Improper Disclosure of Water Supply and Testing Results in Lawsuit

By Lisa Scoble posted 11 days ago

  

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The Situation
A real estate agent listed a home that received its water supply from a well. According to the agent, the seller claimed that the well produced an adequate water supply and had no problems with water quality. The buyer was interested in purchasing the residential property for his family but had concerns about the well.


The Problem

The seller told the agent that the well produced a sufficient amount of water, but the buyer’s family was much larger than the seller’s. The seller also told the agent that the well's water quality was fine.

After taking possession of the property, the buyer quickly discovered the water production from the well could not support increased consumption from bathing and laundry. The water production diminished, and it became necessary to have another well drilled.


The Mistake

The agent assumed he knew the buyer’s needs. He failed to consider the size of the buyer’s family instead of recommending the buyer have the well independently tested. 


The Result
The buyer filed suit against both the agent and the seller. An independent test of the well and the water determined that there was an elevated level of bacteria in the water. A new well was drilled, and the buyer eventually settled with the seller and agent for $20,000 plus attorney fees.

 

Prevention
Real estate professionals often represent well water flow, supply, and quality to meet a buyer’s needs, especially when the source of the statement comes from the seller. However, it should never be assumed that the buyer’s needs are the same as the seller's. A lower yield of gallons per minute may be acceptable to one family, but not for another.

In making representations based on assumptions, you may be putting yourself at risk for litigation if your representations are perceived as being untruthful at a later time. If water production tests yield certain gallons per minute, that should be represented.

Always recommend the buyer hire an independent source to verify the information, and document your recommendations. This will go a long way in removing any perception of deceit and also transfer the risk of litigation to another party.

Additionally, a well inspection may lead to the detection of other environmental hazards, such as underground storage tanks. As in this case, contaminated water can involve significant expenditure if clean water has to be delivered to maintain the property’s legal occupancy.

This article was produced in conjunction with XL Catlin and is not to be taken as legal advice.

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