This will be interesting to watch — UPDATED

37 Deepwoods Lane $2.805 million paid on $2.495 ask

Hmmm. Here’s a case where, despite the homebuyers’ hiring their own building inspector and architect to examine the house they were buying before closing, they still managed to persuade a judge to rule in their favor and find there was probable cause to believe that they’d been defrauded as to the condition of the house, and the defendant’s real property and bank accounts have been attached to the tune of $1.4 million. The case file can be found here.

SEE UPDATE, BELOW

The owner/builder, Ed McCullogh, did not necessarily have a reputation of one of our finest builders; mostly, he built moderately-priced, moderate-quality pre-fabs, but I’m still a little surprised that the buyers’ having conducted their own home inspection didn’t shield him from liability. Only deliberate deception by covering up defects and/or lying about same will strip the seller of such protection, and that’s apparently what the judge has found to have occurred here. Her decision is being appealed, so we’ll all just have to sit back, get the popcorn going, and await developments.

Lawsuit claims sale of Old Greenwich home infested by mold was fraud. Buyers seek $1.4M.

GREENWICH —  A lawsuit filed against the sellers of a home found to have sustained water damage and mold — conditions that the homebuyers allege they were unaware of at the time of the purchase — could be headed for a trial or an out-of-court settlement of $1.4 million, documents show.

The case is pending against the sellers of an Old Greenwich home purchased in September 2021 by Karl Robinson and Niamh Bonus. According to the court filings, the couple bought the home from Edward and Patricia McCullogh through the Berkshire Hathaway listing agent, Michelle Nygard, who is the daughter of the McCulloghs. The lawsuit names CTRE LLC, which does business as Berkshire Hathaway Home Services in Connecticut.

The seller, the agent and the company were sued by Robinson and Bonus in the summer of 2022 after a number of problems were found in the home, including a substantial amount of black mold, flooding damage and leaks, according to the court filings. Water was leaking into the home from both chimneys, the lawsuit stated.

The home on Deepwoods Lane was purchased in late 2021 for $2.8 million, roughly $300,000 over the original price, court documents stated. The home was marketed as "built and meticulously cared for by one owner," according to the legal complaint. Edward McCullogh has built a number of homes in the area. The house in question was built in the mid 1980s.

Robinson and Bonus claim the property condition report that was filed by the sellers during the sale process did not indicate serious problems with the house, only that a leaky roof had been fixed in the past.

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According to a memorandum issued this month by state Superior Court Judge Yamini Menon, the McCullochs, Nygaard and her family were still living in the house at the time of the home inspection. The home inspection was cut short by Nygard, the filing said.

"The report that was prepared was an abbreviated and incomplete report, missing multiple sections," the judge noted.

Before closing, Robinson and Bonus had a contractor, architect and interior designer visit and inspect the property. None of them had any indication that the condition of the property was anything other than as it appeared, the suit states.

After Robinson and Bonus moved in, they hired a flooring contractor who found extensive water damage in the home. Later inspectors found mold. The house also leaked during rainstorms. The new homeowners said they found that paint had covered over sections of the house damaged by water, according to the lawsuit. 

In one of Tougias' court filings, it was noted that that a contractor, architect and interior designer visited pre-sale,  and "none of them had any indication that the condition of the property was anything other than as it appeared." 

According to the filing by Tougias, when the new homeowners found the mold, they went ahead with a substantial renovation.

"Instead of performing a relatively straightforward remediation at a relatively modest cost, plaintiffs completely gutted the property from the attic to the basement, including the wiring, appliances and mechanicals, and rebuilt it into a house that is not even remotely the same," the defendants' lawyer stated.

He called the lawsuit "an ill-advised and improper attempt by plaintiffs to recover the cost of the expansive gut renovation and reconstruction of their house." The $1.4 million being sought by the plaintiffs was an excessive amount, as well, the lawyer argued.

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Menon issued a finding this month that the case could proceed to trial. The judge ruled that a $1.4 million payment would be granted to the plaintiffs in "a pre-judgement remedy." Russell and his clients have filed an offer of compromise, offering to to settle the case with the $1.4 million payout to end the suit. Court papers note that an insurance company has the resources to pay for the defendants legal costs and potential damages associated with the case.

A court trial could still be held if the offer of compromise is rejected.

In the memorandum allowing the case to go forward, the judge said Robinson and Bonus "have demonstrated probable cause that they will be able to prove at trial that the defendants committed intentional misrepresentation, fraudulent concealment and negligent misrepresentation through their actions in the sale of the home." 

UPDATE: The Mickster has done what I should have, namely, read the actual complaint and judges opinion granting the pre-judgment remedy. I merely looked at the court docket to confirm that a PJR had been granted (never blindly trust a newspaper reporter to get judicial proceedings right) but the Mickster went to, and read the pleadings themselves. I have now done so myself, and the reasoning behind the judges decision is made clear. You can read THE COMPLAINT HERE, and the MEMORANDUM OF DECISION HERE.

The listing broker was the owner/builder’s daughter, and her assurances to to buyers as to the quality of her father’s work, and the lack of structural problems in this particular house clearly raised the judge’s hackles. But the real problem for the defendants is the judge’s finding of at least a strong claim of deliberate covering up and hiding critical structural deficiencies, and deliberately lying on the property disclosure form, required by state law, that the McCulloughs gave to the buyers. Fraud will get you nowhere good, even when, as here, a home sale contract claims to be selling the property is “as is” condition.