August 31, 2011
A Gentle Reminder That New Paint Does Not Equal Remediation
A plugged-in reader reports with respect to a home currently on the market in Noe:
One of the neighbors got a sneak peak at the place after the tenants moved out and saw evidence of a leaky roof in several places and extensive mold on the walls in most of the rooms – imagine what’s going on behind the drywall. However, what is most interesting is that during the open house you can see the wallpaper is still there, so apparently whoever did the remodeling work just painted over the existing moldy walls.
As we can’t confirm the before, or what exactly what happened during, let’s just consider this a general reminder not to skimp on your inspections, especially when dealing with a newly remodeled home, which might seem counterintuitive.
First Published: August 31, 2011 8:30 AM
Comments from "Plugged In" Readers
I've seen this twice so far. Got inside the house in its unmodified state (once during an estate sale) and then after the superficial "paint and sod" flip during an open house. Fresh paint smells wafted through the air and all evidence of chronic water intrusion problems concealed.
This could be dismissed reasoning that the flipper didn't know that they were covering up a serious problem but one of the houses was only partially painted: the water damaged part.
Posted by: The Milkshake of Despair at August 31, 2011 9:10 AM
I just went through a similar situation. I just bought a nice house, great area, but, in the disclosures, the roof was an issue, as well as one of the rooms, which was evident. The first thing my wife and I have done is replace the entire roof, tear all the drywall down in 2 rooms, replace the studs/framing, replace insulation, put up 2 layers of new drywall with Green Glue soundproofing (plus GG sealant on edges/gasket tape on studs) in between the sheets. Mold is no laughing matter, the smell is disgusting and unless treated the correct way it will get someone really sick. The issues with this Noe house better be in the disclosures or I'm sure heads will roll.
Posted by: PPC at August 31, 2011 9:27 AM
so what is the address of this property in Noe?
Posted by: asiagoSF at August 31, 2011 10:09 AM
Can you expound on the "2 layers of new drywall"? What is the purpose of that, and is it truly effective? Thanks.
Posted by: jack at August 31, 2011 10:53 AM
Would love to see inspectors use themographic cameras to detect leaks. They can be used to help find leaks in walls and roofs, it would require more time and money but I think this could save people a ton of time in the long run
Posted by: b j at August 31, 2011 10:58 AM
I recommend having a reliable contractor take a look at your prospective purchase before buying because such a person works in the real world, fixing and building houses. I've had much better advice from these guys than from the people who specialize in home inspections. From the home inspectors I get reams of useless boilerplate and ripoff fees.
If you do use a home inspector, check them out on yelp and pay close attention to the negative comments. Once they get a negative comment or two, they'll flood yelp with 5 star positive comments.
Posted by: unwarrantedinlaw at August 31, 2011 11:01 AM
Word of mouth, a neighbor supposedly sees something, somebody else doesn't see it and sees new paint instead, sends it to Socketsite, nobody has seen the disclosure packet, and it gets posted, along with a generally moralizing statement? Journalism that ain't.
Posted by: [anon.ed] at August 31, 2011 11:10 AM
Hi Jack, the reason for the 2 layers of drywall is for soundproofing more than anything else. I figured that since the walls were going to be torn down, might as well do it now. On the studs applied gasket tape, insulation was added, then 1/2" layer of drywall, then applied Green Glue to another 5/8" layer that was put on top, also Green Glue sealant was added on the edges of new walls. Though noise hasn't been an issue with my neighbor, I heard a little knock next door, during the open house, and figured it is worth the reasonable price (mostly with future kid(s)). The walls feel extremely solid, very easy to complete, happy with the work done. Here is the link: http://www.greengluecompany.com
Posted by: PPC at August 31, 2011 11:16 AM
Gentle reminders to buyers tend not to be an effective force against the considerable economic incentives of sellers. Mold remediation can be very expensive, and the seller is trying to maximize their profit from the sale.
My personal stories about landlords who refuse to address a mold problem will have to wait until another day since the above post is about pre-closing inspections for SFH buyers, but as far as mold being no laughing matter, I agree with PPC, but note that the incentives tend to motivate ethically challenged sellers to skimp.
