Hollywood Celebs Sue Home Sellers

Spending millions of dollars on a home is, apparently, no guarantee that it won’t come with defects.  Just ask recording artist Rihanna, who bought a $6.9 million Hollywood property only to discover that it flooded during rains; or MGM-Studios head Roger Birnbaum, who bought a $16.5 million mansion which, he says, “began to leak like a sieve” during winter. Both have recently filed suit against their sellers, asking for monetary damages to cover repairs.

(And we thought it didn’t rain much in Los Angeles!)

Any lessons here for us non-celebrity buyers of non-mansions? How about:

  • No matter how famous the seller, ask lots of questions before the sale. Birnbaum bought his home from a big-name Hollywood talent agent turned house flipper named  Sandy Gallin. The house sure looks nice — in fact, you can peep at its current listing, because Birnbaum is trying to sell the place for $16 million. (Does he really want to claim it’s made of “the finest materials and accoutrements?”) But if what Birnbaum is alleging is true, Gallin’s fame doesn’t translate into a leak-proof roof.
  • Filing suit makes people mad. Witness the TMZ reports about Gallin’s response to Birnbaum’s lawsuit, in which he calls it a reflection of Birnbaum’s ” well-known miserly and parsimonious behavior. ” That’s why I recommend trying a demand letter and mediation before marching into court, as described in this free Nolo article, “Home Defects: Sue the Seller?”
  • Not only should buyers get a home inspection done before buying (duh), but be alert to any signs that the inspector isn’t exhibiting Sherlock-Holmes-like vigilance. In Rihanna’s case, she claims that the inspector initially reported that an improperly sloped exterior door potentially allowed for water intrusion; but when the seller then argued that the area was fully protected by a seven-foot overhang, the inspector basically rolled over (my words, not hers) and said it was fine. No surprise, Rihanna is also suing her home inspector.
  • Litigation is expensive, regardless of the size of your home. Legal experts estimate that Rihanna, for example, may have to spend six-figure amounts for legal fees, hiring teams of experts to demonstrate that the inspector’s conduct fell below the expected standard of care in the industry, getting estimates of repair costs, and more. (This according to the article, “Why high-end buyers of real estate need to be cautious,” by Bradley P. Boyer and Saundra K. Wootton, in the Daily Journal, a legal trade publication.) None of those costs are tied to square footage!
  • Moisture problems lead to big repair costs. (No wonder insurance companies raise your premiums when they hear about them.) When buying a home, look hard for any evidence of staining, dampness, or rot, and don’t rest until you’ve made sure the house has no history of leakage (or that any such history has been dealt with appropriately). You may need to ask for repair reports, or go to your city building department and get records of permits for repairs and improvements.

Here’s some more free info for home buyers: Nolo’s article, “Get a Home Inspection,” which describes how to find a good inspector, what inspections are needed, and more.