Sellers and Crumbling Basements

Selling Your Home with a Crumbling BasementBy some estimates, the crumbling basement epidemic has the potential to reach 34,000 homes in Connecticut and destroy the financial security of hard working people who find themselves facing this crisis through no fault of their own.   Sellers can’t sell.  Buyers won’t buy.  People can’t retire. Many sellers still will not come forward and file a complaint to establish themselves as a victim.  Those most severely affected, Eastern Connecticut homeowners, constitute a large part of our market area and as residents ourselves, are our own neighbors, friends and family.  

 

At Home Selling Team, we have daily conversations with potential sellers and buyers about best approaches in navigating this uncharted territory.  As Realtors, our local boards and National Association have provided us with legal disclosures for buyers and sellers and as much guidance as they can in identifying our professional and fiduciary duties in this challenging environment.  Putting your head in the sand and feigning indifference or ignorance of the problem is not doing the job we are hired to do. 

That said,  as of this moment (07/08/20)  this is what we know now and our recommendations to sellers who find themselves facing this devastating problem.

 

Crumbling Basement Options for SellersCrumbling Basements: 

Possible Approaches for Sellers

Getting Started: 

Try to determine the source of the concrete.  Was your home built between the years of 1983 and 2017?  Is your home in one of the affected towns Sellers should look for receipts or photos in their documents and check the town hall building department for any information about the construction.  Check with a closing attorney for lien waivers which may reveal the contractors/vendors who were involved in the construction.  Find your home inspection report from your purchase.  Contact the builder, if known, to inquire. 

If you suspect JJ Mottes may have been the provider of your concrete and/or you have visible signs of a crumbling basement you have the following options: 

Contact a structural engineer for a visual inspection. See Qualified Vendor List.   Inspections are a 100% reimbursable expense up to $400 at https://foundationtesting.org. but in order to receive the reimbursement, you must hire a structural engineer, not a CFSIC-trained home inspector.  Core testing is only required when the engineer gives your home a Severity Rating of 1 (no visible evidence) and you (or a potential buyer) intend to apply for future CFSIC replacement funds.  In other words, in order to file a CFSIC claim for a property with a Severity 1 Rating you have to prove (via a core test) that your concrete contains pyrrhotite even if you have confirmed that the concrete was supplied by JJ Mottes.

If you discover or have previous knowledge that your concrete did not come from JJ Mottes but you don’t have documentation to prove it.  You may want to get a core test (50% reimbursable up to $2,000 at https://foundationtesting.org).   You can provide the test results to any interested party and alleviate any trepidation a buyer may have about purchasing your home.  Your sale will not be delayed waiting for an inspection if you can provide the documentation ahead of time.  We recommend only taking  his option if you are able to source your concrete from another supplier.  

You can do nothing.  Whether you suspect you have the problem or not, you can wait until you have a potential buyer who will be required (effective 2/1/19) to do a visual inspection or core test if they want to be eligible to apply for CFSIC funds to replace the foundation should it become an issue in the future.  Buyers are not obligated to complete the test if they wish to waive the right to make a CFSIC claim in the future.   HST office policy requires a seller to complete a CADSB-Concrete Advisory and Disclosure for Sellers & Buyers-7/17/2019.  Contact us if you'd like a copy of the disclosure to review.  

Have your property reassessed.  See An Act Concerning Concrete Foundations.  In most towns, if you have a confirmed crumbling basement and you want your property value depreciated and your property tax adjusted you will probably be required to:

  • Have an engineer inspect and provide a report and a severity letter.Crumbling Basement
  • File a complaint with CT State Department of Consumer Protection.  
  • File a claim with your insurance company and provide copy of acceptance or denial.
  • Get a replacement quote from a contractor to replace your foundation (not required in all towns)
  • Get these documents to your assessor.  The assessor is required by law and has 30 days from the date of the request to inspect the foundation.  A letter will be issued to you with your new assessment. Most assessors assess the depreciation using these guidelines provided by CRCOG.  
  • You should check with your town Assessor for specific requirements. 

