Real Estate ethics question

[ohyouknow]

We sold a 4-plex 2 weeks ago that we had professionally managed in a city we haven't been to in years.  Closing was delayed a few times because of the buyer.  Maybe 10 days before closing finally happened one of the garage doors was struck by a car and dented. Our realtor told us about a dent in one of the garage doors 10 days before closing. (Tenant clearly did it but denies responsibility). Our realtor told us that he was 100% sure that the VA appraisal would require it to be fixed before closing, and our realtor contacted our property manager to get it done. I said okay, if we are sure it needs to be done in order to sell, otherwise I don't want to fix it. Because of a backlog, the repair couldn't be done immediately. In the meantime the appraiser/inspector comes and goes and doesn't mention it.  My realtor tells us he was wrong and its not a required fix after all and I say we don't want to fix it then.  Our property manager says it's too late to cancel the garage door replacement because it was special ordered by the company.  I reiterated that if it's fixed after closing I don't want to pay for it and the PM says he will see what he can do.  Closing comes and goes and the tenants never mentioned a thing about it.  Now two weeks after closing it still hasn't been fixed but the new owners want us to pay for it. The new owners have the same PM as we had used. It's a $650 repair.

My husband and I have different thoughts on whether we pay for this or not. What say MM?

[Deleted]

It happened while you owned it and you ordered the repair, so I think you need to pay for it.

[imojoebunny]

You need to pay. You ordered the door / agreed to have it ordered.

$650 is a bargain for a garage door, and had it been a problem that delayed or even cancelled the sale, it would have been well worth it.

[ohyouknow]

The garage door order couldn't be cancelled, but installation obviously can be since it's still not fixed. Fixing it was never requested by the buyers until after 2 weeks after closing. If I pay for the garage door itself, it's about $400. Do you think I need to pay for future installation also?

[ohyouknow]

Jan 30, 2015 10:39:37 GMT -5 imojoebunny said:

You need to pay. You ordered the door / agreed to have it ordered.

$650 is a bargain for a garage door, and had it been a problem that delayed or even cancelled the sale, it would have been well worth it.

The tenants never knew this though - they never requested a fix. It was only my realtor/PM who knew it was ordered.

[imojoebunny]

Jan 30, 2015 10:47:49 GMT -5 ohyouknow said:

Jan 30, 2015 10:39:37 GMT -5 imojoebunny said:

You need to pay. You ordered the door / agreed to have it ordered.

$650 is a bargain for a garage door, and had it been a problem that delayed or even cancelled the sale, it would have been well worth it.

The tenants never knew this though - they never requested a fix. It was only my realtor/PM who knew it was ordered.

Why did you order it then?  I thought you ordered it because you thought it would be a problem with the closing, even if only because your PM told you that.  You agreed?  I am assuming you have to pay because you cannot return the door.  I just ordered a sofa for example, if I change my mind, I cannot send it back.  I still have to pay for it.  

[maddiepaddy]

You should pay. This is damage that happened while you owned the property. It's also damage that likely happened in between the buyers writing the contract and closing. Put yourself in the buyer's place, I bet you'd be pretty pissed if you made an offer on a property that was in one condition and then it was in another once you had closed.

The buyers really should have made sure to either just get the repair $ from you at closing or get some other assurance you would repair it. But, this doesn't mean it isn't still your responsibility.

[ohyouknow]

Jan 30, 2015 10:53:58 GMT -5 imojoebunny said:

Jan 30, 2015 10:47:49 GMT -5 ohyouknow said:

The tenants never knew this though - they never requested a fix. It was only my realtor/PM who knew it was ordered.

Why did you order it then?  I thought you ordered it because you thought it would be a problem with the closing, even if only because your PM told you that.  You agreed?  I am assuming you have to pay because you cannot return the door.  I just ordered a sofa for example, if I change my mind, I cannot send it back.  I still have to pay for it.  

But you are getting the benefit of the couch, plus you wouldn't have to pay for delivery (installation) if you never get it delivered.  
Our realtor ordered it directly with the PM then told us he had because we wouldn't be able to close. Based on that I said okay. A couple days later our realtor told us the garage door was not a problem with closing. I told him to cancel the garage door.  The PM said it had been ordered and couldn't be cancelled. Clearly installation can still be cancelled.  The tenants are local and living in the property and never mentioned it until today.
I called the garage door company and we can return it with a 50% fee. Based on that, we'd have to pay about $250 instead of $650. 

