Can you cancel the deal based on this previously undisclosed matter? The need to work on the pipe is uncertain, the likelihood of damage to the house is uncertain, the extent of such damage, if any is uncertain. The cost of repair at that point in time is uncertain. So exactly how would you determine a value for accepting the house as-is? And the builder is essentially saying "take it or leave it". That appears to cover your available choices.

Well, we can walk but figure it will cost us....deposit money, appliances we brought to the job, legal fees for the inevitable battle. Add to that the stress of doing so. It's really not our first choice but we are considering it.

As for the builder, this was his first "offer" and we have yet to reply. I don't think we're quite at the take-it-or-leave-it stage yet. And I believe his carrying costs give us some leverage.

As for determining a value, I am not sure how to approach that. But it seems that zero is not even close. I also feel that this is an issue of right and wrong, not just one of money. He screwed up. He admitted it. Now he wants us to shoulder that burden alone. This is the first house we've built and this just doesn't seem fair. Am I being naive?

Have they considered moving the pipe? Leave the existing pipe where it is but close it off, then run a new pipe in an area that won't damage the house if it needs to be dug up. I know someone who recently did that with a gas line (capped the line, ran a new line, had new easement signed off by all and filed). The easement owner has to agree, of course.

Whatever you do you really need the advice of an attorney. I don't know the terms of the easeent, but generally speaking you are not supposed to encroach on an easement. So, if the builder put a driveway over the easement the easement owner is not required to repair the driveway (or whatever is on the easement). You (well, the builder) encroached their easement. Do you know the exact terms of the easement?

I won't comment on whether you can cancel the deal since you didn't give any information on the deal - the terms of the contract, whether there is a P&S, what stage you are at, etc. This is a complicated situation and, again, you should really discuss it with an attorney.

Hi,

Since it is the builders error, why not ask him to move the pipe, or get him to pay to move the pipe. It reminds me of the "buried oil tank" which was never signed off by the EPA scenario. Then someone builds over it, some steps a garage. The tank may leak oil..... time bomb waiting to happen.

I would move the pipe.

Best, Mike.

"Well, we can walk but figure it will cost us...."

Better now than later! It will cost you FAR more in the future....

Why do you want to buy a house from a builder that is not careful?
That mistake is not a little mistake and the attitude of the builder makes me think that:
- He is not a responsible person and
- Maybe there are more "mistakes" in the house.
I am not a lawyer but I do not think that you are to loose the deposit money.
What he did is illegal, no one can not built anything on an easement and if he gives you hard time he is to loose this case.
I think this is not the perfect house for you and there are many in the market waiting for you.

PS:
The community is being nice to do what they did, but actually, if you want to go ahead and buy the house you need to go to the county office or to the zoning department or to the entity that provides the building permits in your area to make sure that it is ok to have your basement bulkhead on an easement. Easements are established on plats - and Plats are official/legal documents and they can not be changed unless you go to be process with your city and that is not easy to do and takes time. I think that builder is in trouble.

I am a lawyer but I can't give you legal advice because 1) I'm probably NOT licensed in your jurisdiction and 2) the laws in various jurisdictions are different so what applies in one might not apply in another anyway.

That said however, I personally would never purchase a house where part of it had been built over a utility easement... especially not one where the utility has already laid a drainage pipe.

You do need to talk to an attorney licensed in your area but I suspect he will advise you to back out of this purchase. Ultimately the builder will have to disclose the issue to all potential buyers and probably discount the price significantly because of it. If he discounts it enough so that you think the risk has been offset by the discount, you could then make an offer. Might PO the builder to get an offer from you at the discounted price so you might need to get someone else (an agent) to handle the negotiations for you.

But, pay full price for a home with this kind of problem? No way.

