Is there legal recourse for an untruthful house listing?

September 6, 2006 5:35 PM

The home inspection revealed that the house we're trying to buy, listed as having a garage, does not have a functional garage. What, if any, legal recourse do we have? (i.e. are we entitled to compensation from the seller?)

The listing of this South Philly row home says, ". . . parking for two cars, garage, etc . . ." We have a car and are looking for a home in South Philly, so we were excited to find a house with a garage. We bid on the house and came to an agreement, pending the home inspection. When the inspector came today, he stated that this was not actually a functional garage, but a "basement with a garage door." The walls were not built per fire-safety standards, so it is unfit for parking a car in. The garage was a major selling point for us. Though we can back out of buying the house, we're now out over $400 for the home inspection and termite inspection. Is the mislisting something that violates real estate law, and, if so, can we pursue compensation?

posted by robynal to home & garden (17 comments total)

We bid on the house and came to an agreement, pending the home inspection.

Does the sales agreement represent that there's a garage in the house? Did you bid on the house without actually seeing it first?

In many states, you could probably demand compensation for the $400 based on false advertising or some equivalent claim. If the listing was placed by a licensed professional, you have a lot more leverage because that type of complaint could _really_ ruin thier day. If the sales agreement represents that there's a garage, then even more so. However, your failure to actually view the house before bidding on it may work against you. (Your reliance on their representation may not be reasonable)

I'm not a PA lawyer, so this may not apply in your state. You may want to consult a PA lawyer to see if it will be worth trying to get your $400 back. (You might be able to wait until you actually live there, which would make it easier...)

However,
posted by mikewas at 5:47 PM on September 6, 2006

No, we did see the house. The garage door leads into the basement. Based on the listing, we understood this to mean that the car could be parked there. Unfortunately, the home inspector let us know that the car cannot be parked there and that the listing was wrong and misleading. Thank you for your help!
posted by robynal at 5:56 PM on September 6, 2006

However, your failure to actually view the house before bidding on it may work against you.

The original poster may have viewed the house first but not realized the garage was not up to code. The real question is how much to bring the garage to code? Also, will the sellers saddle some of the cost?
posted by malp at 5:57 PM on September 6, 2006

If you can fit a car in there, regardless of if it is within current codes, then it's a garage. If you bought the place, you'd probably park your car there even though the inspector told you couldn't/shouldn't. Thus, I would be of the opinion that the seller hasn't done anything wrong in this instance. It isn't uncommon for sellers to list "bedrooms" that aren't legal definitions of bedrooms or "closets" that aren't legally closets, etc. That's why you tour a place and get an inspection so you're only out $400 instead of $400,000. You can make a stink about it, but I wouldn't bet on it being worth the time or energy. Good luck.
posted by pwb503 at 6:09 PM on September 6, 2006

Just park in the median of Broad St. like everyone else. /yo filter

By all means, have your agent take it up with the listing agent. Find out what it would cost to bring it up to code, and use that as leverage to further negotiate the final price. (And find out just how unsafe it really is to use as a garage.)

Out of curiosity, is this newer construction or an older (>40 yrs at least) home?

The listings usually have a disclaimer about all of the information being in good faith, but possibly inaccurate. I expect that the answer from the seller will be "how were we to know it wasn't up to code? We've always parked there -- it works fine as a garage."
posted by desuetude at 6:19 PM on September 6, 2006

desuetude: this is an older home where the upstairs was renovated and the basement/so-called garage was unchanged.
posted by robynal at 6:21 PM on September 6, 2006

Did I miss it, or did no one advise you to talk to an attorney?

Re-read the paragraph in your contract for purchase regarding the home inspection. In most contracts it has language similar to "if buyer finds deficiencies unacceptable to buyers....."
In our market if you find issues like this you can request repairs or credits, if the Seller's refuse it can terminate the contract.
posted by Wallzatcha at 7:11 PM on September 6, 2006

You stated "pending on the inspection."

So now you make another offer based on what you've learned. $5 grand less or whatever is reasonable to bring the garage up to code.

Don't feel at all bad about doing this. Real estate people are very used to haggling and negotiating. They might even offer to have it fixed (which they might be easier for them than you.) Just make sure that they pay for reinspection.

I knocked 5 grand off of a deal once because the "hot tub" was a piece of shit. They took off the 5 Gs AND hauled that shitty tub away just to be assholes. They really just did me a favor.

Also, the worst that can happen is for them to refuse and you continue with the original deal.
posted by snsranch at 7:29 PM on September 6, 2006

I'd have to agree with pwb503. I doubt the people who currently live there have any idea that the "garage" is not up to code. They probably park their cars there without knowing whether it's up to spec or not.

Regardless, snsranch is right: just bid lower! Try and assume good faith -- don't assume the seller was out to get you unless circumstances prove differently. Try and work it out, and if it won't, then politely, but firmly, require your $400 be reimbursed for the inspection. If they refuse, then take them to small claims court.
posted by PandemicSoul at 8:19 PM on September 6, 2006

Agreed: the inspection is so you know when to re-negotiate the price.

If the sellers are unhappy about kicking back the full amount for bringing the garage up to code, you can point out their agent's role in the false advertising. Agents often throw part of their commission into the pot to help tie up that last loose end needed to get the deal closed, especially when there's good motivation involved. Between the options of getting this deal closed fast with (most of) a commission paid vs no commission plus a lawsuit plus a complaint to their state licensing board plus an FTC complaint...ahem. What's a couple hundred to get everybody shaking hands again?

