Here is my situation and question. (NC real estate attorneys specifically although i appreciate the input of those in other states)

My wife and I are in the market for a house. We made an offer on a house and during the due diligence period (a period of time that per NC law allows the buyer or seller to cancel the contract) the home inspection revealed that the furnace was much older than the sellers attested to on their disclosure statement (they stated it is 3 years old. The inspection and verification of serial number showed that it is 17 years old).

When we pointed this out to the sellers (all communication between parties was done through realtors) they apologized and claimed they didn't know it was that old - that when the HVAC unit (which is on the outside of the house) was replaced 3 years ago they thought that the furnace (which is in the crawl space under the house) had been replaced too. They subsequently had the furnace serviced and let us know that it was functioning within manufacture's specifications. Rather than continue with the purchase of the house we informed the sellers we were cancelling the purchase agreement. At that point they offered to replace the furnace, but we felt that they are not trustworthy and that other declarations they made (that were not discovered during the home inspection or not subject to inspection) might be untrue so we cancelled the agreement.

One point to note which I think is important. The husband seller is in the home construction business (hands on, not an office worker). Also, he has a side business where he renovates and repairs homes. He even has his video's online. Given that he is more knowledgeable than the common layperson, I find it hard to believe that he did not know that the furnace was not replaced when the HVAC was.

My question after that long set-up is this: since we relied on the sellers declaration statement when considering making an offer on the home, should we be entitled to be reimbursed for the expenses we incurred as a result of the offer to purchase (septic inspection, well inspection, pump inspection, appraisal, etc.)?
Had we know the furnace was 17 years old we would not have even considered the house or made an offer. I believe that given their untruthful attestation on the declaration statement (whether intentionally deceitful or just incredibly stupid) we should be able to recoup those expenses.

I have written a demand for payment letter to the sellers but haven't mailed it yet. I have also completed the forms to file in small claims court but again haven't done so yet (we just cancelled last week).

I would appreciate any insight as to whether this has a chance if it goes to court. Or, as their position seems to be, they offered to replace the furnace (even though it was after we decided to cancel the contract) so therefore we would have been made whole and thus have no recourse to recoup our expenses.

Thank you. Sorry for the length - just wanted to present the facts as clearly as possible.

(not a lawyer)

wow - interesting to see the responses

recently sold a home in NC and we took a big hit by fully disclosing an issue related to water damage

IMO I think they were at best 'lazy' in their disclosure - at worst purposefully untruthful, esp. given his career field (he should know better)

how long have they been in that home?

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quote:

Originally posted by Sig209:

how long have they been in that home?

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4-5 years

I am not a lawyer but have bought three houses in NC and sold one, and had to withdraw two purchase offers after going on contract on two others.

The purchase contract should spell out what happens when the offer is withdrawn. The contracts I had allowed me to get a full refund of earnest money but did not provide for the seller to compensate me for my expenses. Bottom line: I got my earnest money deposits (~$10K each, as I recall.) but ate the cost of the inspections, etc. One of the contracts I had to withdraw from was very much like your situation - inspections found several egregious issues they could not have been ignorant of (like, for example, a dishwasher that was installed but not plumbed, septic systems not functioning....)

That said, you may still have some hope. Reason being,the NC real estate forms change almost annually, and the forms I had are from several years ago.

At any event, if you made your offer using a buyers' broker, the broker may be able to help you get a sense of this without using an attorney - their interest there would be to keep your business when/if you continue looking for property.

If you used the seller's broker (who is legally required to represent the seller, and has zero obligations towards you) then you are on your own. A sellers broker who gave a buyer advice or information that cost his client money would be in violation of ethics and could lose their license.

If there is a large sum involved it may be worth getting an attorney's opinion whether you have recourse. It may hinge on what you can prove about the misstatements - intent, etc. - or it may be cut-and-dried.

quote:

should we be entitled to be reimbursed for the expenses we incurred as a result of the offer to purchase (septic inspection, well inspection, pump inspection, appraisal, etc.)?

Read the contract.
It probably says all inspections are at buyers own cost.

Why are legal documents so long? To take the ambiguity out of situations like this. Sucks it has to be that way but it's gotten that way for a reason.

quote:

The husband seller is in the home construction business (hands on, not an office worker). Also, he has a side business where he renovates and repairs homes. He even has his video's online.

You may have possibly dodged a bullet, besides them being dishonest. I've found that the worst home improvements are the ones done by people who do construction. Often times they cut corners in their own homes for some strange reason. Never under any circumstances buy a home from a handyman.

As for the actual question, it's typical for those costs to be yours even if you pull out due to a undisclosed deficiency.

quote:

Had we know the furnace was 17 years old we would not have even considered the house or made an offer.

As opposed to making the offer contingent on the seller replacing the furnace? I believe the sellers flat out lied to you but their position that they offered to replace the furnace will weigh in. I'd make the request for reimbursement for the reason you explained but I would also be prepared for them to deny it in which case I would move on.

quote:

Originally posted by chellim1:

quote:

should we be entitled to be reimbursed for the expenses we incurred as a result of the offer to purchase (septic inspection, well inspection, pump inspection, appraisal, etc.)?

Read the contract.
It probably says all inspections are at buyers own cost.

