Dear George: My family purchased a new home a couple of years ago. During the builder's warranty period, we occasionally noticed drops of water running down from the second-floor bathroom. When we reported it to the builder, he checked it and said it was due to rain being blown in from an exterior vent. Several years later, the condition suddenly worsened, and it was discovered to be from a leak in the second-floor bathroom. The builder tore out the bathroom, discovered mold, and performed mold remediation. If in the future we decide to sell our house, will this be something that we have to disclose? Will it affect the marketability of the home or the ability of the new owners to secure insurance?
Answer: One way to look at this is that "if you have to ask if you should disclose, then you should disclose." There are two places in the Seller's Disclosure Notice that beg for this kind of disclosure. In Section 3, "Water Penetration," you could check the yes box and explain in the area below it. That would be the place to enter the date the bathroom wall was torn out by the builder (name and address), the builder's discovery of mold, and the name and/or certification received from the state health department that the mold was successfully remediated. And look in Section 5: "Any repairs or treatments, other than routine maintenance, made to the Property to remediate environmental hazards such as asbestos, radon, lead-based paint, urea-formaldehyde, or mold. If yes, attach any certificates or other documentation identifying the extent of the remediation (for example, certificate of mold remediation or other remediation)." If you have disclosed the situation, kept any paperwork, documents, and certifications involved, then you have disclosed everything and anything that you could possibly disclose.
Another way to look at the situation is that unless you reported it to your insurance company, the builder made a repair under the builder's warranty. There is no more reason to disclose that repair than to disclose a builder replacing the heating element of a stove under warranty. Unless the builder furnished you with a mold remediation certificate, you have no actual knowledge of what happened.
The disclosure option, of course, is the right thing to do. Also, even if you did not report the occurrence to your insurance company, the builder might have reported it to his insurance company. If the builder also obtained a mold remediation certificate, then your address will most likely end up on a CLUE report utilized by insurance companies to track addresses and people who have made insurance claims.
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Dear George: I entered into a contract to purchase a house, and the closing date is a few weeks away. However, I've realized that I can't afford the cash payment required at closing. At what point does a deal like this fall through? What will be the costs to me if I can't qualify for a loan? Should I contact the closing agents now and let them know my predicament?