Prior to closing, Buyers learned of extensive termite damage to the deck. Is Seller resp to repair under para 19.1?

Question

1. Prior to this discover, Buyer agreed to remove all contingencies. 
 
2. Inspection report suggested that the stucco was damaged and needed expert review. 
 
3. Experts found significant moisture readings and Seller agreed to have stucco partially removed. Upon removal, experts discovered the deck was severely damaged and was unsafe and needed total replacement. Price of replacement is $75,000, (less than 10% of sell price of $900,000) 
 
4.  Seller claims she is not responsible to replace deck or issue credit at closing because she did not know of the damage, and it was discovered by Buyers when we paid the experts to investigate. 
 
Buyers say she should pay or provide credit. 
 
Who is correct?

Ashley Dean Powell · Answer

Assuming that we are talking about Section 19.1 of Colorado's standard form Contract to Buy or Sell Real Estate (Residential), and assuming you did not make revision to the standard language, I think it is doubtful that Section 19.1 was intended to apply in this situation. Such extensive damage from water/moisture and/or termite infestation as you describe above requiring a complete removal of an entire deck is likely something that has happened over a long period of time as opposed to a the types of damages that are contemplated by Section 19.1 as between the signing of the Contract and the Closing. Something such as significant water or termite damage likely already existed at the time you signed the Contract; it just wasn't known at that time (and that's what the inspection period is for). [I don't know, but perhaps this analysis could be different if there is currently evidence of active termite activity as opposed to historical termite activity.] 
 
Also important to note that Section 19.1 seems to be assuming a loss that would be covered by insurance proceeds, and Seller's responsibility to repair or provide a credit appears to be directly tied to Seller's receipt of insurance proceeds throughout the language of that section. Perhaps rather than demanding a Seller concession, you should attempt to cooperate with Seller to file a claim for the damage (if you believe it will be covered by Seller's insurance). 
 
Based on your question above, the possibility of damage was first discovered as a result of the inspection (presumably during the Buyer's due diligence period). It is Buyer's responsibility to conduct the due diligence she desires during the allowed period and to make any objections (or demands for concessions) before the appropriate deadline (often the "Inspection Objection Deadline" from Section 10.3). 
 
If you can prove that Seller already knew of the damage and failed to properly disclose that information, that's a completely different legal issue to consider. 
 
In my humble opinion, as a Buyer, I would not hang my hat on Section 19.1 in this situation. 
 
Sounds like an unfortunate situation, possibly made worse by an unfortunate decision to waive contingencies. 
 
Best of luck, 
Ashley

Q: Prior to closing, Buyers learned of extensive termite damage to the deck. Is Seller resp to repair under para 19.1?