Legal Question in Real Estate Law in Iowa

Residential Real Estate Question: Sellers (the first/only owners of the property) indicated on Sellers Disclosure Form that there were no known problems or repairs to the Heating System, Central Cooling Systems, Plumbing Systems, and stated the property was not subject to restrictive covenants.

Seller refused to allow for pre-inspection unless a purchase of agreement was executed. We then placed our home on the market, received/accepted an immediate offer. We drew up a purchase offer (based upon the condition we thought the property to be in) and were told by Sellers broker prior to submitting that we would be provided a copy of the house plans (because we explained to them that we wished to make major structural modifications and to add a third garage.)

After acceptance of our offer - we finalized our agreement with our buyers (and are now in a firm sale situation) and then the Broker then indicated that they could no longer find the house plans.

We had the inspection two days ago (in which we were present) and the inspection revealed a long list of "major recommendations". Although the things found cost a good amount of money to replace/repair - (refrigerator/freezer and stove were inoperable, all the toilets are cracked/major leaking, fire alarms inoperable, majority of the windows have failed/cloudy) - nothing was a deal breaker thus far. Our greatest concern lies with the fact that the heating/ac systems have had substantial parts replaced/repaired and both show evidence of copious water leakage, etc., and the drain pipe/cleanout from the kitchen had obviously leaked and there was very noticeable evidence of wall repair/paint - that did not match existing color on the wall. (This evidence was hidden behind a desk when we toured the home - but was videoed by the inspector prior to running water as an item to question the sellers about.) Then the inspector ran the dishwasher, the drain leaked down the wall, drywall became wet, and the carpet flooded in an area of about four x six feet. Additionally, the three structural beams to the porch and four-season porch resting atop them are rotted and easily movable. (There is evidence of attempted repair to the these beams - which was covered up at the time of walk through prior to our offer.) The radon inspection also came back at 7.5 -- which means radon mitigation needs to be completed and tested. Again, I don't want the sellers to simply run out and get a fly-by-night operation to do the work. The inspector recommended a contractor, the State told us he's done more mitigation than any other contractor in the state and is a very knowledgeable and respected. We had him to the property that afternoon and he's providing a bid to the sellers.

Unfortunately our realtor is out this week due to death of her mother and was not present at the inspection. Near the end of the inspection - we called the sellers broker to advise that we were standing with the inspector and had called a contractor to come to the house (who was present during our call to her) and advised that we needed to get a heating and air conditioning team in the following day (to determine what had been done to the systems to better understand if we would have a $6,000-$8,000 bill in the near future) and asked if she could she let them in the home (because they had removed the lockbox/key that day).

The Broker lost her mind over the phone and told us we had no right to bring a contractor (other than the inspector) on site, that we had to vacate the property immediately, that if we stepped foot on the property without our realtor or expressed permission from the broker that we would be charged with trespassing, and then hung up. When our realty company rep called them back to try to understand what had caused their reaction - the broker indicated that we could no longer have access to the house and would only speak to our realtor - who will not be back into town until the middle of next week (five days from now).

So here we sit...our home sold, move day pending, and we can't gain access to the house for the next five days to better understand what truly major, structural repairs might cost.

The sellers were aware of the structural beams rotting, they were aware of the drain pipe issue, and they were aware of the issues with the heating and cooling systems. When the contractor was on site and we were discussing our additions, the contractor indicated that our plans would not be allowable according to the subdivisions covenants. He also indicated that the sellers broker was fully aware of the covenants because they had sold property previously in that subdivision and had provided them to buyers in previous sales.

My question (finally) is that we've now sold our home, they're holding our $1500 deposit, we've spent $750 in radon, pest, and full house inspection, we've discovered that we can't add on (due to restrictive covenants), and that there were known issues with the heating and cooling systems, known issues with plumbing, and known issues with structural support beams. If the sellers brokers are now refusing to speak to us/agency rep until our realtor returns, and if we fail to come to an agreement over these items and the method/costs for mitigating these items, what rights do we have as buyers for their dishonesty as it pertains to the items they knowingly disclosed incorrectly? One big concern is that very few homes are for sale in our school district and the majority of them are almost double the price of this house. So now we're having to find somewhere else to live (not near our or our children's friends), in a different school district, and have to either rent or find a home that we can move into prior to our close date...all of which are expensive and puts a lot of stress on us and the kids. We wouldn't have put our house on the market and accepted a firm offer had the sellers/broker been honest about major deficiencies or about the covenants. The subdivision does not have a current/active homeowners association.

Sorry to be long winded....but sitting here unsure what to do that this point.

I think we may go back to the sellers with a list of items that we would repaired by people we trust and they can pay for the items via escrow. Our desire is not to screw them and or nickel and dime. I'm not even going to ask for the appliances to be repaired or brought up to working condition as I identified this afternoon an entire suite of appliances I can purchase for $500.

Do we have an remedy in this situation for misrepresentation if they refuse to pay to fix major deficiencies, we can't find a home, etc? Thanks in advance.

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