Water Issues Disclosed When Selling Houses

In all the risk management seminars I’ve attended, one thing instructors always say is that if a client asks you, “Should I disclose this?” The answer is invariably yes.  Take for example the neighbor who owns a kayak.  Do you need to disclose that?  If they use it to get to and from their house during floods every few years, the answer is yes.  That’s actually a real disclosure.  I liked to joke to a few close friends when I was selling that house that if they brought in a buyer an excellent closing gift would be a new kayak!

Flooding is no joking matter.  I was selling a condo in San Rafael for a bank last year and I knew it was going to be a difficult sale from the outset when during my initial inspection of the property I found the entire backyard was submerged in bay water.  The tide wasn’t even very high that day!  Later I learned through a neighbor that the previous seller owned a pair of waders, those long waterproof boots.  How about that for a closing gift?  Congratulations on purchasing your new home, here are a pair of waders.  You’ll need them to get in and out of your house during the rainy season high tides.

During escrow I actually called the buyer and had him come over to the house because I timed a visit during a full moon, exceptionally high tide (7.0 feet) right after a rainstorm.  The bay was already full from the rain, and the high tide had the water spilling over in all the usual spots of Marin.  The property was surrounded by water, front to back. When we opened the crawl space hatch we found the area under the house was almost completely filled with bay water, like a large swimming pool and only about 7 inches from spilling over into the bedroom!

Despite the water issues that buyer purchased the house.  The foundation needed work, drainage and pumps were put in and I assume the problem was solved as best as it could have been.   There’s nothing like bay front property, especially when your property is in the bay, or if the bay is in your bedroom.  I learned the bay water had entered that back bedroom a few times in the previous owner’s years at the property.  You better believe that became a disclosure.

The moral to the story is that you don’t want buyers to find out about water or any other issues after the close of escrow.  Disclose everything that materially effects the value of the house, including your waders in the hall closet and the neighbor’s kayak.