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December 7, 2020

House of Horrors: A Real Estate Deal Gone Wrong | Cup of Joe

House of Horrors: A Real Estate Deal Gone Wrong

Everyone knows actor Donald Sutherland. Very early in his career, Donald played the role of  Dr. Bob Carroll in Dr. Terror's House of Horrors, a 1965 British horror film. Dr. Carroll returns to his home in the United States with his new French bride, Nicolle. Soon there is evidence that a vampire is on the loose, and the doctor seeks the aid of his colleague, Dr Blake. They discover that Nicolle is the vampire. Following Blake's advice, Dr. Carroll kills Nicolle. When the police come to arrest Dr. Carroll for his wife's murder, Dr. Blake denies giving any such advice. As the police take Dr. Carroll away, Blake says to himself that the town isn't big enough for two doctors or two vampires, and he turns into a bat. 

This week’s case is not about vampires. It is about a dispute over the sale of a house that was once owned by Donald Sutherland in the 1990s. The house was (and still is) in Glen Head, New York; a hamlet in the Town of Oyster Bay, in Nassau County.  Donald was not part of this case.


Enter:

Blaise Heid & Kathryn Heid: the Buyers

Richard Mohring & Harry Bienenfeld: the Sellers


Background

On February 28, 2014, Blaise and Kathryn entered into a contract with Dick and Harry.

The contract stated that the property was being sold in “AS IS” condition. It also stated that Blaise and Kathryn relied on no representations other than those made in the contract.

Blaise and Kathryn chose NOT to have a home inspection performed prior to signing the contract.

The closing took place on May 8, 2014. 

Three months after the closing, Blaise and Kathryn decided to have their home inspected. The inspection revealed structural defects in the house; and, that renovations had been performed by Dick and Harry, without permits. Blaise and Kathryn wanted out: They sued Dick and Harry to reverse the sale of the house.  This is the testimony from their case.


Testimony of the Buyers:

Q: Why didn’t you have the house inspected BEFORE you purchased your home?

A: Because the house was supposed to be delivered in a like new condition, we agreed to waive a pre-purchase home inspection.

Q: Did you visit the property before you bought it?

A: Yes. Several times.

Q: And could you detect any problems?

A: Not really. I mean, there were minor things, and we created a punch list.

Q: Were the items on the punch list taken care of by Dick and Harry.

A: No. But they seemed minor and we really liked the house. And that was the reason that we had the house inspected after the closing…you know, because they didn’t address those issues.

Q: Now, you told your inspectors that there were defects in the home, right?

A: Not really…

Q: Well, I am going to show you a copy of your inspection report, okay?

A: All right.

Q: And here it states:

Because the house was supposed to be delivered in a like new condition, Mr. Heid agreed to waive a pre-purchase home inspection.

Q: Do you see that?

A: I see it.

Q: And that statement in your inspector’s report is true, right?

A: Of course.

Q: Now looking a little further down the report, your inspector writes: 

Just prior to closing, Mr. Heid found deficiencies in the subject house....

Q: Do you see that, sir?

A: I see.

Q: So, in fact, you did tell your inspector that there were defects in the home?

A: Deficiencies.

Q: Okay. So, your inspector writes that: 

A Building Permit should have been issued by the Town of Oyster Bay Department of Buildings prior to the renovations. The following items would have required a permit: 

  • Removing or cutting a wall, as was done when the second floor master bedroom and master bathroom were altered.
  • Altering plumbing, as was done when the second floor master bedroom and master bathroom were altered. 
  • Installation of the gas heating system. 
  • Altering a means of egress, as was done when the portico was constructed. 
  • The rewiring that was performed

Q: Is that what you mean by defects?

A: Yes. By not filing for the permits we were unable to determine whether the work was done properly.

Q: I see. Now you did sign a contract before you bought the house…in May, correct.

A: Yes.

Q: And you purchased the house, according to the contract, in “AS IS” condition?

A: Yes. But Dick and Harry repeatedly reassured us that the property had been renovated and improved in accordance with state and local municipal laws; and, that the renovation and improvements have been performed within prevailing building standards and the utmost care; and that the property conformed with the requirements of all municipal laws. 

Q: Okay, let’s take a look at the contract again, okay?

A: Okay.

Q: You see here at paragraph “12” where it is written: 

Buyers are not relying on any representations other than those expressly set forth in the contract.

A: I see that. 

Q: And you read that provision before signing the contract?

A: I don’t know if I read every word. But I believed them, you know?

Q: You did sign the contract, sir?

A: That’s my signature; so, I guess so.


Buyer's Closing Argument

Your Honor, because of Dick and Harry’s failure to fix the  punch list items required under the contract the my clients began to investigate the veracity of the Sellers’ representations. Upon investigation, we determined that Dick and Harry violated a multitude of municipal laws in performing their renovations, including making structural alterations to the premises without obtaining the proper municipal approvals. That’s active concealment, Your Honor! My clients should get their money back.

In an effort to cover up their malfeasance, Dick and Harry employed a widespread series of tactics to prevent my clients from discovering the latent defects prior to the closing of title.


Ruling of the Court

The Buyers’ failure to investigate Dick and Harry’s representations until after closing, is not tantamount to “active concealment”. Blaise and Kathryn chose not to have an inspection of the home either before signing the contract, or before closing. They chose to have an inspection only months after the closing.  It was only until several months after closing that Blaise visited the Building Department to inquire about the renovations and permits. Those are things that should have been done by Blaise and Kathryn or their agents, either before signing the contract, or, even before the closing, as part of a buyer’s responsibilities fixed by the doctrine of caveat emptor.

THE CASE IS DISMISSED!


Conclusion

Blaise and Kathryn were stuck with their House of Horrors. When you sign a contract, it is presumed that you have read and understood everything in that document.

Caveat Emptor: Let the Buyer Beware.


Click here to read the full case.

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