, if it was installed right it should be no problem to swap the units in under an hour.
posted by gjc at 7:12 AM on January 6, 2011


Nthing keep the new water heater, if the loan is secured, it is secured with the particular old unit.
posted by seventyfour at 7:19 AM on January 6, 2011


Response by poster: You are all confirming my concerns. Will swap units out this weekend and wash my hands on the whole thing... with some hot water.
posted by Frasermoo at 7:34 AM on January 6, 2011


Given that the unit itself is $1000 new, is it possible/likely that the balance of what he owes is labor for installation? I would probably do a little research to ensure that if that is the situation, that a lien filed by the plumber/electrician would not end up causing YOU problems.

Maybe that would be covered by title insurance? I don't know. But I have a vague feeling of concern around the lien question. (a disturbance in the force, if you will)
posted by misterbrandt at 7:34 AM on January 6, 2011 [1 favorite]


He could sell the new one and if he defaults you could still lose the existing one. A better solution to this would have been to make it a condition that the loan on the water heater be paid out of the sales proceeds at closing.
posted by brownrd at 7:43 AM on January 6, 2011


The $3500 may include some improvements like a larger gas line to accomodate the on demand heater. Might want to make sure that the lien doesn't include the other improvements related to the installation.
posted by electroboy at 7:51 AM on January 6, 2011 [2 favorites]


My point being, I guess, that swapping out the water heater may not in fact be "wash[ing] [your] hands on the whole thing" if a portion of the money is owed for labor, not materials. As trite a suggestion as it is, I would call a lawyer.
posted by misterbrandt at 7:54 AM on January 6, 2011


If you have papers saying that it has conveyed with the house then why are you spending ANYTHING? Tell him to pound sand.

I realize he may be a nutter and that could be a pain, but my reading on tankless water heaters indicates that sizing them is critically important. Is this $1000 unit you purchased IDENTICAL IN EVERY WAY to the one you're going to swap out? You don't want to replace one that will handle the proper intake temp and flow rate with one that's not up to the task.

If it is identical then folks above are probably right; looking at a sample install manual for a Bosch the connections aren't at all complicated.
posted by phearlez at 8:21 AM on January 6, 2011


Response by poster: Our lawyers have already been involved, culminating in the last act of giving him his heater back. I'm gonna take his unit off the wall and give it back to him as agreed by legal documents already drawn up and signed by both parties. I'm not worried about any work done installing. Contractors would have got paid. The unit has been in for two years.
posted by Frasermoo at 8:23 AM on January 6, 2011


Response by poster: Is this $1000 unit you purchased IDENTICAL IN EVERY WAY

yes, I have spoken to manufacturer referencing serial #s and done extreme due dilligence. I should have, as I sell HVAC equipment for a living.
posted by Frasermoo at 8:28 AM on January 6, 2011


Our lawyers have already been involved...

Was your lawyer at your closing to the house?

Why wasn't this settled at closing. It's called "closing" for a reason. I'm concerned about your lawyer's advice if they allowed you to close on this house with this obvious problem outstanding. At closing, all parties with an interest in the house, or parts thereof, should have been settled, period. You would all sign papers. You would get the keys, he would get a check reduced by the amount that he owes anyone relating to the house, and those he owed money to on the house would be settled.

I bought a house 10 years ago where the current homeowner was making payments to a contractor for work he did renovating a bathroom. After all negotiating was over, at closing, there were two checks given, one to the previous owner minus the outstanding balance for the contractor and one check for the contractor, settling that debt.
posted by sandra_s at 1:19 PM on January 6, 2011


Response by poster: Why wasn't this settled at closing.
It was settled at closing. We agreed he would come and remove his heater. He's getting his heater back. The end.
posted by Frasermoo at 6:32 AM on January 7, 2011


Frasermoo, I think people are confused here because you asked a question that proposed a course of action at 6:50AM (my time), and 90 minutes later you posted a response saying that heaters had been exchanged, lawyers had been involved, closing had been completed. If you had already spoken with a lawyer about this problem, that would have been good to know in the original question. If you were off doing all of this while people were in the thread trying to help, that's kinda weird, because then why did you ask the question.

Not a big deal, but that's the vibe I get here. I think people are trying to figure out what happened, because the chronology doesn't make sense to us outside observers.

posted by misterbrandt at 11:00 AM on January 7, 2011


Response by poster: Sorry if this was not clear.

- At closing in October we agreed that we would not take over the loan payments on his tankless system and that he had to come and remove it. This was done with our lawyers.

- I now have a new replacement unit and was considering just giving him that, rather than taking out the old one, but was concerned that keeping the old unit might open me up to problems later, regardless of any receipts or signed documents by him showing that we had exchanged units.

Update - we are removing his unit this week and giving it back to him and installing the new unit that I bought.

The early answers in the thread all confirmed what I knew to be the right course of action. Thanks all for your input, apologies if I wasn't crystal clear all the way through.
posted by Frasermoo at 6:58 AM on January 10, 2011


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