A Hutchinson, Kansas, couple who bought a home without being told they would be responsible for maintaining a dam on the property has been awarded $202,500 in a lawsuit they filed against their real estate agent and a realty company. This case arose after the Jerry and Georgia McGonigle purchased a home and the surrounding acreage in Hutchinson, Kansas, in 2008 from Danny and Mary Beth Rich. The purchased land included the Panorama Dam. In 1981, the Riches entered into an agreement with the City of Hutchinson concerning the duties of both the Riches and the City concerning the dam. The agreement required the Riches to remove trees from close proximity to the dam, and to perform maintenance and repairs. The City also had the right to inspect the dam and give notice of needed repairs. In the event that the Riches did not make said repairs, the City could complete the repairs and bill the Riches.
When Jerry and Georgia McGonigle bought the home in 2008, they also were not told the home’s previous owner had received complaints about the condition of the dam, which at the time was part of Hutchinson’s flood control program. After they discovered their liability, bids to repair the dam were received for $850,000. The $202,500 awarded to the couple is for removal of trees that weaken the dam. The McGonigles settled a lawsuit against the home’s previous owner for an undisclosed sum.
There was no dispute that the McGonigles weren’t told before they bought the house about a document at Hutchinson City Hall and at the Reno County Courthouse that made them responsible for maintaining the dam on the property in northeast Hutchinson. The previous owner said he told his real estate agent about the agreement. That agent testified that she told the McGonigle’s real estate agent about the agreement but that agent said she didn’t recall the disclosure. The dam agreement was not disclosed in the Seller’s Real Property Disclosure. Instead, the agent testified that she thought it would be disclosed in the Title Report – and it wasn’t.
PRACTICE POINTER: Agents continue to be plagued by disclosure issues. One simple rule to follow is DON’T ASSUME ANYTHING. If you become aware of a problem make sure it is disclosed and DOCUMENT your advice/recommendations. Don’t rely upon title companies, home inspectors, other agents, etc. Be proactive in your own defense by taking affirmative action to ensure buyers make well-informed decisions.