Am I liable for plumbing issues that the buyer claims we didn’t disclose?

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Am I liable for plumbing issues that the buyer claims we didn’t disclose?

My wife and I closed on our sold home in California in December of 2017. We just
received a letter from the buyer stating that there are several plumbing issues
from a recent renovation of ours summer 2017 that include reversed cold/hot lines
in one bathroom, a hot water line plumbed to an exterior spigot, and two hot water
lines connected to the washer. We weren’t aware of any of these issues, and he
chose his own inspector for the home inspection where these issues didn’t come up,
either. Half of these plumbing areas weren’t even touched in the renovation, and
must have been the way the were since the home was built in 1977.

The one thing that has me worried is that we didn’t get a city permit when we did
our renovations, as at the time we didn’t have plans on selling our home. The buyer
is aware of this, as we disclosed this fact before he purchased the home. We wanted
to make sure he knew. we also have written proof that he was made aware of the
lack of permits, and he himself stated he didn’t care whether or not the work was
permitted

He’s threatening to sue us for 5600 plus lawyer fees if we don’t send him a
cashier’s check for 4000 to pay for the bulk of the repairs. We’re not sure what
our liability is here, especially since we were not aware of these issues and
therefore didn’t disclose them on our disclosures form during the sale. He says
we’re liable because we had to have known they were issues, and we profited from
the sale of the home.

What advice can you give us? we currently live in Georgia

Asked on April 26, 2018 under Real Estate Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

If he accepted the house without permits and you can prove--as you evidently can--that was aware of the lack of permits, you would not be liable for that.
As to the other issues: IF you knew of the issues and failed to disclose them, you would be liable based on fraud. Unfortunately for you, if a court concludes (assuming he does sue) that you *should* have known--that is, that based on how long you lived there and the circumstances, that any reasonable homeowner in your position would have known--you can be found liable based on that "constructive" or effective knowledge even if you claim that you did not know; this is so that people cannot hide behind "willful blindness" but instead are assumed to know what they should know. 
Some of the conditions a court could easily conclude you should have been aware of: e.g. reversed hot and cold lines; hot water coming out of an exterior spigot; only hot water connected to the washer (since you would therefore not be able to do a cold-water wash). Based on what you write, there is a reasonable chance he could prevail on a lawsuit; you may wish to try to negotiate something you and he can both agree to. If you do, get the resolution in writing, and don't pay anything until he signs a settlement agreement (even if only a short one you draft yourself) stating that in exchange for you paying the agreed-upon amount, he gives up all claims and right to sue.


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