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 Dear George: Three-and-a-half years ago, I relocated to Texas and purchased a home, relying on my REALTOR® and an inspector for advice. There was a Seller's Disclosure Notice regarding the property, and during the walk-through before purchase, I noticed dry rot around window sills on the back porch sunroom; this problem was supposed to be fixed. Two years later, I discovered it was not fixed, but merely covered over.
I contacted two independent contractors and received estimates for repairs. The cost to fix the damage currently stands at $700, but could increase if they find structural damage. One contractor by coincidence happened to be the contractor hired to do the original "repair" work. He remembered the job being done wrong, but his employer told him to "fix" it a certain way, and he did what he was told. I contacted my real estate agent and explained it all to her. She said she would send a letter to the other broker. The seller replied that too much time had gone by, and they would not fix it. I've not yet paid for the work to be done, and I wonder if I have other recourse first.
In addition, I recently discovered water damage caused by washing machine overflow. I have not yet had a contractor out, but apparently my inspector missed this. There is significant water damage to the wall, cupboards, and flooring that is hard to see. Since my floor flooded, I cannot imagine it did not happen to the previous owners. These are recent discoveries that show damage long before I occupied the house. Assuming a contractor gives me an estimate and clear indication this damage was not caused by me, has it been too long a time? Must I pay to fix this?
Answer: In answer to your last question, I don't believe that too much time has passed in order for you to obtain recourse on either issue. Generally, the time will begin to run from the date you first discover the alleged fraud or deceptive trade practice. One problem you may have is that wood rot was disclosed, but you bought the property anyway. Also, regarding the water damage, there will probably be questions as to whether you may have caused it or made it worse. If you did not, you may need to prove it. It's often easier to fix it yourself than to blame somebody else. However, those are questions you need to ask your attorney should you choose to pursue recourse from the sellers in this matter.
As for taking your matter to the REALTOR® organization, you can do that. However, the Texas Association of REALTORS® only handles complaints you may have about how a REALTOR® handled you. The association's programs are not designed to resolve a dispute against a seller. The same thing applies to the Texas Real Estate Commission. Your best bet is to hire an attorney should you choose to litigate.
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Dear George: I read on your Web site that attorneys cannot split or share fees with brokers; however, what if an attorney is buying a new home directly from a builder? Can an attorney serve as his own realty agent and take a commission off the price of the house or to absorb closing costs?
Answer: If an attorney is buying new home directly from a builder without being represented by a REALTOR®, that attorney is a principal in the transaction. Anyone who is a principal in the real estate transaction can negotiate the sales price with any seller of real estate, including a builder. Thus, whatever sales price the principal and the seller end up with in the contract, no matter how much less than the original asking price, is simply the agreed-upon sales price and has nothing to do with commissions. Also, builders are usually sensitive about the fact that REALTORS® are one of the key marketing tools the builders employ to sell their newly constructed homes; they like to be seen as REALTOR®-friendly.
Whatever a reduced price is called, it is not a sales commission paid by the builder to a real estate licensee (provided the attorney is not also a real estate licensee), and therefore the proceeds from such sale can only be accounted for as sales proceeds instead of a deductible commission expense. Even if it were categorized as a commission expense by the builder because the attorney buying the home was also a real estate licensee, the builder would more than likely have to deliver a 1099 form to the attorney/real estate licensee at the end of the year; there could be federal income tax consequences to the attorney/real estate licensee.
Dear George: I want to become a builder of small, single-family homes. To gain experience, I was hoping to use a firm like UBuildIt, where they act as the builder but you do a bunch of the work in terms of managing and selecting subcontractors. When it came time to sign a contract with them, there was a clause that they could not explain to me why or if it was necessary. It was listed under a section called Texas State Regulations, and it was called "intent to occupy clause." It states that my intention is to occupy the home, which it incorrect, and that I have not completed a self-built project in the last 24 months. Is this is a Texas requirement?
Answer: There is no state requirement. It's a lender requirement. Ubuildit has partnered with Indymac Bank, a leading national lender. Speak with someone at Ubuildit national headquarters to clear up the disturbing phrase.
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