 

Fixing a Crumbling BasementOptions: Selling or Renting

Sell the home for what the market will bear.  We can offer you a market analysis.  It is difficult to ascertain what a selling price would be for a home with a crumbling basement.  We recently had a sale for almost full market value with a home with an acknowledged crumbling basement.  Most of these homes are fully habitable and the buyer's perspective may be the key.  We can look at previous sales of similar homes with documented concrete issues and give you a ballpark but ultimately a buyer will determine what it is worth.  Consult with a qualified tax accountant to see if you qualify for a casualty loss deduction. See Courtney-Larson tax press release.  Casualty Loss defined.  

Apply for CFSIC captive funds to replace your foundation and sell after replacement is complete.  Get started here.  

Apply for CFSIC captive funds and sell your property once you have a registered claim.   Once you have an active, inactive or pending claim you can transfer your place in line for replacement funds to your buyer (buyer must commit to staying at least 12 months from Certificate of Occupancy prior to disbursement of any funds).  See How to Transfer a Claim here

The maximum benefit via CFSIC is $175,000.  There may be an additional supplemental amount (up to $25,000) available through your insurance provider, so far, Travelers, the Hartford and Liberty Mutual have signed on to the collaborating insurers benefit program.  A foundation replacement quote from a contractor will specifically identify what is not covered by CFSIC and what you will be responsible for out of pocket.  If you have an expensive foundation to replace this option may be financially not feasible for the seller or the buyer without a large concession by the seller.  There is a Supplemental Collapsing Foundation Loan Program to assist homeowners with repairs not covered by CFSIC funds.  The maximum amount is $75,000 financed over 20 years.  For more information click here.  

Rent the home to short term to homeowners who need interim housing while their foundations are being replaced. 

Rent the home in one year lease terms until a remedy is available or more assistance becomes available.

Short Sale- Outcome unpredictable.  Bill pending to protect homeowners from deficiency judgments when value is decreased by presence of pyrrhotite. Consult with an attorney. 

Deed in Lieu Foreclosure-Outcome unpredictable.  Bill pending to prohibit lenders from denying first mortgages to borrowers who lost their homes due to pyrrhotite. Consult with an attorney.  

 

Who’s Who and the best resources for information: 

CRCOG- Capital Region of Council Governments

CFSIC-CT Foundation Solutions Indemnity Company (Captive)

JJ Mottes/Beckers Quarry, Willington, CT -Source of faulty concrete

CT Coalition Against Crumbling Basements- CCACB Facebook Page

Update on CFSIC funds:  Effective June 30, 2020 all applications are currently in suspension because the funds have been pledged to those who have registered active and inactive claims. The Healthy Homes surcharge brought in $10.6 million in additional funds which will be distributed to existing claimants in line since September 2019.  The newest claimants, pending claimants, will be in line for funding if and when the sunset date of 6/2022 is extended and more funding becomes available either through bonding or the Healthy Homes surcharge funds.  Click here for a video tutorial of the application process.  

At this point, CFSIC is only authorized to operate through the end of its fiscal year June 2022 and the funds are committed to the existing list of active and inactive claimants.  If you have additional questions or need more information about other sales in your area, contact us.  

If you are a buyer and looking for information regarding crumbling basements and purchasing please see our Buyers and Crumbling Basements page.  

DISCLAIMER:  The information contained on this website has been provided for informational purposes only, and Home Selling Team makes no representations or warranties, express or implied, as to the completeness or accuracy of the facts, presumptions, conclusions, methodology of preparation, or any other matters contained therein.  By viewing any information contained on this website, all visitors to and viewers of this site expressly understand and agree that any information or materials provided on this site are provided only for the convenience of any such visitors or viewers in making their own examinations and determinations as to whether to engage in any real estate transactions, and, in doing so, visitors and viewers shall rely exclusively on their own evaluations and not on any materials supplied by Home Selling Team.  Visitors and viewers are also expressly advised to conduct their own independent investigations and inspections of any property in which they might be interested, utilizing such experts as they, in their sole discretion deem to be necessary for an independent assessment of all liability and risk, with respect to any property.  Visitors and viewers further agree that they shall ultimately rely only upon their own investigations and inquiries with respect to all such liability and risk, including, without limitation, all liability and risk with respect to the presence of crumbling foundations, in, on or around the Property.