June 26, 2017

Realty brokers targeted in crumbling-foundation lawsuits

HBJ PHOTO | Bill Morgan
HBJ PHOTO | Bill Morgan
South Windsor homeowner Kristen Cole is one of hundreds who have problems with cracked foundations they claim was due to tainted cement from a defunct supplier. But Cole is one of the first to press the court for damages against the real estate broker involved in her home purchase.
HBJ PHOTO | Bill Morgan
South Windsor resident Kristen Cole is dealing with cracks in her home’s foundation.

The enduring nightmare for a cluster of northern Connecticut homeowners with crumbling concrete foundations has spread to a potential new group of victims: Realty agents and brokers.

A civil lawsuit against a real estate broker/agency tied to allegedly faulty foundations that authorities have traced to a former cement supplier is pending in a state court in Vernon. In it, the buyer of a South Windsor home claims the "residential property condition disclosure report'' received from her Coldwell Banker real estate agent failed to disclose any foundation problems.

Although the sale closed in 2013, the suit claims that it wasn't until the homeowner, Kristen Cole, hired an engineer in early 2016 that the scope of the dwelling's foundation problems became apparent, said Brian Danforth, who is Cole's attorney. Heavy rainfall last December seeped into her basement.

Cole filed suit last year against Coldwell Banker Real Estate LLC, several of its subsidiaries, realty broker Julie Corrado as well as the former homeowners, who have all denied having knowledge of the faulty foundation at the time of the sale, court records show.

Coldwell Bank Residential Services, in an emailed statement, said: "We operate with integrity and strive to uphold the highest of ethical standards. We are defending ourselves in this matter. We will not comment further on pending litigation."

A Coldwell spokeswoman said in the email that its agents are not employees, rather they are independent contractors. Corrado also declined comment, citing the pending suit.

Danforth says he represents between 200 and 250 property owners with foundation problems, but so far he has filed only one suit against a realty broker. The state Department of Consumer Protection counts 583 broken-foundation complaints in Connecticut.

"This house is bad,'' he said of Cole's dwelling at 30 Andreis Trail. "It's one of the worst ones I've seen. … It's a tough situation. But there are a few people who aren't convinced that brokers didn't know about these problems.''

The South Windsor foundation case, which could be headed to a jury trial in early 2018, is likely one of the first of potentially many civil lawsuits against brokers and others involved in the sale of houses with defective foundations in South Windsor, Tolland, Ellington, Vernon, Manchester and other northeast Connecticut towns, observers say.

Other industries also have been targets of legal action related to crumbling foundations, whose cause has been linked to the mineral pyrrhotite found in the concrete supplied by J. J. Mottes & Co., according to a state consumer protection investigative report.

Last year, for example, several homeowners joined a class-action lawsuit against dozens of insurance companies they claim are part of a "concerted scheme to deny them coverage for their failing basement walls, which experts say must be replaced." The case is ongoing, court records show.

Raising awareness

In an industry where people-to-people interaction is vital to arranging and closing a deal, realty agents and brokers are particularly sensitive about anything that casts a negative spotlight on their business model.

"Real estate agents are not concrete experts,'' said Ellington Realtor Dan Keune. "Anybody that claims that he is, is lying."

That sensitivity also is the reason Connecticut's agent/Realtor community has moved pre-emptively to open what it says "is better communication'' between property owners looking to sell and prospective buyers.

The Connecticut Association of Realtors (CAR), the state's largest agent-broker lobby, within the past month has introduced what it considers a more comprehensive disclosure statement related to property foundations. The Greater Hartford Association of Realtors referred foundation-disclosure inquiries to its umbrella affiliate, CAR, which declined comment on the suit against Coldwell Banker.

The disclosure form aims to alert buyers and sellers as to whether any foundation problems are known to exist, or have been remediated. It is, Realtors say, not meant to shield them from potential liability for failing to discover or disclose foundation problems, but to raise awareness.

"We spend a lot of time talking about foundations,'' said Keune, principal in Campbell-Keune Realty Inc. and a member of CAR's property condition subcommittee that revised its home-foundation advisory disclosure. "We didn't spend this much time 10 years ago.''

Brenda Draghi, an attorney-partner with Danforth, said that in Nov. 2015, CAR issued an "advisory,'' alerting homebuyers to the cracked-foundation problem.

In late May, the lobby issued a revised advisory document for Realtors to present to homebuyers and sellers. The previous advisory's language, said Keune, was "too open to interpretation'' and did not always lead to full disclosure of information vital to buyers.

The new one, he said, is more direct: "Does the seller have any knowledge of any testing or repairs related to a foundation on the property?"

"It really does pretty much remove the Realtors from any responsibility of knowledge'' about whether a home has a foundation problem, Draghi said.

Another advisory-form change focuses on condominium sellers. Often, a condo owner is asked about his/her unit and the building, Keune said, but it may be surrounded by other buildings for which the seller lacks any knowledge about the condition of their foundations.

Property disclosures will continue to evolve, Keune said.

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