Need to Disclose Cistern Potability Issues

An offer is accepted on a 60 years plus country home with these conditions: financing, a home Inspection, a  septic Inspection and potability of the cistern’s drinking water.

 Inspections Reveal Septic and Potability Issues because:

  • The septic inspection revealed that the septic tank had to be replaced, the sellers agreed to reduce the price by $6, 000, the cost to replace the tank.

  •  Subsequently, the --declared unfit for drinking. The seller contracted to have the 3,000 gallon cistern cleaned and sterilized but ignored a request to pay to obtain a report as to the cistern’s condition.

    Were there any concerns with the cistern’s condition? The buyer’s rep wanted to know, and prompted the listing salesperson to inquire. One seller responded with: “There was nothing on the receipt so there is nothing to report.” Unsatisfied, the buyer’s rep volunteered to pay for the report and so the listing rep called the cistern inspector/contractor.

    The Sellers were told of the problems, the contractor explained. The cistern was cracked and a tree root was growing inside. This could be corrected by removing the root, digging around the cistern and sealing it. He had also talked to his lawyer and would provide two copies of his report for free—one for the seller and one for the listing salesperson--as he didn’t want any disclosure problems.

    On receiving the report the sellers became angry with their representative and told him they didn’t want the report revealed to the buyer. The listing rep advised that they are legally obligated to disclose any latent defects, otherwise legal action could follow. The sellers argued that they had already deducted $6,000 for replacement of the septic tank and didn’t want to take any more money off the price.

    The sellers complained to the real estate board. The sellers further reported that, according to the real estate board, if there was nothing wrong with the home inspection then they were fine. Their rep suggested that the matter had nothing to do with the home inspection or the Board’s opinion. The Offer to Purchase is a contractual agreement between the buyer and seller and the issue in question dealt with the condition of water potability a potential health hazard if undrinkable. The listing rep advised them to talk to their lawyer.

    What if the seller directs their REALTOR® not to disclose?

    Their REALTOR® would have to tell the buyer’s agent that the seller directed him to not disclose any information in this regard. He would also have to object directly to the sellers in writing to their direction. In addition, it could leave the seller and the REALTOR® open to legal action after the transaction closes.

    All of this will, of course, would make the buyer suspect. He might choose to walk away or insist on an amendment to obtain his own inspection and report.

    The lawyer advised the sellers to give the buyer a copy of the report. The sellers complied but adamantly insisted that they would not take another penny off the price. The buyer wanted the additional cost to correct the cistern--about $3,600. The sellers agreed to reduce the price by $1,000 and the buyer accepted.

    Disclosure of latent defects is a legal must.

Eugene Pilato

Eugene Pilato

Broker of Record
CENTURY 21 Today Realty Ltd., Brokerage*
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