Matt and Jill Spaulding were looking for a new home in Long Beach in the spring of 2022 when an online ad for a spectacular $1.6 million, four-bedroom, three-bathroom property in the El Dorado Park neighborhood caught their eye. Estates.

“Stunning makeover!” gushed the list published by RedfinTruila and other real estate companies. “Pack your bags and move. Almost everything is new. There is so much to love about this house.”

The Spauldings, who moved from San Jose and have a 3-year-old daughter and two sons, ages 5 and 7 months, toured the 2,530-square-foot Lama Avenue home listed by RS Real Estate Plus, Newport Beach Company. , indeed, hit.

The lush lawn, renovated kitchen and bath, recessed lighting, fresh paint, new roof and other luxury amenities ticked all the boxes. The Spauldings quickly offered $100,000 over the asking price and within a month closed the deal.

The dream turns into a nightmare

However, the ink was barely dry on the escrow papers when it became clear that a nightmare money pit lurked within the walls of their dream home.

The bathroom lights flickered, an army of subterranean termites marched along the walls, and the ceiling oozed a mysterious yellow, orange, and red liquid from the debris-clogged drain of a malfunctioning air conditioning system.

Jill Spaulding, 38, said even more troubling were asbestos, mold and mildew throughout the house and an improperly installed water heater that vented dangerous carbon monoxide directly into her and her husband’s bedroom floor.

“This story is much worse than a bad flip or a contractor who cut corners,” she said. “It’s a story of our family being exposed to many toxic health hazards that we may face for years to come. Honestly, we’re still not sure how we’re still alive after our hot water heater situation.”

For about two months, the Spauldings shuttled between hotels, Airbnb and rental properties because they didn’t feel safe at home.

“The lack of stability and constant moving to unfamiliar places affected my children’s sleep and health and had psychological effects,” said Jill Spaulding, whose family has lived in a rental in Los Alamitos since May 2023.

Process: hidden issues

The Spauldings filed a lawsuit alleging the home’s numerous structural problems were covered up by Raafat Salem, chief executive of RS Real Estate Plus, and Lisa Richmond, a broker at its affiliate, RS Prime Properties.

“The hardship this pinball machine and his businesses have caused our family cannot be put into words,” said Jill Spaulding. “The effect it has had on us physically, financially and emotionally is indescribable.”

The Spauldings are suing Salem and Richmond, along with their realtor, Anne Hulegard of RE/MAX Estate Properties in Redondo Beach, for negligent misrepresentation and fraud. The suit asks the court to terminate the purchase agreement between the Spauldings and RS Real Estate Plus and order the restitution of $1.6 million plus interest.

They allege that Hulegard was aware of RS Real Estate Plus’ massive unpermitted construction work and failed to notify them, despite disclosure documents from Salem stating there were no changes.

A Southern California News Group search of Long Beach Planning Department records found no building permits issued to RS Real Estate Plus for renovations at the Spauldings’ home. It was unclear whether the company faces citations or fines.

2018 house spin

Founded in 2018, RS Real Estate Plus states on its website that it pays cash for homes in any condition or location and can close escrow in as little as seven days.

“We will take care of all repairs, inspections, etc. after we purchase your home,” the company says. “We’ll include this in our offer, of course, but it saves you money and the headaches associated with preparing your home for sale.”

RS Real Estate Plus’ Facebook page includes photos of remodeled homes in Fountain Valley, Corona, Huntington Beach, Placentia and Anaheim. The company recently purchased a five-unit apartment in Fullerton for $1.5 million, according to Marcus & Millichap, a commercial real estate brokerage and capital markets services firm.

Salem and Hulegard did not return emails and phone calls seeking comment on the Spauldings’ lawsuit. Reached by phone, Richmond declined to discuss the lawsuit.

Jesse Thaler, a Huntington Beach attorney who represents RS Real Estate Plus, RS Prime Properties and Salem, said the Spauldings’ allegations about their home are baseless.

