Indiana Real Estate Agents: Beware of What is Behind the Walls

A $30,000 monster might be lurking in the walls of your buyer’s potential home, and most agents and owners don’t know anything about it. What’s worse is time is running out to make a claim.

From 1995 to 2007 Polyethylene plumbing pipes and fittings were used across the United States. Plumbers liked this system because it was cheaper than copper and it was a ﬂexible material, so it was easy to install. Unfortunately, the plumbing started to fail and continued to fail. Currently, there is a $125M class action lawsuit for those affected, but the time to file a claim ends January 9, 2020.

Indiana Real Estate Continuing Education at IBREA

The following is a clip from an IBREA Continuing Education course: Flushing Out. Learn about this huge problem including what it is, what it looks like, how to find it, why it matters, and what to do about it:

Most people discover Kitec plumbing in their house, or another brand of polyethylene, when they are either buying or selling their home. There are reports that this plumbing could lower the value of the home by $30,000, but this video offers some even worse numbers when putting their home back to the original condition. “The main problem is that over time”, Patty Thornberry of Security Home Inspections states, “the fixtures have issues with prolonged exposure to water and oxygen.” Well, obviously, that would be an issue for water pipes.

The Kitec Effect in Indiana

If you look up Kitec plumbing issues on the internet, many sites come up referencing Canada and Nevada. So, is it a big deal for Indiana? “Absolutely!” Thornberry warns. “Kitec was popular by plumbers around Indiana and is found in all price ranges of homes.”

Kitec brand was the most common brand name for Polyethylene plumbing, but it was marketed under several other brands. Although it has been over 20 years since the first use of Kitec, most homes have existed without incident. That being said, every year presents new cases of pipe rupture or fitting failure. And, the general consensus is not that IF there will be problem, but WHEN.

There is a $125 Million settlement; however, the deadline for submitting a claim is January 9, 2020. The money will be used to pay for the repair of buildings, residences, or homes plumbed with the Kitec System. Claims made after the deadline will be rejected. There might be other settlements put together for other brands.

Concerns as a Real Estate Agent

Condominium owners: Under the Condominium Act, each condominium corporation must be insured up to the amount of replacement value of condominium. If/when purchasers learn that there may be an insurance issue, they could be scared away, and unit prices may fall.

Townhouse condominiums: There is little or no risk to common elements and so the responsibility is generally all on the homeowner. (http://cdckitec.com/kitec-effect-property-values/)

Single family residences: If a home has Kitec or the equivalent, buyers might be alerted and could ask for a lower price when purchasing the home. Perhaps a pre-sale inspection would be of value. If found, an agent should have a discussion with the seller, including issues of disclosure to buyers, potential tough negotiations or a possible option to replace it.

How Real Estate Agents Should Deal with Plumbing Issues for Buyers

When dealing with this issue, Jay B. Rose, Esq. with Indiana Business and Real Estate Academy, states that Agents should take precautions when writing the initial purchase agreement. He suggests that if there are no current issues, it is not currently a defect. Consequently, it is tough to be released from a purchase agreement if it is later found in the house. As he points out, the best way to offer protection for your buyer is to state in the initial purchase agreement that their buyer could be released from the contract if this type of plumbing is found. Talk to your Managing Broker to get approval of exact wording in a purchase agreement.