water leak found after closing

jeremy11June 25, 2009

We just sold our house, it has been on the market for 6 months. 48 hours prior to closing I recieved a huge water bill from the local utility company, I called the utility company and asked them what caused it and they said it was most likely a meter reading error and they would have someone go out and re-read it and my bill should auto correct. That was the FIRST high bill I ever received, house was vacant for months so I had no idea what caused it other then incorrect meter reading, or the slim chance someone actually stole water. Well, I told my agent just in case we had to disclose it and she said we didn't since we don't have to disclose a water spike, just known material defects. Now we closed a day later and the utility company is saying there is most likely a leak somewhere since they double checked the meter reading. The buyers refused to do a home owners inspection and bought it as is, they did the final walk-through the same day I actually received the high water bill. At the time the discliamer was signed (few months prior) we were not awawre of an issue and our history of water bills show this spike just occured, it really only became evident this morning (24 hours after closing)with the confirmation the meter reading was correct and I got my final bill.

My question is, since the buyers bought it as is, didn't get an inspection and I had no idea about this issue can I be held liable for repairs? There is ZERO evidence of a leak, no wet ground, etc just a large bill so there was no way for me to know, and the water company told me it was originally most likly an incorrect meter reaidng and even my agent said not to worry.

On a side note I did take about a $14,000 loss on the house when selling it and threw in a home warranty (what's another few hundred dollars I figured). So I would imagine the new owners could file a claim with the warranty or their insurance. But am I at all liable for this possible leak, in all honesty I had no clue there was any type of a problem, wasn't trying to hide anything. This was simply bad timing.

What are your thougts?

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"As is" means just that. I cannot even imagine someone so green to home buying that they wouldn't do a home inspection! I'll bet they do one the next time they buy! They just received an education in Real Life 101 rather than HGTV make believe land.

    Bookmark   June 25, 2009 at 11:37AM
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As is means As is -- buyer should have done his due diligence, not your fault he didn't.

    Bookmark   June 25, 2009 at 12:44PM
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home inspection is great and all, but I've been through them, and they wouldn't have picked up on this.

As far as the water bill, Not sure what sky high means. Double normal? 10 times normal?

you probably aren't liable legally. However, if it is "large enough" that it could be causing big problems with the house, I would think you have a moral obligation to mention it to someone to communicate to the buyers.

up to you what you consider "large enough" is.

    Bookmark   June 25, 2009 at 3:16PM
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Large is 33ccfs. Translates to 26,000 gallons of water. The bill was like $500, it normally is $50.

I just wonder if the inspection would have caught it, seems like if in fact there was a leak that size it would have caused water pressure to be low or sediment to be in the water when they ran it.

    Bookmark   June 25, 2009 at 3:22PM
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You're not liable, you have to disclose "known defects". That is not a known defect. I would call the buyer, or have their agent call, explain the situation and have them get the water company over there so they don't recieve a huge water bill too.

This isnt something that would have even shown up on a home inspection. No one knows when something is going to go. A broken pipe or water leak is one of those things.

    Bookmark   June 25, 2009 at 3:36PM
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I wouldn't feel guilty about it. The house was sold "As is", it was not a know defect, and you purchased the buyer an insurance policy. If you used a realtor, let them handle it. They got a percentage!

    Bookmark   June 25, 2009 at 6:53PM
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You don't mention if they have even come after you for the money. Have they? If they have, I would have your REA explain you are not liable. If they push it further spend a few hundred to have a lawyer write a letter.

    Bookmark   June 25, 2009 at 7:59PM
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You say the house was vacant for months, are you sure it might not be something as simple as someone leaving a faucet running or kids turning on an outside faucet that someone later closed?? I wouldn't loose any sleep over it, it would have to be between the meter and somewhere in the house, I'm sure 26,000 gallons would have shown up somewhere.

    Bookmark   June 26, 2009 at 9:31AM
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I certainly understand your distress about this issue. You are obviously a fair person and you feel bad about the buyer ending up with a huge expensive problem.

Of course, you must be extremely careful about what you say about this issue to the buyer because even though you most likely have no liability, you do not want to imply that you feel responsibility for this.

I had a similar situation when I sold my mother's home. There was a small leak which I relayed to the realtor -- the buyer didn't want me to repair it, because they were planning a remodel. The handle fell off the oven about a week prior to close (old stove, but probably weakened during inspection) -- I asked buyer what they wanted -- they just wanted stove removed. Then only days before close -- the water heater pilot light would not stay lit. I paid for the repair & got a year's guarantee from plumber & I left all the paper work for new buyer on the table. The plumber had to be recalled on closing day (I had a flight to catch) and I was so upset by the whole situation. But that house had also been sold "as is".

We had a water leak on my current residence. Luckily it wad just beyond where the meter registers the water going to the house -- or unluckily, because it didn't register on my bill or my neighbor's bill. Anyway -- the cost was about $700 total got the plumbing company to dig in and repair the leak.

Good luck

Good luck

    Bookmark   June 26, 2009 at 11:30AM
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"Well, I told my agent just in case we had to disclose it and she said we didn't since we don't have to disclose a water spike, just known material defects."

Since when are water spikes not material facts? Give me a break. If I was an attorney, I'd be having a ball with you and your agent for not disclosing a possible water leak that can fill a swimming pool.