“RS Prime Properties, RS Real Estate Plus and Raafat Salem have denied all allegations made against them and are confident that the evidence will reveal that there was no lack of disclosure and/or false information provided regarding the Long Beach home being sold,” Thaler said. .

The family felt pressured

Jill Spaulding also claims that Hulegard urged her and her husband to complete escrow even though their home had repeatedly failed inspections.

“She kept trying to pressure us into signing the closing papers even when it didn’t pass our home inspection and I refused,” Jill Spaulding said. “So my husband and I delayed closing because of that.”

After three attempts, the house finally passed inspection. However, it became clear once the Spauldings moved in that many things still needed fixing.

The right side of the yard was flooded even when the sprinkler system was turned off, a railing fell off the stairs and a bathroom shower stopped draining.

“We had a plumber come in three times to fix it,” Jill Spaulding said of the shower. “He stated that a foreign object had been thrown down the drain by the workers and that if it happened again we would have to open pipes through the floor.”

The family had to move because water damage from the malfunctioning air conditioner required rebuilding walls and ceilings in an upstairs hallway, walk-in closet, two bathrooms, laundry room and garage.

When the Spauldings returned a few weeks later to mow the lawn and gather new clothes, they noticed that the roof was sagging.

Inspections reveal defects

They hired construction and consulting services in Los Angeles, which determined that two load-bearing walls were removed without proper permits and inspections.

“Failure to maintain the beam and their physical members in accordance with code regulations can occasionally lead to structural collapse and even injury,” the company warned in a Dec. 29, 2022, report.

The report stunned the Spauldings, leaving them worried and feeling cheated.

“The disclosures they gave us stated that nothing structural was done without permits,” Jill Spaulding said. “We were also told that everything was done in a professional manner and that they worked with licensed contractors.”

Jereme James, a licensed general contractor and president of Builder Boy Inc. who was hired by the Spaulding family, dug deeper, discovering more than four dozen additional structural deficiencies during a site visit on February 7, 2023. The problems listed in a subsequent 19-page report included:

• Bedroom windows that do not meet building code safety standards.
• Many electrical items do not meet current building codes, posing safety risks and deviating from industry standards.
• There are no switch sockets in the kitchen.
• Loose wires, trash, debris, and abandoned items of electrical, plumbing, and attic framing.
• Improper heating, ventilation and air conditioning drains.
• Undersized gas lines for kitchen, water heater and heating, ventilation and air conditioning.
• Improper joists causing the roof to sag
• Lack of insulation and an improperly installed irrigation system.

The report also includes numerous photographs of structural deficiencies.

Jill Spaulding estimated it would cost about $545,000 to complete all the repairs and make the home livable, a price she said was out of her family’s reach.

“Our home insurance paid to do a bunch of work on the air conditioner leak, but otherwise we only paid for a few things,” she said. “So the house stays there and we eat up our savings every month paying the mortgage and the rent.”

A cautionary tale

The family suffered another setback when Matt Spaulding, 40, who works as a security manager for an aerospace and defense firm, was asked by his bosses to take a smaller role in the company because he had left the office so often to take care of matters about the house.

“The stress and time spent worrying and dealing with this situation took a toll on my career and military reserve career as well as my physical and mental health,” he said. “In addition, it challenged my family financially and denied us the use of what we thought would be our forever home.”

The Spauldings worry about whether they’ll ever be able to recover financially and hope their experiences will serve as a cautionary tale for others.

“Flipping became the norm and television shows glorified it,” said Jill Spaulding. “It is imperative that homebuyers are aware of all the potential problems that can arise from construction. They should ensure that all work is permitted and that extensive inspections are carried out by specialists they can trust.

“In just over a month, we were rushed into the biggest investment of our lives, and two years on, we still can’t get out.”

Originally published: October 27, 2024 at 6:45 am