I was lucky that the mold that turned out to be present in the last place I rented wasn't the toxic, serious respiratory problem-causing variety. I still terminated the lease early and moved. Shortly after that, I discussed it with an acquaintance who was a licensed general contractor and part-time flipper.
Mold issues "should be in the disclosures" but in the real world, heads will certainly NOT roll if they aren't. This flipper laughed and told me he painted over and otherwise obscured obvious mold contamination in lieu of remediation in no fewer than three of the last five places he sold, he didn't disclose mold issues in any of them and he hadn't been sued yet. Now, perhaps he was just overconfident or arrogant or both, as flippers tend to be.
The thing is, he said, is that the buyer would have to show that the seller knew about the issue beforehand. Just like Jake Moore in the movie Money Never Sleeps, he said "that's difficult to prove". Such a seller can always play dumb and claim that the painting was normal pre-sales preparation, especially if they painted the whole room.
Are you, as the buyer, going to discover that the mold problem was present and/or serious before the statute of limitations kicks in? He was betting that you wouldn't.
I forget the actual legal language and I'm not a lawyer, but lots of lawyers will tell you that if one of the real estate agents involved sees mold damage from a routine inspection, they're required to yadda, yadda, yadda…he said it never happens. Real Estate agents don't want to get sued by the seller after a deal goes south, and the same goes for property inspectors, which is why during the bubble some property inspectors would refuse to document mold in written reports when there was an obvious issue and only report the problem verbally. Economic incentives.
RE lawyers will also tell you that there's lots of case law out there regarding mold, so obviously some sellers are in fact getting sued and damages are being recovered. This flipper said that as a practical matter, he knew that most buyers don't have the financial wherewithal to engage in protracted civil litigation that would involve expert witnesses, etc., so even if he got sued, he was counting on an early settlement, which of course would be for an amount less than he made on the property. Economic incentives.
Also, insurance companies like to force early settlements if not completely going to mandatory arbitration. Because civil litigation is expensive. Economic incentives.
The more expensive a mold problem is going to be to fix, the more motivation that an unethical seller has to take steps to hide it. So unless you start seeing lots and lots of sellers paying for after-closing remediation work, and those payments are somehow made public, I don't see this problem going away.
Posted by: Brahma (incensed renter) at August 31, 2011 11:19 AM
[anon.ed], you bring up an important point which I'll concede, real estate being a market characterized by asymmetric information effects.
I have a question for you. Is there any way for the public to get their hands on "the disclosure packet", either before, during or after close of escrow?
Posted by: Brahma (incensed renter) at August 31, 2011 11:38 AM
@Brahma: If by "the public" you mean people who are not connected to the transaction - probably not; I'm not really sure why there would be any reason the selling agent would give a copy of the disclosure to some random person. Sometimes the disclosure package is available to browse through at open houses (that's usually when the seller feels confident that there's nothing in it to scare people off!), and of course, if you go into escrow on a property, you should get the disclosure package right away.
But when shopping for properties in the past, I've never had much problem getting access to the disclosure stuff if I was contemplating an offer and asked to see them. I don't think the disclosures are usually treated like national security or something. But I don't think there's any OBLIGATION to give it out to someone until they have an accepted offer. In practice though, my experience has been that if you ask to see it, they'll usually show it to you.
Posted by: Dubocian at August 31, 2011 11:59 AM
"Is there any way for the public to get their hands on "the disclosure packet", either before, during or after close of escrow"
If by the public, you mean anybody who has expressed a specific interest in the property?
Yes, by all means.
If by the public, you mean people for whom SFRE is in actuality only so many 1's and 0's, then the answer is an emphatic no.
Posted by: [anon.ed] at August 31, 2011 12:04 PM
I figured that since the walls were going to be torn down, might as well do it now.
A wise decision, if you're sensitive to noise.
Posted by: acoustician at August 31, 2011 12:12 PM
The seller's agent is only too happy to hand out disclosure packets to anyone who asks.
Then they beat every prospective purchaser over the head with how many disclosure packets they handed out to indicate that the property has lots of interest and will go way over asking, when in fact anyone who asks for one will get one regardless of how serious they are.
The next open house you are at, just ask for one. In this market, the agent will be thrilled.
