Most home inspection contracts state that the inspector's liability is limited to the cost of the inspection. But if you have an issue with your inspector, will this hold up in court? In Zerjal v. Daech & Brauer Construction, Inc., 210 Ill.App.LEXIS 1269 (5th Dist.2010) , the Court says yes, it will.
In 2006, the plaintiff hired the defendant to inspect a home he had under contract. A few weeks later, he closed on the home. After closing, the plaintiff found many structural defects that he was not informed about during the inspection or in the inspection report. According to the plaintiff, the foundation could not support the house, the walls could not support the loads they were carrying, there was water leakage into the home, the electrical system was not safe, the HVAC was damaging the home's wood, and the home was generally structurally unstable.
The trial court found that under the terms of the inspection agreement, the inspector could not be liable for latent or concealed defects, and that the inspector had not guaranteed the structure of the home. Furthermore, the court stated that the contract limited the inspector's liability to the cost of the inspection, which was $175. The inspection contract even stated that any suits must be filed within two years. The plaintiffs filed late, and the court agreed with the inspector that they should have filed within the two-year term as defined in the Contract. The appellate court later affirmed these points.
So moral of the story? Read your inspection contract, and understand your rights and responsibilties. If you're not satisfied with your home after you had it inspected, don't expect your home inspector to be liable to you!
Monday, June 27, 2011
Wednesday, June 22, 2011
As-Is Sale is Not a Defense for Seller when Seller Commits Fraud
Last year, in Mapcor Corporation v. J.P. Morgan Chase Bank, N.A., 938 N.E.2d 1181 (2d Dist. 2010), J.P. Morgan Chase Bank lost on appeal after it claimed that it should not have to pay the amount the jury awarded to the plaintiff at trial because the plaintiff had purchased the property from J.P. Morgan Chase AS-IS.
The court, however, disagreed, based on the following background: The bank was aware that the roof of the property needed to be torn off and completely replaced. However, because the cost to do this was high, the bank hired a contractor to put a new roof over the original roof -- against the broker's and the contractor's advice. The bank fired the original broker and hired a new broker, and then falsely represented that the roof was torn off and replaced with a new roof.
Relying in part on this representation, plaintiff purchased the property in 1996. Over the next decade, the plaintiff had constant problems with the roof and eventually discvered that the original roof had not been torn off. The plaintiff sued on grounds of fraud and won. At that point, the bank appealed, arguing that the plaintiff had purchased the property AS-IS and was therefore not entitled to relief.
The appellate court stated that the jury and the trail court were correct in stating that the bank had intentionally, knowingly, or with reckless disregard for the truth made a false statement of material fact. Furthermore, the court stated that had the plaintiff known the truth about the roof, the plaintiff may have offered far less money for the property.
Moral of the story -- Just because a Buyer purchases something AS-IS, the Seller should not attempt to commit fraud against him!
The court, however, disagreed, based on the following background: The bank was aware that the roof of the property needed to be torn off and completely replaced. However, because the cost to do this was high, the bank hired a contractor to put a new roof over the original roof -- against the broker's and the contractor's advice. The bank fired the original broker and hired a new broker, and then falsely represented that the roof was torn off and replaced with a new roof.
Relying in part on this representation, plaintiff purchased the property in 1996. Over the next decade, the plaintiff had constant problems with the roof and eventually discvered that the original roof had not been torn off. The plaintiff sued on grounds of fraud and won. At that point, the bank appealed, arguing that the plaintiff had purchased the property AS-IS and was therefore not entitled to relief.
The appellate court stated that the jury and the trail court were correct in stating that the bank had intentionally, knowingly, or with reckless disregard for the truth made a false statement of material fact. Furthermore, the court stated that had the plaintiff known the truth about the roof, the plaintiff may have offered far less money for the property.
Moral of the story -- Just because a Buyer purchases something AS-IS, the Seller should not attempt to commit fraud against him!
Wednesday, June 15, 2011
What is a Common Interest Community?
Most people know what a condominium is. You may even know what a co-op is. But do you know what a common interest community association is?
Last year, the Illinois legislature passed the Common Interest Community Association Act. The act defines a "common interest community” as follows: Real estate other than a condominium or cooperative with respect to which any person by virtue of his or her ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association. "Common interest community" may include, but not be limited to, an attached or detached townhome, villa, or single-family home, or master association.
What does this mean in plain English? It means that if you live in a subdivision or neighborood where there is some common area managed or administered by a common group, such as an association, then you are in a common interest community. Usually this means that you are paying some sort of fee (whether monthly, quarterly, or annually) for the maintenance of the common area. Some large neighborhoods have only a common retention pond, for example, and every homeowner pays just a few bucks every year to maintain it. Regardless, that makes the neighborhood part of a common interest community association.
If you are buying or selling a home in such a neighborhood, make sure you review the Common Interest Community Association Act to learn what obligations and rights you have, and what disclosure requirements are applicable. If you are buying a foreclosed home in a common interest community association, you should be particularly careful, as you could end up liable for past due assessments and other fees.
Last year, the Illinois legislature passed the Common Interest Community Association Act. The act defines a "common interest community” as follows: Real estate other than a condominium or cooperative with respect to which any person by virtue of his or her ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association. "Common interest community" may include, but not be limited to, an attached or detached townhome, villa, or single-family home, or master association.
What does this mean in plain English? It means that if you live in a subdivision or neighborood where there is some common area managed or administered by a common group, such as an association, then you are in a common interest community. Usually this means that you are paying some sort of fee (whether monthly, quarterly, or annually) for the maintenance of the common area. Some large neighborhoods have only a common retention pond, for example, and every homeowner pays just a few bucks every year to maintain it. Regardless, that makes the neighborhood part of a common interest community association.
If you are buying or selling a home in such a neighborhood, make sure you review the Common Interest Community Association Act to learn what obligations and rights you have, and what disclosure requirements are applicable. If you are buying a foreclosed home in a common interest community association, you should be particularly careful, as you could end up liable for past due assessments and other fees.
Thursday, June 9, 2011
How is the Cook County Foreclosure Mediation Program Doing?
It has been a little more than a year since Cook County announced its new Foreclosure Mediation Program in April of 2010. The purpose of the program was to help homeowners with free legal advice, and also to assist then in reaching a resolution with their lenders.
As of April of 2011, more than 27,000 homeowners had asked for advice. Of those 27,000 homeowners, 1,820 were referred to mediation. Of those 1,820 referrals, 627 homeowners had completed their mediations. Of those 627 completed mediation, 216 homeowners received loan modification and will continue to stay in their homes. The remaining 411 homeowners have either left their homes already or are still in the foreclosure process.
The Foreclosure Mediation Program started with a budget of $3.5 million, and has received another $3 million to keep it running until November 2011. While mediation can be slow, the program has helped many homeowners. With any luck, the program will continue to assist Cook County homeowners facing foreclosure!
As of April of 2011, more than 27,000 homeowners had asked for advice. Of those 27,000 homeowners, 1,820 were referred to mediation. Of those 1,820 referrals, 627 homeowners had completed their mediations. Of those 627 completed mediation, 216 homeowners received loan modification and will continue to stay in their homes. The remaining 411 homeowners have either left their homes already or are still in the foreclosure process.
The Foreclosure Mediation Program started with a budget of $3.5 million, and has received another $3 million to keep it running until November 2011. While mediation can be slow, the program has helped many homeowners. With any luck, the program will continue to assist Cook County homeowners facing foreclosure!
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