[lys]

Pay up.
Would you want a seller to deal with you in this same manner? I doubt it.

[ohyouknow]

Jan 30, 2015 11:03:18 GMT -5 maddiepaddy said:

You should pay. This is damage that happened while you owned the property. It's also damage that likely happened in between the buyers writing the contract and closing. Put yourself in the buyer's place, I bet you'd be pretty pissed if you made an offer on a property that was in one condition and then it was in another once you had closed.

The buyers really should have made sure to either just get the repair $ from you at closing or get some other assurance you would repair it. But, this doesn't mean it isn't still your responsibility.

I have no idea if it happened before or after the contract. It's not a massive dent.

In regards to the bolded part, the lawyer in me says that it isn't my responsibility any more than any other issue in a building I used to own. The tenants never requested the fix until AFTER closing.  I can see that I would be responsible for paying for the non-refundable portion of the actual garage door, but I'm not inclined to pay for installation in a couple weeks.

[orangeblossom]

You should pay for it. It does suck that it happened, but yeah, you still owned it at the time it happened, and it did not look like that when the contract was signed, so yeah, you need to pay.

[ohyouknow]

Jan 30, 2015 11:15:48 GMT -5 lys said:

Pay up.
Would you want a seller to deal with you in this same manner? I doubt it.

I see this very much as a contractual issue.  What if they discover something else they want fixed? At what point am I not responsible for their repairs anymore? What if the snow melts and they see something else they want fixed?
I keep going back to the fact they are local, had an inspection prior to closing, and still never requested it fixed.

[ohyouknow]

Jan 30, 2015 11:18:49 GMT -5 orangeblossom said:

You should pay for it. It does suck that it happened, but yeah, you still owned it at the time it happened, and it did not look like that when the contract was signed, so yeah, you need to pay.

No one knows what it looks like when the contract was signed. At least my realtor and I don't. My realtor went there a couple weeks before closing and noticed it and tried to be proactive before an inspection, but the inspection didn't note it.

[kadams767]

So you think you aren't responsible for damage that occurred in between closing time while you still owned the property just because it wasn't a required fix by the inspector/mortgage company? Your buyer signed off on buying the property in the condition at the time they agreed to it. It would be like if something was damaged inside, like a hole in a wall or something, in that time. Would you turn over a house knowing that a week before closing, someone put a hole in the wall, and not expect the buyer to want you to get it fixed?!

[kadams767]

Jan 30, 2015 11:21:50 GMT -5 ohyouknow said:

Jan 30, 2015 11:18:49 GMT -5 orangeblossom said:

You should pay for it. It does suck that it happened, but yeah, you still owned it at the time it happened, and it did not look like that when the contract was signed, so yeah, you need to pay.

No one knows what it looks like when the contract was signed. At least my realtor and I don't. My realtor went there a couple weeks before closing and noticed it and tried to be proactive before an inspection, but the inspection didn't note it.

You said a car struck it 10 days before closing.  Wasn't the contract signed before that?

[ohyouknow]

I should have said it was brought to our attention 10 days before closing. I don't know when it was actually struck. I never heard about it other than via our realtor, he let us know about it 10 days before closing.

[ohyouknow]

Thanks for the all the opinions. I appreciate it.

[maddiepaddy]

Jan 30, 2015 11:17:03 GMT -5 ohyouknow said:

I have no idea if it happened before or after the contract. It's not a massive dent.

In regards to the bolded part, the lawyer in me says that it isn't my responsibility any more than any other issue in a building I used to own. The tenants never requested the fix until AFTER closing.  I can see that I would be responsible for paying for the non-refundable portion of the actual garage door, but I'm not inclined to pay for installation in a couple weeks.

But you knew about it before closing. It doesn't all the sudden become a reality just because the tenants requested it finally be fixed. 

And, in the OP you said the dent happened 10 days before closing. Surely the contract had been written before that. 

ETA: I see you addressed the 10 days before closing.

[craftyone]

I had a similar instance when I was in the process of selling my house. But it was to the tune of 2500. New buyers were living in the house and paying rent. The a/c went out and I had to pay to get a new outdoor condenser. I'm sure buried in your contract there is some verbiage about new damage that occurs between contract and closing.

