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The decision by the Court of Appeals of Iowa in Yeboah
vs. Emans most certainly left the West Des Moines, Iowa
homeowner-sellers dismayed. Everyone on the sell-side of that deal had to be scratching
their heads and left wondering what went wrong. The sellers were left paying
the buyers an additional $17,280.92 and then the Court remanded the case back
to the Iowa District Court for an award of appellate fees. Obviously the amount
the sellers would have to pay was higher than $18,000 and may have easily
exceeded $20,000. Unfortunately for the sellers it’s doubtful any insurance
policy covered this award; that money more than likely comes out of their
pocket and in many instances will reduce the home equity they have to use to
buy another home. In the end everyone involved had to ask how this could have
occurred. I would guess even the buyers were left scratching their heads.
On
that claim, the court found the sellers “had actual knowledge of the existence
of a problem involving a leak in the roof of the sunroom” and failed to
disclose the leak in their disclosure statement. [Page 3]
The buyers had to be wondering why they were paid for
the leaky roof but not the leaky windows. Obviously this blog isn't the place
to hash out all the problems with the disclosures so I won’t, but let’s discuss
our solution for Iowa sellers.
Like all appellate court decisions we have little to go
on except what is written in the decision. A court decision can’t fully
describe all the facts; the court provides only those facts relevant to its
decision. So I hesitate to extrapolate much from what is stated in the
statement of facts, but with just those facts homeowners, sellers, buyers,
agents and brokers must try and figure out what did go wrong.
A careful reading of the Court’s decision indicates the
Iowa Supreme Court is critical not just of how the form is being used, but of the form itself. I'm critical as well and can easily understand the
Court discussing the form in its opinion.
The form also included a list of questions and check-box answers under the heading, “Appliances/Systems/Services.” This portion of the form was designated “not mandatory” and only “for the convenience of Buyer/Seller.” Among the questions was a request for information about the condition of the windows. The sellers checked the box indicating that the windows were “[w]orking.” [Page 1]
Listen folks, the Iowa Supreme Court does not find this form as being adequate. Now I realize most agents aren't attorneys, I get that, but when your clients are being sued, a bell ought to go off in your head that something is wrong. That form everyone is using is terribly misleading.
Who provided that form? And who pray-tell wrote it?
Not even a home inspection uncovered the problems the
subject of the alleged defects. That’s bothersome because the sellers and
buyers had to be wondering why they were paying so much to so many
professionals and getting so little in return. After all what are we paying
for? It seems like the inspection amounted to telling them the obvious and then
concluding with telling them what they could already see.
Six to eight weeks after closing, the buyers noticed wetness in the northeast corner of the sunroom and wetness in the drywall on the ceiling. Yeboah tore off a deck above the sunroom and found that one wall was soft. The buyers hired contractors to repair the damage. The total cost was $17,280.92. [Page 3]
Katrina, who is a lawyer in our office, summed up the
allegations as a failure to fully disclose a leaky roof and damaged windows.
This is one of the cases that made me aware of the need homeowners have as sellers for
a lawyer to review and to assist them in how to properly fill out the
disclosure forms. It made me re-examine the disclosure forms being used and to
suggest additional disclosures along with how to position what needs to be
disclosed.
The buyers also found that four of the windows in the home would not open. They obtained a replacement cost estimate of $4365. [Page 3]
In this case it’s too easy to simply blame the sellers
for failing to disclose a known problem, because they did make disclosures of
what they thought was a problem and they took corrective action on what was a
leaky roof. I don’t blame the sellers for the disclosure statement but frankly
I have to wonder why they didn’t seek legal advice to protect themselves from
future claims. Were they told to seek legal advice? Were they told by a person
or just in the fine print of one of the half dozen documents they were asked to
sign? Take a step back and think for a moment about how this deal went wrong
and how it could have been done differently to everyone’s satisfaction – do
that and maybe they get paid a little less for the house, maybe they have some
additional repair costs and maybe everyone walks away happy with their real
estate agents and brokers. The way it worked out no one was happy and who
knows what happened to the sellers and how they came up with the money to
satisfy the judgment.
Here is what the Court stated about Iowa law: Iowa Code section 558A.2(1) requires a
person interested in transferring real property to deliver “a written
disclosure statement to a person interested in being transferred the real
property.” This disclosure is to include “information relating to the condition
and important characteristics of the property . . . including significant
defects in the structural integrity of the structure.” Iowa Code § 558A.4(1).
The seller is not liable “for the error, inaccuracy, or omission in information
required in a disclosure statement, unless that person has actual knowledge of
the inaccuracy, or fails to exercise ordinary care in obtaining the
information.” Id. § 558A.6(1).
A person who violates this statutory provision is ordinarily liable for the
actual damages that the buyer suffers. Id.
§ 558A.6.
From my point of view the blame is easily spread around to all involved and had a more complete disclosure been made the issue would have been remedied for a lot less than what the sellers ultimately paid. And if you ask them today I'll venture to guess they would rather this deal had fallen through then to choose the way it ended after the court case.
From my point of view the blame is easily spread around to all involved and had a more complete disclosure been made the issue would have been remedied for a lot less than what the sellers ultimately paid. And if you ask them today I'll venture to guess they would rather this deal had fallen through then to choose the way it ended after the court case.
This is a difficult part of selling your home, because
no home is perfect, not even new homes. We read this decision and as a
lawyer-broker I made the decision to restructure how we would do this portion
of the deal. We offer this service across the entire state of Iowa, all 99
counties. We can do it via the Internet, phone and/or in-person. Contact Katrina and I if you would
like assistance in filling out your disclosure statement.
Call us, contact the Lombardi Law Firm and ask for
either Steve Lombardi or Katrina Schaefer. And if you are a buyer with a home disclosure problem we will represent you so long as we do not have a conflict of interest with having reviewed for the sellers.
HOW
TO CONTACT US
5000 Westown Parkway, Suite 440
West
Des Moines, Iowa 50266
Telephone:
515-222-1110
Fax:
515-222-0718
Write
to Steve or Katrina
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