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How to Settle Purchase and Sale Disputes: An Interview with William Hoffmeyer of Hoffmeyer & Semmelman

By William Hoffmeyer

Tell us a little bit about your firm and the areas of law that you practice.

The law firm of Hoffmeyer & Semmelman, LLP dates its beginnings to 1962, the date the founding partner was admitted to practice in the Commonwealth of Pennsylvania and presently employs 7 attorneys for a total of approximately 22 staff, including paralegals and support staff. The founding partner, William F. Hoffmeyer, also owns York Abstracting Company, LLC., which is York's oldest title insurance agency and title searching company, and employs 4 persons. It conducts title searches and issues title insurance policies throughout Central Pennsylvania.

Of the 7 attorneys, 3 of those attorneys exclusively practice family law including divorce, custody, support, alimony, alimony pendente lite, protection from abuse, etc. The remaining attorneys practice law in the fields of real estate, estate planning, wills and trusts, civil and orphans court litigation and decedent's estates.

What are the most common purchase and sale disputes that you handled for people in the York area?

After the purchase and sale of a home, the buyers discover latent defects which were not disclosed on the Seller's Disclosure Statement or discovered by the home inspector, such as defective construction, mold and other structural problems caused by undiscovered water leaks, whether from internal water systems or from exterior improper water drainage caused from rain or broken water mains outside of the property.

Sellers who, after settlement, are discovered to have deliberately left garbage, old furniture, etc. on the premises after having promised that it would be removed no later than the day of settlement and they have since disappeared into the sunset.

Sellers who have liens against their property for which the payoffs are in excess of the amount of money which they are receiving from the buyer and who have previously promised the buyer and the real estate agent that they would have sufficient funds to pay off those liens when, at the time of settlement, it finally materializes that they do not have sufficient money to pay off the liens.

Property line disputes that were not disclosed or determined until after the buyers have purchased the property and then they discover that a neighbor does have a dispute with the property line or, perhaps, is even claiming a portion of the property by adverse possession.

Determination after settlement that the tax collector had improperly certified the taxes that were due and owing and after settlement was claiming additional taxes which the seller actually owed, as opposed to the buyer. The buyer had to use significant efforts through their legal counsel in order to obtain the payment of those monies from the seller;

Buyers who have specifically advised realtors that they have specific requirements, needs and desires with regard to the use of the property and it is not until they have obtained title, without having been provided with copies of the restrictions, etc. by the title company representing them, that they discover that they cannot construct the swimming pool that they desire to place on the property, they cannot use the property for horses, etc. and then obtain our services in an attempt to revoke the sale.

Buyers who were not advised by the title company representing them, or the realtors, that the stormwater management pond that was to the rear of their property was actually on their property and under the recorded plan and building restrictions they were personally responsible for the maintenance of the pond.

Buyers who were never advised that the driveway servicing their property was a private driveway over which other adjoining owners had the right of access and use and that they had to financially assist in the maintenance of that driveway.

The buyer discovered after purchasing the property that the culvert under the public road in front of their property during severe thunderstorms, discharged significant amounts of water onto their property which caused flooding and damage to the property which was never disclosed by the seller and for which the local municipality refused to take any responsibility even though the culvert was owned by the municipality.

The situations in which neither the seller nor the realtor discloses that the small, little innocent looking stream which is in the vicinity of the house, during periods of heavy rain actually floods into the basement of the house. It was not discovered by the buyers because the damages of the previous flood were very artfully repaired with repainting and never disclosed to them.

Frequently, the septic system has not functioned properly or has functioned properly only because the sellers are a husband and wife with no children. The buyer who has 4 or 5 children, who take showers every day, run the dishwasher several times a day, run the washing machine several times a day and did not have the septic system properly inspected, and who discover after they move in that within a very brief period of time, the septic system is defective.

Can you explain what a breach of contract in a home purchase/sale is?

