This Week's Q & A

Q: We want to know if we have grounds for a law suit against the town in which we formerly lived. When we put our home up for sale initially, the brokers we interviewed said it should sell quickly because of its size, its condition and its proximity to the downtown area. After hearing that prediction, we decided to sell the house ourselves. There was a lot of buyer interest, but we found that our work schedules made it difficult for us to handle the details of marketing, showing the house, etc., so after several weeks, we listed the house with a local realty company. The broker suggested that we lower the price by $10,000, to expand the pool of prospective buyers, and we followed that advice. A lot of people saw the house and there were quite a few potential buyers, but somehow, things always fell through. So we dropped the price by another $10,000. At this point, my husband had lost his job and it was imperative for us to sell.

After the first listing agreement expired, we listed with another company and reduced the price again, by $17,000. We received an offer shortly after that, but the buyers withdrew before signing the purchase and sale agreement, claiming that in researching the property, they had discovered a notation on the assessors’ records indicating that the house was built on a bed of peat and was sinking.

Needless to say, we were shocked. We checked the records ourselves and found that the assessors’ public computer file did, in fact, contain the statement, “house sinking,” with no additional information. After going through several layers of the bureaucracy, trying to find the basis for that description, we were told that there was no documentation; the information was based on a visual observation of the property. We contacted an attorney, who told city officials that if they couldn’t substantiate the sinking information, they had to remove the notation from the file, which they did. Shortly thereafter, we sold our house, but for $45,000 less than its market value. We are convinced that the false information on the assessors’ files was responsible for delaying the sale, forcing us ultimately to sell for a lot less than we could have gotten. Do we have a case?

A: There are two questions here: 1) To what extent, if at all, did the erroneous information in the assessors’ files interfere with your sale? and 2) Even if the you can show that the negative information discouraged otherwise interested buyers, can you sue the town for damages? The answer to the second question, attorneys who specialize in real estate law tell me, is, “probably not.” That’s because the doctrine of “sovereign immunity,” which generally protects governments and government officials from being sued for actions taken, or errors made in fulfilling their official duties, is difficult to pierce.

Even if you are able to overcome that procedural barrier, it’s not at all clear that you will be able to prove that the assessors’ notation was the primary reason (or even a significant factor) contributing to the delay in selling your house, and its lower than anticipated selling price. You cite only one prospective buyer that, you know, backed out (or said they backed out) specifically because of the assessors’ information, but you imply that the negative information influenced other interested buyers as well. That seems unlikely, at best. Consumers rarely, if ever, do that level of intensive due diligence before purchasing a home.

Undeniably, the “house sinking” description would have been unnerving for any prospective buyer who actually saw it. But a seriously interested buyer probably would have obtained a home inspection or a structural engineer’s report to confirm the problem and assess its seriousness rather than simply walking away.

If you managed to take your complaint to court the town undoubtedly would argue that other factors contributed to your selling difficulties. And your letter suggests that this argument might be hard to refute. For one thing, you tried unsuccessfully to sell the house on your own for several weeks before you listed it with a realty company. Arguably, that cost you time and put your house at something of a disadvantage; it was already a little “shopworn” before it reached a broker’s listing shelf.

Moreover, your insistence that the house ultimately sold for an amount considerably below its market value raises the obvious question: how were you defining market value? The highest figure quoted initially by brokers who were trying to persuade you to list the property with them? Reputable brokers base their market estimates on a solid analysis of recent sales data, but some agents intentionally inflate their estimates in order to win the listing contract, proposing a selling price higher than other competing brokers are quoting – and higher than buyers are likely to pay.

While it is possible your house sold for less than it should have, it also is possible that you overpriced it to begin, which would explain both the lack of initial buyer interest and the multiple price reductions required before you received a solid offer. Market value, after all, is not what a desperate seller needs to net on the property; it’s what a willing buyer will pay for it.