Posted by: tipster at August 31, 2011 12:16 PM
Thanks, PPC. I'm jotting down GG, extra drywall (QuietRock) and Accousti-gasket tape for the re-build that's taking place soon.
I love SS; I've learnt so much.
Posted by: Jack at August 31, 2011 2:24 PM
What is the statue of limitation for going after the seller if an issue like this pops up. This is really the only question that needs to be asked. Stagers should be very careful on this tactic and can potentially assume liability unintentionally if not careful. Seller agent better also be careful here and document when they have entered the property and when they wrote their disclosures.
Posted by: eddy at August 31, 2011 2:25 PM
Beware of sellers handing out "inspection" reports and/or plans to "improve" the property.
My understanding is that if a seller gives these to the buyer, it provides indemnity in the event they fail to disclose material items in the required disclosure forms.
Posted by: datadude at August 31, 2011 2:35 PM
Disclosure packets are usually publicly available to anybody who asks. Most people review the disclosure packet before they even make an offer. If during the course of a transaction information not in the disclosure packet is discovered (such as through various inspections) and the buyer backs out, that information is required to be added to the disclosure packet.
Posted by: lyqwyd at August 31, 2011 2:40 PM
I've never heard of this, do you have any references?
Posted by: lyqwyd at August 31, 2011 2:48 PM
No problem Jack, good luck with your remodel. Just to let you know we didn't use Quiet Rock for the 2nd layer of drywall. I have read that it is a good product, but a bit pricey for our budget. Again, good luck!!
Posted by: PPC at August 31, 2011 3:05 PM
eddy - You have an interesting point about a stager's obligation to report problems before they're covered up. My guess is that they are not obligated to say anything. Especially since some stagers intentionally conceal less serious flaws.
Even the seller and the seller's agent has an easy out. They're not officially experts at inspecting homes so it is pretty easy to claim ignorance.
Posted by: The Milkshake of Despair at August 31, 2011 3:39 PM
I've seen agents / sellers try to do some shifty things and everything changes when a lawsuit is filed. Buyers are wise to get their own inspections and demand the seller and seller agent attend the buyer inspection.
Posted by: eddy at August 31, 2011 3:41 PM
I certainly agree with getting as many inspections as feasible, and if there are issues discovered contract a reputable contractor to give a bid on the cost of work.
Why do you think it's important to have the seller there?
Posted by: lyqwyd at August 31, 2011 4:01 PM
Is there any way for the public to get their hands on "the disclosure packet", either before, during or after close of escrow?
On occasion an agent will put the disclosure information on the internets, but it's not that common.
Why do you think it's important to have the seller there?
I'm not sure if this is the rationale eddy was thinking of, but you could ask them questions based on the inspection, and if they lie about it, they may be making a misrepresentation.
Posted by: sfrenegade at August 31, 2011 4:24 PM
You could ask those questions without them being there, and have them answer in writing, which would be much more usable if a lawsuit were necessary.
Posted by: lyqwyd at August 31, 2011 4:39 PM
You don't have the seller there. The agent is sufficient. It's all being annotated, after all.
Posted by: [anon.ed] at August 31, 2011 4:48 PM
The seller should be there, IMO. The seller has unique insight into the home and should be able to answer any questions the inspector might have on the property. But most seller agents will not permit their client to be present for liability reasons.
One of my biggest pet peeves with the seller disclosure requirement are the agents that simply let the seller scribble their notes on the standard form. We're talking 5% spiff on $1-4M homes in most cases; and >$500k+ in 95% of all cases. Would it kill you to type up your clients chicken scratch and have them initial it. Always seems a shaddy / dodgy tactic to deceive buyers and make it seem OK to provide the absolute bare minimum in disclosures.
Remember the S&M guy from a few months ago. I wouldn't be surprised to see more buyers going after sellers in the coming years. Speaking of S&M, TMZ is running a story right now about Rhianna suing the seller, seller agent and everyone else under the sun for disclosure issues on a $7M home in LA.
