Tag Archives: litigation

The Deadly Double Dip–Things for Unhappy Condominium Unit Owners to Think About before suing their Association

Condominium, Litigation/Disputes, ,

The case made perfect sense. The Condominium Trustees were acting capriciously, and without any regard for my client’s well-being. There had been a water main break which has damaged my client’s unit, and he was aware of a substantial payment from the insurance company which provided the common area insurance. My client wanted to repair the damage to his unit, and he wanted a portion of the insurance proceeds to do this repair. 

So we wrote a few nasty letter, which were ignored. Then, we sat down with the client and discussed litigation. We gave the client a budget and a timetable. They were reasonable, and we  got clearance to proceed. We filed a lawsuit, and then we got hit with the BOMB. The Trustees hired a very expensive law firm to defend their position. The law firm required a substantial retainer, far more than our firm quoted for representing the client throughout the entire litigation, including a trial if necessary. By the rules of the Condominium, my client was required to advance his share of the retainer to the Trustee’s law firm. If this sounds like “Oz” to you, you can imagine my client’s reaction.

The case has since settled, with a result that my client could live with. In fact, my client received a substantial percentage of the advanced retainer back when the matter settled. That made things more palatable to my client.

There are some lessons to be learned from this set of circumstances, which I want to pass along to each of you:

     1. Review the Condominium Documents carefully before you Purchase. Look to see if there is an arbitration provision for disputes. Arbitration is becoming more common in newer documents, and some Lenders are insisting on arbitration provisions, especially for smaller Condominiums.

     2. Pursue all non-litigation avenues before deciding to start litigation.  Without arbitration. litigation is a lonely path for a single unit owner, and often more expensive than a unit owner can anticipate. Try to find a sympathetic person on the Condominium Board of Trustees, who can bring about a non-litigation based solution. It is worth the effort.

     3. If your Condominium Documents do not provide for arbitration, try to get them amended.  Amending Condominium Documents is generally expensive, mainly because the consent of Lenders will need to be obtained. Lenders favor arbitration. Therefore, the normal Lender will be receptive to the type of change which institutes arbitration. It is definiotely worth pursuing.

Many Condominiums are poorly managed, with the least capable people serving as Trustees. That being the case, it is imperative that the Condominium Documents be adapted, as much as possible, to permit free speech by unit owners and a non-confiscatory way to settle disputes. “Double dipping” really hurts, and it is not fair.

The AirConditoning System Only feeds the second floor–What to do when the pre-closing inspection reveals an issue that complicates closing

closing, Litigation/Disputes, ,

Recently, I conducted a residential closing on a property in a high end suburb of Boston, The property was generally in great condition, but my client, the BUYER, informed me that the pre-closing inspection (not the inspection after the Offer, but the “walk-through”) indicated that the air conditioning system in the home didn’t feed both floors. The SELLER said he was mistaken, and there was no problem with the air conditioning system, at all.

An impasse arose where the closing, itself, was in jeopardy. The problem was that this is a “grey” area in most sales agreements. It is not a material kind of breach of the covenant that the property will be in the same condition that it was at the time of the signing of the sales agreement. On the other hand, the BUYER expected a fully operational air conditioning system.

After some rather heated discussion between counsel, a compromise position was reached, whereby a sum of money was held in escrow pending analysis and repair by an air-conditioning professional. That work was done; the $360 charge paid out of the escrow, and the  both parties were generally satisfied.

That was a good thing, because at the worst part of the closing negotiations, my BUYER was not going to close on the transaction, and perhaps leave a healthy deposit on the table, pending litigation, and the SELLER needed the sales proceeds to buy another home in Florida.

So when it was over, I tried to develop some provision I might put in the sales agreement which could prevent this from re-occurring. I came up with the following provision, and I would appreciate feedback from the ActiveRain community (1) whether you think this approach makes sense or (2) what other ways you have seen to deal with this type of problem.

MY SUGGESTED PROVISION:

       “If at the “walk-through” the BUYER determines, in good faith, that there is a condition on the premises which is not consistent with the condition which existed when the purchase and sale agreement was executed, but which is not of such material nature which would prevent completing the delivery of the deed and the payment of full consideration for the premises, the BUYER may, nevertheless, complete the transaction, and the BUYER and SELLER will agree on an appropriate escrow sum to be held by BUYER’s attorney, for a period of no longer than thirty (30) days to permit the parties to resolve the problem with the assistance of professionals skilled in the area which is in dispute.”

Let me know if you think this works, or any other thoughts you may have. Thanks

Seller’s attending closings–Very little to gain: Perhaps a lot to lose

closing, Litigation/Disputes, ,

In my over 40 years of conducting real estate closings in New England, I wouldn’t say I have seen everything. I would say, however, that I have seen enough to reach the conclusion that having the Seller present at a real estate closing is rarely a positive experience, and in some instances, is an invitation to trouble.

Put aside the possible distractions of having another “persona” at the closing table who wants to comment about the length of the process or the interminable amount of paperwork involved in a typical real estate closing. That is part of the territory, and I believe I, and the other people in my law firm, know how to deal with that. Also, put aside the possible antagonisms that may have developed between the Seller and the Buyer over some aspect of the pre-purchase and sale negotiations about the property. The real estate professionals at the closing table should have the skill to deflect this aspect of the process, so things can proceed at an acceptable pace.

The real problem is the potential for litigation about the condition of the premises based on a comment, or lack of comment, made by an attending Seller. If I am representing a Seller at a closing, armed with a durable Power of Attorney, I am duly ignorant about the history of the home or the condition of the premises. If I am asked about the “spot” on the bedroom ceiling, or the trace of water that the inspector found in the finished basement, I can truly answer “I do not know”, and that will be the end of the discussion.

What if the Seller is present and asked the same question? As a point of fact, there was a water problem, maybe 6 years ago, and the derivation of the problem had been found, and the problem resolved. The Seller just had not gotten around to “painting and patching” the spot on the ceiling. That explanation would be honest, and should be sufficient to end the discussion. What if the Seller panics, and thinks, if I mention water now, I may kill the sale, right at the closing table? So, the Seller either denies that there was ever a problem or otherwise lies about why there is a spot. Months, or years, later, there is a water problem in the home, and the Buyer clearly remembers the Seller stating, at the closing, before many witnesses, that there was NO water? The chances for a lawsuit, even after closing, are greatly increased.

The moral of this story is that we, as real estate professionals, are better served if the Seller does not attend the closing. If the Seller wants to meet the Buyer, or convey information important information about the home to the Buyer, suggest a post closing event. Better yet, suggest that the Seller write down information for the Buyer and deliver it at the closing. While the writer hates to be as defensive as the suggestions in this post appear, litigation after a sale is costly and never really benefits either the Buyer or the Seller.  It certainly is not a felicitous event for a realtor. The Buyer is purchasing a “used” home in most circumstances. Small problems are bound to appear. Gratuitous, or even fabricated, remarks at a closing by the Seller can be costly. Use your influence on your customer to prevent the problem before it arises.