KASS: Seller sued because contract listed A/C

DEAR BENNY: I just read an article you wrote about how disclosing home defects is the best way to avoid a lawsuit. I wanted to ask you few questions because we sold a home about two years ago and the buyer is now suing us. Long story short: The real estate agent listed the property with central A/C when there was none. The sales contract was then drafted and signed the same way. The buyer was told before closing there was no central A/C, and they visited the property and had two inspections done before closing. We lowered the price of the house for him so he could rewire the house and did other updates as he had requested.

I am assuming that later on he saw that the contract was signed wrong and decided to sue and ask for a central A/C to be installed on the property. Basically, he decided to take advantage of the error that was made by the real estate agent.

I wanted to ask for your opinion on how we can deal with this issue? We are convinced that we should not be punished for a mistake that the real estate agent made in the contract because the buyer visited the house and had two inspections done before closing. Any thoughts on how to deal with the issue? We don’t have the money to install the A/C in the house. – Stefka

DEAR STEFKA: First, since you have been sued, I assume you have retained an attorney to represent you. While you can defend yourself, called “pro se,” it is not a good idea. There are technical rules which can impact negatively against you – even though judges are going to bend over backwards to assist a pro se party.

You (through your attorney) should file what is known as a “cross claim” against both the real estate agent as well as the brokerage company where he works. That is telling the court, “If I end up responsible to the plaintiffs, the broker – who created the problem – is responsible to me.”

Hopefully, the real estate broker’s insurance company will try to reach a settlement with the plaintiff-buyer.

But permit me to play devil’s advocate for a moment. Yes, it is true that the broker made a mistake when drafting the real estate contract. But it is also true that you signed those erroneous documents.

The broker will raise that as a defense; yes, we drafted the erroneous document, but we did not force the sellers to sign. They knew – or should have known – of the error, and should have told us to correct them before the documents were signed and sealed.

The moral of this story: Before you sign any important legal document, please read it very carefully.  And if there is something you do not understand, talk to your attorney; do not rely on the broker.

DEAR BENNY: I bought a condo in Texas back in 1990 when I moved from Northern Virginia. I left in 1993, and have rented it on and off since. Getting tenants is tough and the neighborhood has gone downhill. I have paid off the mortgage and would now like to get rid of the property as it’s more trouble than it’s worth. Do you have any recommendations as to my options? – Brian

DEAR BRIAN: Sorry to hear about your property; if there is any consolation, at least you are not underwater with a mortgage and thus do not have to worry about getting a bad credit rating if the lender has to foreclose.

I am sure there are many nonprofit organizations – or churches – that would like to get a donation of the condo. I would also talk with a local government representative in the housing field; the government may want to use it for a low-income family.

I doubt there will be any serious tax consequences should you make such a donation, but you should discuss your entire situation with a financial advisor.

One other thought: Talk to a local real estate broker. It may be possible to market the property for two-thirds or even one-half of the market value. People like bargains and if you sell, at least you will get some money. And because the property was a rental (investment) and not a personal residence, you may even be able to take a loss. But again, that’s for your professionals to decide.