By Harvey S. Jacobs August 29, 2013
I recently bought a townhouse as an investment property in Anne Arundel County. The house is part of a condo association. Before the purchase, I had a home inspection, which uncovered a few minor repairs but nothing major. The seller did give me a credit at closing of $500, in lieu of doing the repairs.
The settlement went through without any problems, and I started to update the carpeting and bathrooms. Underneath the carpet were 9-by-9 vinyl floor tiles, many of which were loose and starting to peel off the subfloor. Because I was going to put in a laminate floor on top, I consulted with the flooring installer, and he advised me to remove all of the floor tiles, because they would make the floor uneven.
Before doing the work, I consulted with the condo association to ask whether the tiles contained asbestos. I was told they did not. While in the process of removing the floor tiles, I decided to have them tested. The test came back positive for 10 percent chrysotile, which is a form of asbestos.
I contracted with an asbestos remediation company, which removed and disposed of all the floor tiles in an environmentally safe way. The cost was $2,650. I also had to pay for duct cleaning, to remove any asbestos fibers from the ductwork. That cost was an additional $400. That totals $3,050 in extra costs, plus time lost in doing home repairs to ready it for rental.
Do I have any recourse?
The laws in Maryland, Virginia and the District say that a seller’s failure to disclose a known defect is an actionable omission. All three jurisdictions also require most sellers to deliver a property condition disclosure-disclaimer document.
But note that the seller can disclaim and thus not disclose any property condition information. That disclaimer does not excuse the seller from intentionally failing to disclose any condition that poses a threat to the next occupant’s health or safety. Conditions such as mold, defective drywall and friable asbestos are exactly the conditions that the law intended to cover. You did not mention whether your seller delivered such a disclosure document, or if he disclaimed. Your case against your seller, if any, will rest on whether you can prove in court that the seller knew that those tiles even existed and, if so, that they contained asbestos. That will be a very difficult burden to satisfy.
As for your home inspector’s liability: According to Johnny Lankford, a home inspector with JL Inspect, we do not pull up carpets or open up any walls or inspect concealed spaces. Typical inspection reports contain disclaimers for hidden or concealed conditions such as the tiles you discovered only after you tore up the carpet. Their reports often specifically exclude elements requiring additional laboratory testing, such as mold, asbestos or similar conditions. Most inspection reports also limit the inspector’s liability to the inspection cost. At best, you might be able to recover the inspection cost.
From your letter, it appears that the condominium association did not independently inspect your unit. It has no legal duty to do so or to warrant the individual unit’s condition. Because this appears to have been a resale unit that could have had many previous owners, any owner could have installed the asbestos tiles.
However, once the association ventured to make a representation to you regarding asbestos tiles, it might have a duty not to make a negligently false representation. Last year, the Maryland Court of Appeals decided that disclosures in a condo resale certificate that complied with the Condominium Act could nonetheless give rise to a claim under the Maryland Consumer Protection Act. The court unanimously ruled that if disclosures contained in a condo resale certificate are deceptive or misleading, the condo association can be liable to the prospective condo buyer that relied on that resale certificate.
In your case, however, even if the condo association was found to have had a duty to you, and breached that duty by making a false representation, its representation did not appear to contribute in any way to your damages. From your letter, you already owned the asbestos tiles when you asked the condo association whether they contained asbestos. Your stated damages increased demolition costs, disposal costs and lost rent revenue because of delays were not caused by the condo association’s false representation. You would have incurred those costs even if the condo’s representation were true. Thus, the condo association’s false representation did not cause your remediation costs to increase. Causation is an element required to recover against the condo association.
Unfortunately, this appears to be a classic case of caveat emptor (let the buyer beware).
Harvey S. Jacobs is a real estate lawyer with Jacobs & Associates Attorneys at Law in Rockville. He is an active real estate investor, developer, landlord, settlement attorney, lender and Realtor. This column is not legal advice and should not be acted upon without obtaining your own legal counsel. Contact Jacobs at (301) 417-4144, jacobs@jacobs-associates.com or ask@thehouselawyer.com.