The “Kick Out”

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In real estate lingo, when a deal falls apart and the buyers and sellers agree to release each other from the contract, it’s called a "kick out", and that happened this week to the apparently adorable house with Mr. Tree’s roots hugging its foundation (see A Cautionary Tale).

Usually, a kick out is an intense bummer for the buyer’s agent.  You find what you think is a terrific house, manage to negotiate a deal that works for your clients, and then something funky happens.   

This particular transaction involved dear relatives of mine and a structural problem that is probably very, very serious.  It was bad enough that, after the inspection, my cousin’s wife and I had similar bad dreams about Mr. Tree.  We all figured it was our grandmother (St. Tootsie from May the Saints Preserve Us) sending a house alert from the hereafter. 

After getting the results of the home inspection, we had asked the seller to have the Mr. Tree and his stump removed (I know, it sounds like we are evil tree murderers, but it was pretty clearly the beautiful tree or the adorable house).  We also asked for a reasonable credit to pay for repairing and stabilizing the foundation.  I could not imagine the seller saying "No," a possibility that began to make me nervous when I more carefully read the inspector’s report.  Was this house just too scarey? Did we have a realistic estimate on the price of repairs?

So, when the agent called to say there were several other contracts on her desk from people who loved Mr. Tree and wanted the house without the hassle, I felt a little bummed, but mostly relieved.

The contract we signed did not include a property disclosure from the seller, an important document that is optional in the Commonwealth of Virginia.  I have to assume the seller or her agent are now telling the truth to all of the people who are lined up to buy this sweet, but flawed, house.  The listing agent was very professional and didn’t seem like the type who would explain that the previous buyers were unreasonable tree haters with Buyer’s Remorse.  And, if the information is being properly disclosed, what are the buyer brokers representing the new purchasers advising them to do? 

I’ve noticed that Virginia sellers and agents seem to be much more cavalier than than most of their Maryland and DC colleagues when it comes to disclosure – they virtually always advise against disclosure, opting instead for a disclaimer telling the buyer to get the house inspected if they want to know about it’s condition.  But what about known latent defects.  Will a disclaimer help a sneaky seller in the event of a post-settlement dispute? 

I’m certainly not saying that this particular seller was being sneaky about anything at all.  When she bought the house, she passed on a home inspection.  But it’s hard to live in a house without being aware of it’s quirks and flaws.

Bottom Line: almost all post-settlement lawsuits result from sellers not disclosing some flaw or another in their house.  And I’ve never, ever heard of a case of someone getting sued over a flaw that they did disclose.  So, when you are about to list your home for sale in the Commonwealth of Virginia (one of the few "caveat emptor" jusisdictions in the United States), or anywhere else, my advice it to disclose every quirk and flaw, even the ones you have fixed.  The "don’t ask, don’t tell" rule may not help you out, even in Virginia.

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