Legal Blog - Disclosure

 

Polybutylene Plumbing Nightmares

By:
  • Michael C. Morgan
Sep 20, 2016

Disclosures

"For thousands of homeowners, polybutylene plumbing has become a recurring nightmare . . ." Ed Bradley, CBS, "60 Minutes"

Nightmare 1 . . . A recent story in The Washington Post referenced a homeowner with more than $35,000 in damages from a single poly leak. Personally, I know of one local homeowner with more than $100,000 in damages from a single leak while they were away on vacation.

Nightmare 2 . . . ". . .some courts have imposed upon brokers participating in a real estate transaction a common law duty to disclose facts relating to any material defects of other material information known to the broker. Recently, a few courts have gone so far as to impose on brokers a duty to disclose not only known defects but also defects that are reasonably discoverable in the exercise of reasonable care." Arthur R. Gaudio, Real Estate Brokerage Law 344-46 (1987)

But that's just the tip of the iceberg. The biggest problem facing the residential real estate industry is that "the law appears to be working toward the ultimate conclusion that full disclosure of material facts must be made whenever elementary fair conduct demands it." Johnson v. Davis, 480 So. 2d at 628. Moreover, courts are moving towards eliminating the false sense of security sellers have relied on with "AS IS" clauses. Raynor v. Wise Realty Co., 504 So. 2d at 1364.

In the case of polybutylene, what could be more elementary fair than to disclose the fact that the home for sale has plumbing that was the center of one of the largest class action suits in the world. And the defendants have agreed to fund the Class Action settlement with an initial and minimum . . . billion dollars.

What is happening in courts throughout the country is the move away from the principle of "caveat emptor." In fact, for all intents and purposes this antiquated doctrine has all but been eliminated in the realm of residential real estate. Must Real Estate Brokers and Sellers Disclose? 27 Wake Forest L. Rev. 689 (1992).

There is no question that there are problems with polybutylene plumbing. The courts have competently addressed this issue. If we think these problems are going to reverse overnight, we are kidding ourselves. There are more than six million homes with polybutylene plumbing in the United States. If the industry does not address the issue, the industry faces the same ridicule the tobacco industry is facing for non-disclosure.

Buying clients rely on agents to show them the neighborhoods they are looking for, the style of home they want, and the location they desire. In addition to providing this service, agents make it a policy to point out features that will facilitate the home sale. So why would a buyer's agent hide defective plumbing from his or her client? We all know that is a complicated question with a multitude of answers.
However, we cannot ignore the move towards agents providing full disclosure of known defects, as well as reasonable efforts to determine discoverable defects. Moreover, the Code of Ethics of the National Association of REALTORSои provides that a broker must avoid concealment and has an affirmative obligation to discover adverse factors that a reasonably competent and diligent investigation would disclose.

The issue here is simply how easy it is to spot poly. The issue here is not a hidden underground toxin or a gas we cannot see. And there is no issue here with an expensive inspection. If you see a gray plastic pipe under any sink, there is a problem. If you see a gray plastic pipe at the hot water heater, there is a problem. Basically, if you are doing a walk through and you see any gray plastic pipe anywhere in the house, there is a problem.

Are there any exceptions? Sure. In fact, a home may have copper plumbing on the interior, but poly as their yard service. Not sure if it's poly? A number of companies offer free inspections and estimates and specialize in replacement of polybutylene plumbing, including one of our divisions, Plumbing Express, which has performed more than 7,000 polybutylene replumbings.

Michael Morgan is executive vice president of Phoenix Renovation Corporation. He can be reached at Plumbing Express 800-501-7702
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