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Joe Home Buyer

Sellers contractor lied to them, I bought the lie

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In early 2017, my wife and I purchased a home in California. We asked about the HVAC system, the sellers provided a statement saying the system was a "new, Carrier system installed in 2016". This statement was backed up with an invoice from a state licensed HVAC installer. 

 

We went through with the purchase, believing the HVAC was just one year old & carried the standard 10 year warranty that Carrier brand products carry, even with transfer of ownership. This improvement, paid for by the sellers was considered when we made our offer.
 
HVAC installer was under contract to install a new (model from 2016), Carrier brand Heat Pump & Carrier brand Fan Coil. What was actually installed was a PAYNE brand fan coil / air handler that was manufactured in 2010. It was sold to contractor by the distributor on 9-29-2015. The Heat Pump, while it was an actual Carrier branded product, was manufactured in 2007. This unit was sold to contractor by distributor on 8-12-2012.  
 
I went to the state board & they claim they have no jurisdiction (except for the lack of a permit) due to the change in ownership. That the contract was with the sellers & not with me. They further claim that even if the sellers would cooperate with me, they couldn't file a claim because of the sale. So, no relief via mediation by the Board.
 
The board suggested a small claim lawsuit (damages are above $10,000 but for simplicity, I may opt for that). The challenge is finding case law to deal with my claim of breach. I did not participate in this "contract". It was between the sellers and contractor. I was the "buyer" of this contract & it was used as a negotiation tool by the sellers for our real estate purchase. The transfer of ownership is why the contractor was not pursued by the State license board. 
 
I basically need help with the legal argument. Does anyone have any suggestions? I don't want to show up in front of a commissioner and he dismiss for the same reason the Board let it go.
 
I have filed against contractor's bond. They have a week or so to respond still.

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Sorry, but you have no case.

 

The seller provided you with in invoice showing he purchased the unit in 2016. You relied on that invoice. You have no case against the seller.

 

You did not purchase the unit from the contractor so you have no case against the contractor and the invoice itself is truthful about the installation date.

 

You never questioned the individual items so that's on you.

 

My guess is that the bonding company will deny your claim outright.

 

All you can do is find the warranties from the manufacturers of the components and hope that the warranties apply to all subsequent owners and start running as of the date of the installation. When you get them read them carefully because if they do apply to you they are often void if you don't have the AC serviced annually.

 

Otherwise, you've got nothing against anybody.

 

Besides, the idea that you've got over $10,000 in damages is ludicrous. The AC is working.

 

 

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Appreciate your input, "Adjuster". Issue was brought up because the unit is not actually working. The air handler has a bad motor. The warranty is not transferrable as it is a Payne product and not a Carrier product as I was told. Carrier has a warranty that transfers while Payne does not. I'm working with the distributor & the MFG to figure out if the Carrier product (compressor) has a warranty as it's written to have a 10 year warranty from time of install. Their initial response to me was "no", because it is so old. 

 

I did question the items - I questioned how old and what brand. The answer was "2016" and "New" and "Carrier". Half truths, at best.

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2 hours ago, Joe Home Buyer said:

We went through with the purchase, believing the HVAC was just one year old & carried the standard 10 year warranty that Carrier brand products carry, even with transfer of ownership. This improvement, paid for by the sellers was considered when we made our offer.

 

Before I read further, I have to wonder how much this went into the purchase price.  Given where home prices are in California, I have a hard time believing it had a material impact.

 

 

2 hours ago, Joe Home Buyer said:

I went to the state board & they claim they have no jurisdiction (except for the lack of a permit) due to the change in ownership.

 

California has lots of "state boards."  Which one are you talking about?

 

 

2 hours ago, Joe Home Buyer said:

The board suggested a small claim lawsuit (damages are above $10,000 but for simplicity, I may opt for that). The challenge is finding case law to deal with my claim of breach.

 

What makes you think you need to have case law for a small claims suit?  You don't (usually) file briefs in small claims cases, and no small claims judge expects litigants to show up with case citations.

 

 

2 hours ago, Joe Home Buyer said:

I was the "buyer" of this contract

 

No, you bought a house, not a contract, unless the buyer signed an express assignment of rights against the contractor.  Did that happen?

 

 

2 hours ago, Joe Home Buyer said:

Does anyone have any suggestions?