Psssst. This leverage might also be used to request a garage-rehab contribution from your agent too, if there's good reason to believe s/he knew the garage might not be kosher. Your agent has a fiduciary duty to look after your interests, after all; and would prefer to have the commission, a good reference, and an ethical reputation.
posted by nakedcodemonkey at 8:57 PM on September 6, 2006

There might also be a question about if the garage was up to code when the home was built. If at the time of construction it passed as a garage, then there may be no reason it must be "brought up to code." That being said, it could be very unsafe for the reasons stated in the code, and you could be risking your new home by parking in the "garage."

If you still want this home, check with the local building authorities about this situation, they can tell you what changes need to be made. Then you can talk to a contractor about the cost for such changes, and reflect that in your offer on the home. Price is again negotiable after the inspection for this very reason.

As for the legal liability in a mislisting, it is a very gray area. Wording varies from state to state, but generally the real estate agent is expected to have a certain level of knowledge about the home. This does not include information outside of their area of expertise, and a real estate agent should always refer you to the appropriate professionals (electricians, plumbers, contractors). If the real estate agent believed that it was a garage, the owners said it was a garage, and there is no obvious evidence to the contrary, then the agent would not be expected to know the fire safety codes for the construction of a garage.

Good luck with your home search, be it this one or another.
posted by shinynewnick at 10:07 PM on September 6, 2006

Many responders have suggested that you can make a new, lower offer on the home to compensate for the cost of bringing the garage up to code. But, there is another option. If your closing costs are high enough, you can ask the sellers to pay the closing costs as a way of compensating you for the cost of upgrading the garage.

I did this when I bought my home. Instead of lowering the sale price of the house the sellers paid all of the closing costs. This option is particularly appealing to the seller's agent, since it won't lower his commission. Of course, having the seller's agent predisposed to agree with you makes negotiating with the sellers much easier.
posted by oddman at 5:53 AM on September 7, 2006

desuetude: this is an older home where the upstairs was renovated and the basement/so-called garage was unchanged.

Ah, then, I'll bet you money it was never up to code in the first place. Did the former owners park their cars there?

As far as I can tell, most people with garages keep a bunch of crap in their garage and park on the street anyway. I wouldn't be surprised if the listing agent/seller put forth the theory that garage != place to store your car.
posted by desuetude at 6:11 AM on September 7, 2006

If the guy who listed it thought it was a garage when he listed it, he acted in good faith, you are screwed. At least as long as you don't have a law in PA which defines a garage to be something other than what he did, I am betting since he actually thought it was a garage, the listing was fine.

Either buy the house without the garage (doesn't sound like you want that) or pass. You hopefully could get them to pay for the upgrading the garage to "Safe use" standards if you do decide to buy, but I am guessing they're not that eagar.

I would point out that now you (and more importantly they) know the garage to NOT be safe, they very likely need to change their ad for their house, so that may be a bargaining point.

Old houses aren't built to the same safty standards new ones are. My 1940's condo surely is rife with things that would make a new developer get shot then run out of town on a rail while bleeding from the gunshot. If this garage was okay when built, it is a garage, they can list it that way, and you have to buy the house and deal with that fact, or walk away.

--Michael
posted by gte910h at 7:37 AM on September 7, 2006

What would you have to do to bring the garage up to code? Add another layer of drywall? Did the inspector give you an estimate for the cost of fixing the garage? Are we talking hundreds, thousands, or tens of thousands of dollars here?
posted by malp at 8:25 AM on September 7, 2006

we're now out over $400 for the home inspection and termite inspection.

Suck it up. You're buying a house; $400 is nothing. (I know buying a house is stressful; keep a sense of proportion or you'll go insane during the closing.)

Is the mislisting something that violates real estate law, and, if so, can we pursue compensation?

You can pursue it, but you won't get it. Certainly not without spending far more than $400 on lawyers, and probably not in any case.

Inspections turn up problems all the time, ones that the current owners may or may not know about. That's why we have them.

Your choices now are: don't buy the house; buy the house on condition that the owners bring the garage up to code first; or buy the house at a renegotiated price. There's nothing unusual or devious about this situation at all.
posted by ook at 1:31 PM on September 7, 2006

I had almost this exact situation happen to me in June. I put in an offer on a cute house on the Danforth in Toronto, conditional on home inspection and financing.

Although the house looked great, it turned out to be in disastrous condition structurally. It would take too long to list all the problems with it, but one of them involved the garage. I had been told needed only a new door, but the inspector told me it was unsalvageable. It would cost $8,000 just to demolish it, and the neighbour's garage was leaning on it and would probably collapse when mine was taken down.

My realtor went back to the owner's realtor with a demand that the price be reduced considerably. The owner was willing to come down somewhat, but nothing close to what I needed. After some back and forths I had to walk away. I was out $400, but two weeks later I found the house I'm moving into in November. It's the reverse of the first house - it looks run down, but is structurally in great shape. And I like it as well or better than the first one.

My realtor told me some people wind up shelling out several thousand in inspection fees before they find a house. It sucks, but it's part of the cost of buying a house. Think of it as insurance. You could also have found out that the house needed $50,000 worth of work (that first house did) and risk winding up way over your head and having to live in a construction zone for a year.
posted by orange swan at 6:29 PM on September 8, 2006