From the Forum – flipped condos — reselling issues

Photo of an “old volvo” by PoPville flickr user Leonard Jewler

flipped condos — reselling issues

“another implication of the stories about condo flipping: issues with reselling

What, if any, are the ramifications of something related to a conversion going wrong after the we (the unit’s first owners/residents) complete a sale to new owners? To what extent could we be on the hook financially and legally? To what extent would it be the original builder and seller? We of course would disclose anything we know of that’s an issue, but what about things there’s no sign of? Does it fall into the category of “that’s homeownership”?

Likely we’ll just sit down with a real estate lawyer, but leave no stone unturned; some of you may have experience/knowledge with this, and others might be able to benefit from the topic, as well . . .

Thanks for any insights you all might be able to provide.”

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23 Comment

  • I don’t even really understand this question. Do you suspect there’s serious issues with your condo but you want to sell it? If you’re going to disclose everything you know about anyway then what is your question?

    • The question: Is he/she on the hook if something unknown now becomes known later or if the builder hid known defects can the original owner be on the hook to the 2nd owner. I think that depends on what it is and how easy it would be to figure out. I hope the seller gets kicked for most things.

  • My understanding is that selling a flipped condo is no different than selling any other type of real estate. You are responsible for disclosing things you know about. The first unit owner does not assume any special responsibility for the quality of the construction.

    • “You are responsible for disclosing things you know about.”
      How is this even enforced? It seems like such an impossible thing to prove without racking up a ton of billable hours with your attorney.

      • Under DC law, sellers are required to fill out and provide a standard disclosure form that asks about various types of structural and other physical issues, like whether there has been flooding, a fire, lead paint use, etc. Such things must be disclosed to a buyer, typically before they make an offer but definitely well before closing. Buyer has the right to walk away based on the disclosures.

        • There are some differences for flippers though. I doubt it matters in the OP’s situation since they did not do the flip, but if you buy a flipped house from the flipper/developer, the disclosures may be different, or at least that is what I’ve heard.

          I think as for OP, the law usually requires as others have noted, disclosure of known defects and you’re also responsible for any defects that should have been discovered or that you would have had notice of. You can’t deny knowing that there was a water leak in the basement if there is evidence that there was one that you would have easily seen with the naked eye. That is how they deal with the “enforcement.”

      • Yeah, I have heard that it’s very difficult to prove that the previous owner knew about an issue and failed to disclose it. I’ll note that disclosing things and generally being nice to the person who purchases your property will probably ensure better mail forwarding following your move. Not sure how that compares with the $80,000 structural flaw you may be trying to hide 🙂

        • Exactly. With no-inspection clauses, it seems like you can pretty get away with anything without disclosing (short of some sort of crazy structural issue that’s patently obvious to all parties).

          • This would only ever be enforced through a law suit. You’d be surprised how easy it is to prove someone knew about a problem. Remember this would be civil, not criminal court so the standard of proof is lower. Did you get an estimate from a contractor? Did a neighbor see it? Did you tell a friend? Did you ask about it on an internet message board? Did you Google search it?
            All of the above could potentially out you. If you knew about the problem and intentionally misrepresented it (fraud) the damages are trebled. If you also lied about knowing about it while under oath you could be held in contempt as well.

  • This feels very Donald Rumsfeld, circa 2009

  • Well, the question wasn’t well-phrased so it’s very hard to know what exactly the person wanted us to answer. It seems like the owner has a suspicion something wasn’t done right and wants to get the condo off their hands?

    Not in DC, but in NC, I was a condo owner. I sold the condo in less than 1 day on the market. You’re required to disclose known issues. During the due diligence period if a nondisclosed issue comes up, the buyer has the right to walk away (usually it comes up during home inspection) – and believe me, if there’s an issue and they have a good home inspector, it’ll come up.

    FWIW, a week after I sold my condo and moved to DC, I got a call from my realtor. The buyer’s realtor had called him to find out if I’d ever had issues with the water heater leaking and if there was an easy fix. (The seller had it start leaking on her). I said, truthfully, that I’d never had an issue. (And thought to myself, sorry about your luck.)

  • Sounds like you really need a real estate lawyer. I wouldn’t trust legal advice from an online forum.

  • HaileUnlikely

    I completely understand why one might wish to know the answer to this question, but am unclear on the practical application for a seller. One cannot disclose defects that one really truly is not aware of regardless of the penalty for not disclosing it. And as someone who was presumably a buyer prior to being a seller, you should appreciate your legal and moral obligation to disclose any defect that you actually are aware of, even if you’re confident that you can get away with not disclosing it.

  • As long as you disclose all materials deficiencies with your unit, you can rest assured you are free and clear. Additionally, of course, any well run condo association will have had a “conversion deficiency engineering study” conducted which would record all deficiencies the the common elements which the association is responsible for, and what the status is on those repairs. The association has the responsibility to convey this in the resale package. If it is not part of the resale package, then your association should be asked to include this as part of the package so the prospective owners are put on notice regarding common element deficiencies.

    • Will you (anyone) recommend a reliable firm for completing a “conversion deficiency engineering study”?

      • Swifty – these are also called “transition studies” conducted by an engineering firm. A well managed association will conduct this within the first two years (aka: the legal, warranty period, covered by the Condo Act), and used to legally negotiate with the developer to fix/repair “structural defects”. “The two year warranty period” begins at one or the other of these periods “the date on which the last unit was sold OR two years from the time Association control converted from “developer control” to “homeowner board control”. (I always forget which it is: but a quick check-in with the association’s attorney will be able to confirm this.). Are you still in the “warranty period”? Once you respond to this I will

  • I sold a rather poorly renovated condo (that I had bought from a flipper). Just disclose everything you can think of and you’ll be fine. I even disclosed issues that we had solved (roof leaks) that I was concerned could reoccur. As long as you’re up front and disclose all you know, you’ll be fine. As a seller, you’re lucky to be in a market where people are usually going to buy regardless of issues with the unit.

  • Photo of an “old volvo”?

  • As the creator of the above photo, I must clarify that the name of the cited photo when posted to Flickr was “Urban vista.” It was taken in the West End of DC.

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