 

Yes.  First, forget about case law.  It's not necessary.  Second, consider asking the seller for an assignment of any and all claims against the contractor arising out of the HVAC installation.  Third, if you're thinking you might be able to recover anything based on the theory that, had you known about the HVAC issue, you would have paid significantly less for the house, that's not going to happen.  Fourth, I suggest you carefully review the home inspection report you obtained before you bought the house to see if it mentions any specifics about the system.  It's possible that, as a result of that report, you had constructive knowledge of what you're now claiming not to have known.  Fifth, if you get the assignment from the seller, consider making a claim against the contractor's license bond (without an assignment , you'll be hosed).  All licensed contractors have to be bonded and, at the time of the installation, the penal sum of the bond for homeowner claims was $12,500.  You can get that information here.

 

By the way, have you contacted the contractor to discuss the situation and the fact that the information on the invoice was false?

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PG1067 - thank you for your thoughtful answer. I appreciate that you offered some sort of guidance.

 

While the purchase price was based on appraised value, small things like stucco damage, dead lawn, damaged driveway etc. were not considered. I think you're right though, spearheading an argument with "I would have paid less for the house" is not the best course of action. 

 

State Board = Contractors State License Board. "protects California consumers by licensing and regulating the state's construction industry. CSLB was established in 1929 and today licenses about 290,000contractors in 44 different license classifications." 

Your link actually goes to them.

 

Okay, no case law. Makes sense. I figured I would be prepared.

 

No - there was no assignment. Is that a normal thing to do? This was my first home purchase and I relied on an agent & home inspector... and disclosed invoices, permits & statements.

 

I will request the sellers for assignment. There is nothing about the age or brand, just that they work (at the time of inspection). 

 

Yes - I did have a conversation with the contractor. A couple times, actually. The first time was way back when I moved in. I found that the contractor did not port the condensation line outside the basement. Water was spilling into the basement and I requested he come fix it. He told me his office was 100 miles away so I told him fine, I would do it. I let it go, not a huge deal at the time. 

 

Second conversation was about the broken system. He requested a diagnostic so I paid a local company to do a diagnose & passed it on. I was under the impression that the whole system was a "Carrier" brand, which even after a change of ownership, carries a 10 year warranty from time of install. The contractor took my diagnostic to the distributor who promptly denied the warranty claim due to age of the system (from purchase date) and the fact that PAYNE warranties do not transfer. At that point, he told me "Good Luck" and refused to help. I then did a little research, found out that the system was Payne and not Carrier & that, based on emails from the distributor, not a "new" system. I confronted him about this, comparing the facts to his invoice and requested he simply pay for the $300 part I needed. I offered to pay for shipping + pay someone else to install. He refused. At that point, I filed my complaint.

 

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29 minutes ago, Joe Home Buyer said:

Is that a normal thing to do?

 

No, and I would have been surprised if you had gotten one.  Obviously, your situation is not "normal," but you'll need an assignment if you want to get anywhere against the contractor with whom you had no privity.

 

License bond claims can be hit or miss, and a lot depends on which company wrote the bond.  It's probably your best option here since it will cost you nothing.

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Alright. So all this rests with my ability to convince the sellers to assign me "any and all claims against the contractor arising out of the HVAC installation". That would give me privity. 

 

I'll go to the bond with that & my $ claim, if this first request is denied.

 

If it goes to court, what would you see as a "fair and reasonable" request? The value of the system, installed was around $7,000. It was sold as a Carrier system, 1 year old with 9 years remaining on the warranty... instead, it's 10 years old and has zero years on warranty.... and doesn't work.... and has building code violations (no install permit + electrical issues) Cost to repair & permit is about $1,500.

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You're kind of between a rock and a hard place.

 

You bought the house a year or more ago. The AC was presumably working when you bought the house. If you had a home inspection that just verified that the AC was working at the time and didn't question the invoice provided by the seller I doubt you have any claim against the seller.

 

As for the amount that you can recover, that's the $1500 for the repair cost and permit and I'm not even sure you would win on that, certainly not the cost of a new system.

 

 

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10 minutes ago, adjusterjack said:

You're kind of between a rock and a hard place.

 

Pretty much. 

 

I guess I can find some comfort knowing that the contractor is being fined by the Board for not pulling a permit. Does nothing for me, but the fine is minimum what the part would have cost him & maximum what the contract value was. What a bone head.

 

If anything, expensive lesson. I'll update this with the outcome of the various attempts. 

 

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