When in doubt, disclose, disclose, disclose

Fast forward to the sale, which closed escrow with no problems, and remember that I represented both the Buyer and the Seller. The Buyer went to remove the popcorn ceilings and found water stains, stains which her renovator said would cost about $5,000 to repair. Now to me there's a difference between stains and damage, although stains can indicate underlying damage.

Seventeen years ago the condominium above his had a plumbing leak which left some stains on the Seller's ceiling. Everything was repaired and the ceiling repainted. Unfortunately, I didn't find out about this until the Buyer was in the midst of renovation, and even then it took a lot of work to drag out of the Seller the fact that seventeen years ago there was a leak. I could not get the Seller and Buyer to agree on anything, so the case wound up in Small Claims Court. From what I heard from both sides, it looked like the odds were stacked in favor of the Buyer. Surprisingly, the Judge found in favor of the Seller, stating that a problem seventeen years ago that had been repaired would not necessarily be an issue that needed to be disclosed.

Now today I'm reading Calemine v. Samuelson, a February 17, 2009, decision issued by the California Second District Court of Appeal. The basic premise of the case is that the Calemines had bought a three-story condominium in 2002, and the lower level garage had flooded in 2005. Apparently there had been flooding problems between 1983 and 1999, although the latter date doesn't jibe with other facts.

In 1986 the HOA sued the developer, and in 1992 hired Westar Flooring to repair and waterproof the affected areas. The work was ineffective, and the HOA sued Westar Flooring. Construction Headquarters was then hired to do repairs, which were completed in 1998. Here's where the date doesn't jibe: the Seller did not have any further flooding problems but did have occasional damp spots during periods of heavy rain.

The Seller, Samuelson, disclosed that he was aware of "flooding, drainage, or grading problems," but stated that he was not aware of "any lawsuits by or against the seller threatening to or affecting this real property, including any lawsuits alleging a defect or deficiency in this real property or common areas...."

Samuelson indicated that he said no because he thought the form required disclosure of lawsuits that were pending, not lawsuits from the past that had been resolved.

The trial court found in favor of Samuelson, but the appellate court reversed that decision based on an earlier case, Pagano v. Krohn (November 1997), which found that sellers have no duty to go into detail about the type or scope of repairs, but did have a duty to disclose the existence of previous lawsuits, even if resolved, and not just pending or ongoing lawsuits.

Both Pagano v. Krohn and Calemine v. Samuelson were certified for publication, which means that they create case law rather than statute law.

Just one more example of "When in doubt, disclose, disclose, disclose."

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Jim Frimmer, Realtor, Century 21 Award Mission Valley
California real estate license #01458572
619-729-5701 -- jimfrimmer@century21award.com

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