I agree that you should just pay a visit to an attorney. If you don't already have a lawyer for your family, you should anyway. Unlike the predominant opinion here, I expect the lawyer will advise you not sweat it. I wouldn't worry about it myself. The variance given by the "community association" is just sufficient legal jargon to cover their butts. I certainly don't read your post as though the house or Bilco doors are built over the top of a drainage pipe, merely that the bilco doors encroach upon the easement. I just don't see that as being a big deal, but I'd certainly consult with my attorney.

Thanks everyone for thinking about this and sharing opinions.

Bungeeii, I have to admit I was a bit relieved to see your post this morning. Refreshing!

We do indeed have a lawyer, the bills for whom have been ticking like the national debt. There were issues with the deal earlier this summer when we considered walking away and did not. It was extraordinarily emotional, not to mention expensive. But, we emerged from that process feeling like we should move forward. This resulted in a deepening of our commitment to the house. For many reasons, this house is right for us and there will not be another one like it. I know that's hard to understand, but where we live, that is just a fact.

As for the P&S, yes we have one. We also have a CO. So, we are looking down the barrel of a closing very soon. We have close to $20,000 worth of materials we brought to the job, as well as a large deposit. To walk away now would mean putting all that at risk, not to mention the strong likelihood of entering into a prolonged and costly legal battle. We chose this house because we felt it would allow us to move on with our lives. (There is no other new construction going on here and we didn't want to build "from scratch" or take on an older home with all it's inherent issues.) Walking away would mean jumping from the frying pan into the fire. Somehow, the frying pan seems better to me right now.

Of course, we will not close until this easement thing has been settled -- through both contractual language and actual coverage. The latest thinking is that insurance is the solution, so we are looking into that very carefully. I still feel like the builder screwed up and he's going to dodge the bullet -- the bullet that may someday come my way. He doesn't even want to pay for the legal fees we've incurred sorting out his mess. We'll see about that...

Beyond the possibility of having our house bumped during excavation, I also worry about resale. I'd think twice, and probably offer less, for a house with this problem. Builder says he's already losing money on the house. The way I see it, every legal dollar we've spent sorting out his messes (rewriting the quitclaim deed, fixing the P&S, creating proposals to cover the easement problems) eats into my eventual resale margin. We are not looking to sell this house any time soon, so hopefully it will not make a difference.

If all that is over the line is the bilco and some of the walls I would not be that alarmed about it.

If the walls are concrete and part of the foundation it would cost some to have the concrete cut, but it can be rebuilt with block.

If it is already block it is not very hard top repair.

You should find out how deep the pipe is installed, its actual size, and exactly what it is for.

Sewer lines are not usually large and have a very long life, but if they are deep the trenching rules to excavate to them can require a larger hole or a trenching box.

Storm drain lines can be feet in diameter, with the samne trenching problems.
They are also not likely to fail.

Water supply lines are usually small and not very deep (just enough for frost).

The local AHJ should have records of what the line is for, its size, and exactly how deep it is installed.

I would still beat up on the builder for some $$.

I am just asking, not judging- If you are so set in buying this house after so many people have suggested that it would not be a good move, why even ask for opinions?
You sound like you are going to move in come Hell or high water.
May I say, that I have an easement just to let the 1 neighbor access to his home. NEVER AGAIN!! I would avoid an easement like a big, big rattlesnake!
Remember, not judging, just asking.

Did the builder disclose the (i)easement and the (ii) bulkhead encroachment on the easement? If not, what has your attorney said about your case?

It sounds like you have a substantial amount of money invested in the house hence you are weighing the loss of X dollars against an unlikely event based on another unlikely event.

If your attorney believes you can get your money back, which should be an interesting question, ie, solvency/cash position of builder, etc, then go for that. If your attorney believes it is unlikely to get your money back, put it behind you and start picking out paint colors, otherwise it will drive you crazy.

Brick, we've been looking into trenching thanks to your post. It gives us some reassurance. My DH may have questions for you. I'll post them later if he does. We have considered that we could cut a section of the concrete and replace it with brick in the event of a dig. The builder says there is a minute chance of this being necessary, but with the way our luck has been running, we feel like we need to consider how it would play out.

