Beware: Caveat emptor makes buyers vulnerable

You just bought your first house, and you've barely moved in when a wall of water rushes in, causing thousands of dollars in damage.

Your insurance company says you're not covered because you're not in a flood zone, and the city says you have to chip in thousands to repair the failing storm drain infrastructure that caused the flood in the first place.

And apparently your dream house has a history of such flooding.

That's what happened to the subjects of this week's cover story, Ken and Heidi Vanderford.

Virginia is a caveat emptor state, which means, of course, "let the buyer beware."

"That's the unfortunate part of this," says City Councilor Blake Caravati, who's also president of a contracting company, Vector Construction.

He suggests that homebuyers hire someone to do an inspection "and talk to neighbors." Vanderford ruefully admits that he didn't order a pre-purchase home inspection.

While Virginia puts the onus for discovering property problems on the buyer, "sellers have an obligation to choose 'disclosure' or 'disclaimer' when selling a house," says broker Robert Ramsey at Prudential Charlotte Ramsey.

Disclosure means going down a checklist of all systems in a house and verifying their condition. But the more typical approach for Virginia sellers, says Ramsey, is disclaimer, in which no representations are made about the house.

However, "Just because a seller chooses disclaimer doesn't mean he can go around committing fraud," warns Ramsey. "It doesn't protect a seller who knows he has a terribly wet basement, waits until a drought year to sell, and paints the basement and puts in new carpet to hide the damage."

And while fraud is hard to prove, a disclaimer doesn't mean the seller is immune from prosecution, nor does it prevent the buyer from suing. "A disclaimer is not a free ticket," Ramsey says.

And if realtors have actual knowledge of adverse material defects of a property, they must reveal them. "Realtors shouldn't stick their heads in the sand regarding the condition of the property," he says.

Ramsey also urges buyers to have a home inspection. He suggests checking with city or county engineering departments to see whether a property is in a flood zone. To see if a house might be in the path of a projected bypass or a Meadowcreek Parkway, prospective buyers should go to the Virginia Department of Transportation to see exactly where the road will go.

"It's up to the buyer to do discovery," says Ramsey. "Put a contingency in the contract to allow for a discovery period." And if buyers don't like what they discover, they should void the contract.