A breach of contract occurs, when any provision of an Agreement of Sale which requires affirmative action by the buyer or the seller is breached to the financial detriment of the other party. For instance, the Pennsylvania Association of Realtors Agreement of Sale form is now approximately 23 pages in length. There are a large number of paragraphs for the benefit for both the seller and the buyer which, if not properly resolved by either party, can create financial damage to the other party, can constitute grounds for the revocation of the Agreement of Sale by either the buyer or the seller and place either the buyer or the seller in a position of having to pay damages to the other party. As an example, the contract is subject to the buyer obtaining a mortgage to finance the purchase of the property. After signing the Agreement of Sale, the buyer has buyer's remorse and deliberately does not apply for a mortgage, or applies for the mortgage with incorrect information in an effort to be denied the receipt of the mortgage, so that they can get out of the contract.

On the other hand, in a number of situations in which I have been involved over the years, the sellers have seller's remorse because their child, who will be a senior in high school, is refusing to move until they can graduate from their own high school and the sellers cancel the transaction and have to pay damages to the buyer.

What are the basic legal steps involved in these types of disputes?

If the parties have signed an Agreement of Sale prepared by the Pennsylvania Association of Realtors, there is typically a mandatory mediation requirement, which prevents either party from suing the other party no matter how much the damage is unless they go through mediation first through the local board of realtors. This mediation process will cost the buyer and the seller a specific amount of money to pay for the mediation and will cost them also several months' time before they can engage in litigation if the matter is not resolved by the mediation.

If the mediation does not satisfactorily resolve the issue, either the buyer or the seller can initiate legal action by the filing of a complaint which spells out in detail the reason why the buyer or the seller is suing the other party. The party who is being sued can then file an answer, new matter and a counterclaim against the plaintiff; the plaintiff can then respond to the answer, the new matter as well as the counterclaim and both parties can continue filing various pleadings back and forth until they reach a point where the matter is ready for trial. The legal action may also involve the taking of dispositions of either party or other persons involved in the matter for which the dispute has been initiated. Eventually, the attorneys will attend a pre-trial conference with the judge assigned to the case, which judge typically will attempt to resolve the matter without going to trial. If that is not possible, the matter will go to trial.

If the amount in dispute is $50,000 or less, the matter must go to arbitration before 3 attorneys rather than before a judge. The process is the same as previously explained for initiating a legal action.

If the resolution by the Board of Arbitration does not satisfy either party they can then appeal to the Court of Common Pleas.

Is there anything a buyer or seller can do prior to the purchase and sale agreement to help avoid a dispute?

Absolutely! The buyer should use an independent title insurance agent that is not owned by or financially related to the real estate firm or real estate agent, and an independent home inspector who has no relationship whatsoever with the realtor and a mortgage company that is not owned by, or related to, the realtor.

The buyer should have the home inspected by a very qualified home inspector who has experience in actually building homes or is an engineer who has had significant experience in analyzing home construction, etc. It is this writer's opinion that a home inspector who does not have that type of experience and/or is related financially to the realtor does not typically perform an inspection satisfactory to the buyer or to this writer. It is also this writer's experience that a title insurance agency that is owned by the realtors will frequently not accurately disclose quality information needed for a buyer to make an informed decision as to whether the buyer should purchase the property i.e. complete copies of all building restrictions and covenants, plans, etc. long before a settlement. It is also this writer's opinion that any purchaser of a home should have legal counsel to assist and advise them with regard to the analysis of restrictions, zoning ordinances, etc., particularly if they have a specific use to which they want to put the home or specific improvements that they want to make to the home in order to verify that they will be able to do so after they have purchased the home.

What advice would you give to homeowners who discover the seller intentionally misrepresented a major defect in the new house?

Contact qualified legal counsel immediately! Legal counsel who have handled cases of this type over a long period of time can properly advise them as to the legal action available to them and the approximate cost of that legal action. Further, the purchasers must immediately begin to document all of the problems associated with the major defect.

What is the best way for people to reach you and your firm?

Our phone number is 717-846-8846, or our website which is info@hoffsemm.com.

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