I’m going to venture that this is probably correct. I know it was for me in my recent purchase here in SC.

It depends on what is in the contract. It is not worth your time or money proceeding. Consider yourself lucky you missed this opportunity. Another of life's learning experiences.

quote:

Originally posted by ZSMICHAEL:
It depends on what is in the contract. It is not worth your time or money proceeding. Consider yourself lucky you missed this opportunity. Another of life's learning experiences.

I feel the same way in general. However, I think it's worth asking at least, firing off that demand letter. Make the lying seller go through the same calculus.

If it were 2 typical home owners with white collar jobs, I'd figure they just didn't know better and give them the benefit of a doubt. This dude definitely knew whether he got his furnace replaced!

quote:

Originally posted by Strambo:

quote:

Originally posted by ZSMICHAEL:
It depends on what is in the contract. It is not worth your time or money proceeding. Consider yourself lucky you missed this opportunity. Another of life's learning experiences.

I feel the same way in general. However, I think it's worth asking at least, firing off that demand letter. Make the lying seller go through the same calculus.

If it were 2 typical home owners with white collar jobs, I'd figure they just didn't know better and give them the benefit of a doubt. This dude definitely knew whether he got his furnace replaced!

Wait, so you are telling me a contractor would be able to tell when changing their air filter if the furnace was brand new or 14 years old? Who'd of thunk it?

He pants are definitely on fire.

Query: IF everything else checked out (that's why you spend the money of the inspections), why wouldn't you have gotten a (generous) estimate on the cost to replace the furnace and offered to go through with the deal for the agreed price minus the estimated cost of replacing the furnace?

Of course, if you didn't have everything 100% checked out, then taking the guy's representations on faith wouldn't have made sense.

As Chellim pointed out, the contract answers your questions. If they didn't contractually agree to pay you for the inspections and whatnot if the deal fell through, you may have a difficult time getting them to repay you for them.

Not a lawyer, and trying not to come across as harsh.

NC is a buyer beware state. That means the responsibility to inspect and investigate a property falls directly on the buyer.

NC law requires a seller's disclosure statement. It says the owner makes no representations as to the characteristics and condition of the real property or any improvements to the real property except as otherwise provided in the real estate contract. The seller can elect “No representation” on the seller's disclosure form so essentially they don’t have to tell the buyers anything about the property. However, the listing agent must disclose any material facts that they know or should have known.

There's a standard disclosure form, and for each major system, the question the seller must answer is:

"Do you know of any problem (malfunction of defect) - Yes, No, or No Representation."

Since they offered to replace the furnace, imo you are not entitled to anything. You chose to pay for an inspection to find things, it did find something, and the seller offered to fix it, and you declined.

The "I wonder what else they didn't tell us" is a valid concern but probably not a legal leg to stand on.

Opinion, I feel like based on your post you have buyers remorse, not over the furnace either. And are looking to get out of the deal.

I think it will cost you.

If it is not the house you want, do not buy it. That is ok.

But as Chellim1 mentioned. I think it will cost you some.

Thanks to everyone so far for the input and feedback. I tend to agree that perhaps I don't have much of a legal leg to stand on. However, they clearly misrepresented the age of the furnace and when we found out we elected to terminate the contract. Only then did they offer to replace it (which may not mean anything in court).

This morning new info has come to light which I want to share to see if it changes anyone's opinion. For me it does as it seems to offer more proof that they are liars.

I had my agent pull their new disclosure statement For the age of the heat source they have scratched out "3 years" and written "unsure." However, they were provided the full copy of our inspection report which states in very clear wording that the furnace is 17 years old based on it's serial number. To me at least, this is more proof that they are dishonest and unwilling to truthfully states facts which they absolutely know.

I will send the demand letter and see what that results in. Doesn't cost me anything but postage. I do believe that, given this new information, I could prove in court that they knew the age of the furnace and lied about it (they certainly aren't being truthful to their new buyers - the house is under contract with someone else).

Unless the seller is the original owner who installed the furnace, he cannot be sure how old the furnace really is. Manufacture date based on serial number and when the unit was installed for service can be vastly different.

quote:

Originally posted by kingfish007:
Unless the seller is the original owner who installed the furnace, he cannot be sure how old the furnace really is. Manufacture date based on serial number and when the unit was installed for service can be vastly different.

I suppose. But since the house was built in 2002 it makes sense that it is 17 years old as the inspection showed. Unless you're suggesting they installed a furnace manufactured 14 years earlier into their house 3 years ago?

Well, if they sell the house to someone else then at least they'd have a hard time coming after you unless they can prove that something you did led to their unfairly getting less money than they might have. I'm not sure whether or not that strengthens your case for demanding they repay you what you laid out for inspections.

As to the age of the furnace, yeah, they could've replaced one furnace with an older one. I'm not sure what difference that makes, though, since they told you the furnace was three years old.

I am a FL real estate attorney and you should seek the advice of local counsel.
In Florida, I think you would be entitled to recover your inspection fees as that is the amount of damages you have incurred as a max, not likely to get an award of attorney's fees.

In reality the only guy who makes money is the lawyer and not enough to really fuss about.

Move on to other things, this is a nothing burger