Ilmbg, I didn't really post looking for people to vote whether we should walk or not. My exact words were that we were looking for some kind of "compromise/compensation/remedy from the builder". I left my inquiry open-ended, hoping for input on insurance, a way to rebuild the bulkhead, a way to dig without doing damage, how to extract some $$$ from the builder, etc. No offense taken, but you read more into my post based on the subsequent responses.

I know that posting here offers just the tiniest view of the whole situation. It is hard to appreciate the involvement we've had in this house, and the complications in our lives that walking away might bring about. The more you go through, and survive, the more deeply connected to the process you become. At least that's true for me. Others, including my husband, might just walk away. I feel that walking away could very likely create a far worse situation for us, in terms of quality of life, than moving in would. It's the devil you know vs. the devil you don't know.

John, the initial easement for the drainage pipes (runoff) was disclosed, along with the agreement to be fully responsible for any repairs in the event of a dig. The bulkhead encroachment was not discovered until a couple of weeks ago when the as-built survey was done.

Our attorney is not certain we could win if we walked. He doesn't believe we should walk either. Maybe that's none of his business, but he does advise us from a personal, as well as legal, perspective. He is a good man and I think he understands us. The money is in escrow, so solvency is not an issue.

I'm pulling out my paint chips... :-) But, I am also going to pull together some numbers, including legal fees for this mess, to wave under the builder's nose before we close.

If it helps at all, I could share that when we sold our first house after living in it for 15 years, we got to closing and found out the corner of our concrete foundation (and our kitchen) had been built over a huge concrete storm drain (not shown on the plat when we bought the lot from the builder.) The buyers went ahead and closed but then friends freaked them out over the weekend so they "unclosed." LOL We did sell the house to someone else (with full disclosure of course!) and they have lived there for 15 years....so we're 30 years down the road, the storm drain was probably constructed about 40 years ago....and no problems. Your mileage of course, may vary, but I thought our experience might add some balance. If your house is still under construction, it shouldn't be that big a job to re-route the drainage pipe and your builder really ought to just do it...it's the "cleanest" solution (assuming the land will allow that and that you aren't running into a rock shelf or lot line or something. Otherwise, I think you should ask for some kind of extended warranty insurance to cover the possibility, paid for by the builder. But I wouldn't be lying awake at night over it...under your circumstances I'd get out the paint chips as you said!

I understand your concerns, but it seems like they're greater than they should be. (I realize this is the time for concessions, so you're right to deal with it now.)

First off, if I understand things correctly, you're over the *easement* line, not the actual pipe. Do you know where the pipe actually runs? Quite often the easement is wider than the actual utility, and it's somewhere within that area. So it's possible if they pipe is dug up there still won't be any damage necessary.

Second, you now have an easement to be there, so that should give substantial comfort. It seems the only issue is *if* the pipe is dug up then you won't get compensation for your stairs/bulkhead. But any damage beyond that seems like it should be covered, right? Your house itself isn't in the easement, so any damage to that should be covered/repaired by the community association.

So, if I have things right, there is a *small* chance that anyone will dig up the pipe during your lifetime. And even if it's dug up, there's a good chance that it won't cause any damage to your house (which others will pay for). So, you're looking at a small chance of having to fix the bulkhead at your expense. I'm not sure what the proper compensation for that is, but at most it seems like it's the cost of the bulkhead (if that can be separated off).

Hi,
I've actually seen this problem before, in my old neighborhood. Luckily the owners were very calm about the mistake, they just wanted closure so that if they sold the house later it wouldn't kill a deal. The builder paid the neighbor to extend the utility easement onto their land and he paid to have the pipe re-routed. The whole thing was under $3K, though this was 8 years ago and the builder did the trenching himself. These things happen, even to the careful; it seems as though every building event has one disaster. So you sound like you're ready to address this and move on ,and then move in :). Good deal.