[ohyouknow]

Jan 30, 2015 11:45:13 GMT -5 @songforyou said:

Jan 30, 2015 11:20:14 GMT -5 ohyouknow said:

I see this very much as a contractual issue.  What if they discover something else they want fixed? At what point am I not responsible for their repairs anymore? What if the snow melts and they see something else they want fixed?
I keep going back to the fact they are local, had an inspection prior to closing, and still never requested it fixed.

I just don't understand why the change of heart...is it just because it wasn't fixed in time?  Obviously, you felt a sense of obligation to cover the repair prior to closing, if there had been no backlog, you would have paid for the repair and been done.  So you think the onus should not be on you because the repair company was busy?  You can't think this is appropriate, truly, right?

I'm going to assume the other questions where your responsibility ends were facetious, since this is clearly very different since you were aware of and preparing to have it fixed prior to the closing.

There was no change of heart - the entire time (and every email with the realtor indicates) I only wanted to pay for it if required by the appraisal for closing.  I never had a sense of obligation about it, in fact the opposite. I wanted to close on the sale with the minimum expenditures and not fix extra things that aren't requested/required.  I am realizing my different views on this may be because I invest in real estate apartment buildings.  I see this 100% as a business, not feelings or sense of obligation or anything like that. I see things as either required per the contract or not required per the contract. My husband feels differently, he thinks we should pay for it to be nice, as does MM.   

[kadams767]

Jan 30, 2015 12:02:27 GMT -5 ohyouknow said:

Jan 30, 2015 11:45:13 GMT -5 @songforyou said:

I just don't understand why the change of heart...is it just because it wasn't fixed in time?  Obviously, you felt a sense of obligation to cover the repair prior to closing, if there had been no backlog, you would have paid for the repair and been done.  So you think the onus should not be on you because the repair company was busy?  You can't think this is appropriate, truly, right?

I'm going to assume the other questions where your responsibility ends were facetious, since this is clearly very different since you were aware of and preparing to have it fixed prior to the closing.

There was no change of heart - the entire time (and every email with the realtor indicates) I only wanted to pay for it if required by the appraisal for closing.  I never had a sense of obligation about it, in fact the opposite. I wanted to close on the sale with the minimum expenditures and not fix extra things that aren't requested/required.  I am realizing my different views on this may be because I invest in real estate apartment buildings.  I see this 100% as a business, not feelings or sense of obligation or anything like that. I see things as either required per the contract or not required per the contract. My husband feels differently, he thinks we should pay for it to be nice, as does MM.   

Well, no, I don't think you should pay it to be nice, I think you should pay it because its your obligation to deliver a building in the condition the purchaser agreed to buy it in.  And I am sure that is in your contract.  Just because it isn't required by an appraiser/inspector doesn't mean it doesn't have to be done. 

[Ashley&Scott]

You're responsible for the bill.

[mokes]

I'd probably pay for the door but not the installation because the door was ordered while I still owned it. I wouldn't want any part of paying for anything for the building now, while I don't own it anymore.

Something similar happened to us when we bought our house. The sellers were supposed to replace the garage doors, but it didn't happen. (They had already moved out b/c of a company relocation and the relo company dropped the ball on the repair.) We noticed it wasn't done on the final walk-through (day of closing) and the relo company ended up giving us the $ at closing. I think that's probably what really should have happened in your case if the repair wasn't done in time. I wouldn't think the relo company would have been on the hook if we went back to them after closing.

[rikki]

Clearly based on everything you're saying, I agree with your husband. Pay for it.

[ohyouknow]

Jan 30, 2015 12:08:11 GMT -5 kadams767 said:

Jan 30, 2015 12:02:27 GMT -5 ohyouknow said:

There was no change of heart - the entire time (and every email with the realtor indicates) I only wanted to pay for it if required by the appraisal for closing.  I never had a sense of obligation about it, in fact the opposite. I wanted to close on the sale with the minimum expenditures and not fix extra things that aren't requested/required.  I am realizing my different views on this may be because I invest in real estate apartment buildings.  I see this 100% as a business, not feelings or sense of obligation or anything like that. I see things as either required per the contract or not required per the contract. My husband feels differently, he thinks we should pay for it to be nice, as does MM.   

Well, no, I don't think you should pay it to be nice, I think you should pay it because its your obligation to deliver a building in the condition the purchaser agreed to buy it in.  And I am sure that is in your contract.  Just because it isn't required by an appraiser/inspector doesn't mean it doesn't have to be done. 