    Bookmark   June 26, 2009 at 9:11PM
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susana_2006-"I certainly understand your distress about this issue. You are obviously a fair person and you feel bad about the buyer ending up with a huge expensive problem."

Even though your mothers house was being sold "as is", I admire the way you handled the sale.

    Bookmark   June 27, 2009 at 10:31AM
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"As is" doesn't mean the seller doesn't have to disclose known defects, at least not by all state laws. The paper below, written by an attorney, sheds some light on disclosures. Though it's written about one state's laws, there are going to be similarities. Sounds like you really didn't know. The red flag is that the real estate agent probably knew from experience that the high water bill could mean a leak, and he/she unethically advised you not to disclose it. Too worried about his or her commission, and not enough about his/her client and the stress this is putting you thru.

Here is a link that might be useful: Sharp Sword of disclosures

    Bookmark   June 30, 2009 at 2:34PM
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Forgot to add that a wise buyer checks the utility bills of any house they're considering purchasing. That doesn't let you off the hook but I'm just mentioning it for readers' use. This is often available free from the utility co's. Gives the history of bills' amount over the course of a year. Buyers can also ask to see copies of the last year's utility bills to assess the house's efficiency. When a house is especially energy efficient some sellers provide bill copies to show that. (Private info is blocked out of course.) Not sure if buyers in your area can check utility bill amounts by address but either way you knew about the high water bill, and that's not going to work in your favor. Your agent really messed up by advising you to ignore it. He or she surely knew this was indicative of a potentially serious leak that should've been checked out. The surpise to the buyer of getting a $500 water bill themselves is something they should've been informed about. The issue now is how much is it going to cost. Whenever I have heard an agent say you don't have to disclose something, alarms go off in my head.

    Bookmark   June 30, 2009 at 2:52PM
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"Whenever I have heard an agent say you don't have to disclose something, alarms go off in my head."

Excellent points made. When in doubt, disclose, disclose, disclose.

    Bookmark   June 30, 2009 at 8:48PM
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Does this house have a sump pump with a siphon backup by any chance? We recently had a situation where something happened to the sump pump that had the siphon running for a few months. (Another case of empty house. We were selling for deceased relative.) By the time we discovered the situation the water bill was $800. Five minute fix to the sump pump and the siphon stopped.

You have proof right in the dated bills and at the water authority of when you learned of the problem. You couldn't disclose anything you hadn't discovered yet. I wouldn't worry about it.

    Bookmark   July 2, 2009 at 10:49PM
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I'd ask your Realtor to call the buyers and let them know that right after closing, you became aware of a possible water leak, and that you wanted them to know about that possibility as soon as possible so they could have it checked out and not get a huge bill.

Since all of the information you had at time of closing was 'probably a meter reading error' it was not unreasonable to refrain from sounding alarm bells while you checked it out. But now that you have...

    Bookmark   July 4, 2009 at 9:48PM
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If you cannot see any leaks visibly, I don't think you need to say anything. Are you supposed to start digging the ground? It could have been a fluke, or a meter malfunction. One large bill is not indicative of a leak. If you cannot see any leaks in the house, it's the Water Company who needs to check things out. They need to dig, if the new owner gets a huge bill. I doubt that an inspector would have found anything wrong if no leaks are visible. However, he should have had the house inspected. IMO, this is a wait and see situation. I don't think you need to go overboard over ONE bill. Your neighbor could hooked up a hose and used your water...

If nobody left the faucets on outside (the house being empty and all), then it must be the meter. Someone on this area had an incident with the electric company. The electric company sent out people, denied anything wrong with the meter etc. Years later the truth came out. IT was the meter...

    Bookmark   July 6, 2009 at 9:08AM
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In some areas, the water company connects to your water pipes near the road and the meter is near the road too, in the ground or near the ground. From that point, the underground water pipes that go to the home are your responsibility to repair. So if there is an underground leak, maybe 30 feet from the road or somewhere in your yard, then you might not notice it and it could be the owner's reponsibility to find the leak and repair it. But this is now the new owner's problem and they will have to deal with it as soon as they get a very large bill. My guess is there is an underground leak.

    Bookmark   July 6, 2009 at 1:41PM
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I had an underwater leak. I did not get a high water bill, because the leak was beyond where the meter registered water usage. But the leak was on a pipe that brought water from the main pipe to my house. It was my neighbor's & my responsibility -- it was a very small leak & the plumbing company dug up the area & fixed the pipe ($700). We did not know about the leak (which had probably been going on a long time) until spring thaw when a small spring kept bubbling out near the driveway.

I agree that the realtor should call the new owner. The new owner will undoubtedly feel like the seller got by with a fast one, no matter what the facts are. Hopefully for them, it will be able to be easily and cheaply repaired.

    Bookmark   July 7, 2009 at 3:41PM
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Since you received a notification 48 hours prior to closing of a significant variance in your water bill--a huge spike (though the property was vacant),I submit that until an investigation was performed to determine whether this huge spike was as a result of a leak vs. a meter mis-reading, that a possible material defect existed, and that you kinda needed to be the one to determine which and take responsability accordingly.

    Bookmark   July 9, 2009 at 12:12AM
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Do your neighbors at your old house you just recently sold have a pool?
And you weren't living there right?
You just sold it in June, which means the water bill would account for May, right?
It may not be a leak after all.

    Bookmark   July 12, 2009 at 7:19PM
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