Executor sells real estate without property disclosure
Q. I closed on the purchase of a house in Freeport last month. After closing, we discovered mold in the basement which had been covered with fresh paint and which we did not discover beforehand. I called my lawyer, who said the Seller - who was executor of an estate - was not responsible and that I have to pay for the remediation. I am not happy with my attorney’s response. What can I do?
A. When all else fails, please do not blame the lawyer – unless you have good reason to do so. This is not a good reason.
Did you have a home inspector inspect the house prior to entering into contract? This is an important due diligence step every buyer should take. Purchasers buying real property are making a major purchase, perhaps the largest purchase they will ever make. Yet, some purchasers look to cut corners and save a few hundred dollars by not hiring an inspector. This is usually a bad decision. Unless you are an engineer or home inspector yourself, your eyeball inspection will be insufficient – as is shown in this instance. Presumably, a home inspector would have discovered this mold issue and alerted you of it. Then, you could have decided whether to proceed with the purchase nonetheless or look for another property. I always recommend to clients to hire a home or building inspector.
The cost of the home inspection is usually offset by the credit almost every seller gives the purchaser at closing. Let me explain. New York State law requires almost every seller to either disclose defects in the property’s condition or give the buyer a $500.00 credit at closing. Sellers generally give the credit because it is impossible to know every defect in a building and Sellers are responsible for any defects which are not disclosed even after the closing. However, under the law, some sellers are exempt from this requirement. The list of exemptions is found at NY CLS Real P § 463. As you may have already imagined, a fiduciary (executor, guardian, trustee, etc.) is exempt from the requirement, as it is argued that the fiduciary did not own the property and is, presumably, unfamiliar with its physical condition. Therefore, in your particular circumstances, the executor acting on behalf of the estate which was selling the property did not either have to disclose defects at the property or provide the $500.00 credit at closing.
I would like to make one last point about the timing of your discovery. As your lawyer told you, after the closing it is too late to complain about any problem at the property. The “walk-through” immediately prior to closing is your opportunity to make sure there are no changes in the condition of the property from the period before the contract signing until closing. Please do not skimp on this inspection. Plan to spend a few hours at the property to make sure that the outlets work, there are no leaks, etc. I do not know that it would have helped you here to realize the mold issue during the walk-through; however, at least your attorney could have raised the issue prior to closing and there may have been some financial resolution of the issue then. Again, that would not have been a guaranteed outcome.
After the closing is too late to discover any defects – and have the Seller either fix them or give the purchaser a credit to make repairs after closing. After closing, the purchaser has full responsibility for all repairs – even if the defects pre-date the closing.
W. Zehava Schechter, Esq. specializes in estate planning, administration and litigation; real estate law; and contracts and business law. Her law practice is located on Long Island. Please send your comments to SchechterLaw@gmail.com. Her podcast, the LI Law Podcast, may be downloaded on itunes, Google Play, Spotify, Stitcher, or wherever you get your podcasts. The podcast website is: https://lilawpodcast.podbean.com.
No column is a substitute for competent legal advice. Please consult with the attorney of your choice concerning specific legal questions you may have.