Homeowner fails to disclose propensity for flooding during home sale

This case concerns a house that was sold without any disclosure of several prior instances of flooding, thus misrepresenting its value.

The home was sold in August, 2013, and was subject to massive flooding a little more than a month later, in September, 2013. The plaintiff alleges that the defendant failed to disclose information regarding the home’s high susceptibility to flooding, and how the house’s basement accumulated mold and vermin infestations. It was later discovered that the defendant in this case had replaced her carpets three times due to floods, before she finally replaced them with tiles. Despite this, the seller never mentioned anything to the buyer regarding flood risks or the home’s pest infestation. To make matters worse, the home sits below street level, and has a sump pump in the front yard, which should have been equipped with a five-inch tube instead of the two-inch tube it currently has, and making the pump completely ineffective. Despite all of this, nothing about flooding, water damage, or vermin infestations was ever disclosed to the buyer.

Question(s) For Expert Witness

Can you discuss the ability of the house to flood in the future and the expected value?

Expert Witness Response E-007049

It is possible for me to discuss the potential for future flooding, assuming I have access to verified records of past flooding, as well as records of the most recent flooding and an analysis of the inadequate sump pump. Two appraisals of the property are needed; one before the owner gained knowledge of the flooding issue and another after the flooding issue was known. There will likely be a difference and that difference is the measure of damages in this case. That difference is likely to be made up of cost-to-cure factors, such as installing a higher capacity sump pump and re-grading and re-landscaping the yard, as well as some measure of stigma given the requirement that future potential buyers be notified of the past flooding issue and potential for future flooding. A drainage engineer’s professional opinion would be helpful regarding the flooding issue, the inadequate sump pump and cost-to-cure for re-landscaping and the cost associated with a final and permanent cure. I can determine diminishment in market value from stigma.

This real estate expert has been an appraiser and consultant for 35 years. He holds the MAI and SAI designations, distinguishing him as a consummate professional in the area of real estate valuation and analysis for both commercial and residential properties. A former president of a chapter of the Society of Real Estate Appraisers located in the western U.S., he has extensive experience in all areas of real estate appraisal from single-family residences to industrial and special use properties.