PS: I'm very proud of myself for my little S&M tie-in. :)
Posted by: eddy at August 31, 2011 6:50 PM
No, in general you're talking pie in the sky there, Eddy. There are a million variations and in some cases it might be just fine. But in general the seller is not there because you don't put somebody with memories in the same room as somebody with future plans if you want a deal to go through. The potential irrational thought and human emotion to come out is very high. The agent is perfectly capable of communicating the findings of the 3rd party inspector to the seller, and later relaying the seller's response.
Posted by: [anon.ed] at August 31, 2011 7:31 PM
Regardless of whether the seller is present, don't ever settle for verbal answers to inspection questions....get it in writing, have both parties and both agents sign the document and put it in the file...always!
Posted by: willy at August 31, 2011 7:49 PM
Very fair point. I'd rather the seller present than the buyer in your scenario.
Posted by: Eddy at August 31, 2011 9:43 PM
Why shouldn't the home seller meet with the home buyer?
When I go into a store I can deal the the salesperson and/or the owner. We're talking exepnsive, life changing decisions here and yet the attitude amongst the real estate agents is that they are not responsible for anything.They just push paper and get paid to say they know nothing. Even a seller's agent has no motive to check things out, because they're not responsible for the buyer's choices and not responsible for getting info from the sellers either.
Real Estate agents have a really profitable racket going.
Posted by: MM2 at September 1, 2011 6:56 PM
Or, another example, I can sue someone who sells me toxic paint, but I can't sue an agent who sells me a toxic house. I may I have to find the paint manufacturer as well, but with a real estate transaction, I've no right to the records of previous owners or to previous incidents with other potential buyers.
Posted by: MM2 at September 1, 2011 6:59 PM
MM2, your words have nothing to do with the things I've said.
Posted by: email@example.com at September 1, 2011 7:59 PM
Unfortunately mold is endemic in San Francisco's humid climate - unless a house has extremely good ventilation, you can pretty much assume that it is present. Unfortunately, to discover it will generally involve invasive testing, which is beyond the scope of a routine inspection. In general I would use extreme caution if a seller has replaced only the bath tile and fixtures in a fluffed and flipped property and done nothing with the underlying surfaces. You will then be likely to have issues with the quality of the HVAC system, windows, etc. as well as mold.
For anyone remodeling in SF it makes sense (and adds very little cost) to use only paper-free drywall and tape in all areas and provide humidity sensing exhaust fans in kitchens and baths.
Posted by: tj at September 1, 2011 11:19 PM
Good suggestions tj. By "paper-free drywall" do you mean greenboard? A humidity sensing fan sounds interesting. Are they reliable?
One other suggestion that I learned here on SocketSite for really a cheap fix in a bathroom that is too humid is to use Killz brand paint. I had tried a lot of other solutions before and only Killz solved my ceiling mold problem caused by condensation from the shower combined with a too wimpy exhaust fan.
The issues that I mentioned in my first post were a lot more serious than condensation / air circulation problems. They were rainwater and groundwater intrusion problems. Those need much more expensive roof or foundation/retaining wall repairs.
One house I visited in Noe had a really serious leakage problem. The OH was on a day that rained in the morning and there was actually a puddle of water in the corner of the living room. That can't be good.
Posted by: The Milkshake of Despair at September 2, 2011 9:11 AM
Just like the headline says new paint does not equal remediation, remediation does not always equal removal. Frequently the mold is killed (with bleach usually) and then encapsulated with a high quality latex paint. If you have mold in a wall the wallboard and insulation are removed and discarded and the wood studs are treated as explained above.
Posted by: OneEyedMan at September 2, 2011 12:01 PM
the property with the all mold was 481 Jersey street in a very nice section of Noe Valley and is on the market for over $1,000 per square foot!
Posted by: Alice Thorn at September 3, 2011 2:33 AM
Well then I wouldn't worry about it because whoever bought that place is gonna gut it and add a third story.
Posted by: sparky-b at September 3, 2011 9:40 AM
I saw photos on line of 481 Jersey Street and it seemed pretty decked out with a new kitchen and bathroom. A fixer at 550 Jersey (i think) sold for only $700K earlier this year. This one is at $1.1M asking. Seems like they're looking for a sucker.
Probably the realtor posting last time...
Posted by: RM at September 4, 2011 8:32 AM