Again - we don't know what the condition was when they made the offer.

[maddiepaddy]

Jan 30, 2015 12:22:21 GMT -5 ohyouknow said:

Again - we don't know what the condition was when they made the offer.

Welp, I suppose that's one of the many risks you take as a long distance landlord. You may have no proof it was there or not but, you did at least find out about it while you still owned the property.

You nor your property management company or realtor appear to have enough knowledge of the condition of the property when the contract was presented to claim that this is an as-is issue. Just do the right thing, consider it your final business expense, and move on. 

[Deleted]

Jan 30, 2015 12:08:11 GMT -5 kadams767 said:

Jan 30, 2015 12:02:27 GMT -5 ohyouknow said:

There was no change of heart - the entire time (and every email with the realtor indicates) I only wanted to pay for it if required by the appraisal for closing.  I never had a sense of obligation about it, in fact the opposite. I wanted to close on the sale with the minimum expenditures and not fix extra things that aren't requested/required.  I am realizing my different views on this may be because I invest in real estate apartment buildings.  I see this 100% as a business, not feelings or sense of obligation or anything like that. I see things as either required per the contract or not required per the contract. My husband feels differently, he thinks we should pay for it to be nice, as does MM.   

Well, no, I don't think you should pay it to be nice, I think you should pay it because its your obligation to deliver a building in the condition the purchaser agreed to buy it in.  And I am sure that is in your contract.  Just because it isn't required by an appraiser/inspector doesn't mean it doesn't have to be done. 

This is the reason that when we sold our house we had to fix a part on the sump pump that went out about two weeks before close.  It wasn't an issue for us, and the buyers wouldn't have known until they tried to use it, but our Realtor made it clear to us that if something happens/breaks/is damaged we either needed to get it cleared with the buyer that they will repair it or we need to fix it.  Otherwise, it would fall under non-disclosure and, though this was a minor issue, we still didn't want to go there.  Normal wear and tear is understandable because moving can cause this but outside of normal wear and tear it is our problem until they legally take possession.

[imojoebunny]

Jan 30, 2015 11:11:35 GMT -5 ohyouknow said:

Jan 30, 2015 10:53:58 GMT -5 imojoebunny said:

Why did you order it then?  I thought you ordered it because you thought it would be a problem with the closing, even if only because your PM told you that.  You agreed?  I am assuming you have to pay because you cannot return the door.  I just ordered a sofa for example, if I change my mind, I cannot send it back.  I still have to pay for it.  

But you are getting the benefit of the couch, plus you wouldn't have to pay for delivery (installation) if you never get it delivered.  
Our realtor ordered it directly with the PM then told us he had because we wouldn't be able to close. Based on that I said okay. A couple days later our realtor told us the garage door was not a problem with closing. I told him to cancel the garage door.  The PM said it had been ordered and couldn't be cancelled. Clearly installation can still be cancelled.  The tenants are local and living in the property and never mentioned it until today.
I called the garage door company and we can return it with a 50% fee. Based on that, we'd have to pay about $250 instead of $650. 

You agreed to order it, on the advice of your realtor.  You don't need it, so return it, if you want for 1/2 the cost or tell the new owner that if they want it, you will pay $250 towards it if they pay the rest.  Either way you need to pay the $250 at a minimum because you agreed to order it.  Blaming others for what was ultimately your decision, doesn't change the fact that you agreed to order it.  

[sacattack]

So, I am going to be in the minority, but I don't think you should pay. The buyers never said anything during the sale process, including the final walk through before the sale (I assume this happened). It seems the PM told them this happened and that a door was on order, perhaps to get on their good side. I would offer them the door minus the sunk costs of $250 (because no matter what you are out that money).

[kadams767]

Jan 30, 2015 12:22:21 GMT -5 ohyouknow said:

Jan 30, 2015 12:08:11 GMT -5 kadams767 said:

Well, no, I don't think you should pay it to be nice, I think you should pay it because its your obligation to deliver a building in the condition the purchaser agreed to buy it in.  And I am sure that is in your contract.  Just because it isn't required by an appraiser/inspector doesn't mean it doesn't have to be done. 

Again - we don't know what the condition was when they made the offer.

OK.  Well, if you really want to play that game, why didn't you just take it from the tenant's security deposit?