House flipping CEO: mold problems not our fault

AUSTELL, Ga. - A house-flipping company called Jar House sells homes "as is," much like you might buy a used car.

Potential buyers are encouraged to get a home inspector to look over the property. But is that really enough to protect you?

The company CEO is Zareh Najarian, a 35-year-old Henry County native who began buying cheap foreclosures at the start of the Great Recession. By his estimate the company has now bought and sold thousands of properties.

Here are three customers who are demanding he buy theirs back.

"Buying a home is supposed to be the happiest time, one of the happiest times in your life," Kayla Bhatt said fighting back tears. "And unfortunately, this has been the worst time of our life."

She and her husband Jimmy would love to give you a tour of their new Austell home. They suggest you bring your own mask, though. We had to borrow ours.

"We have mold everywhere," Kayla pointed out as we walked through their unfinished basement. "We have mold in the walls. On the ceilings."

They're the latest unhappy customers who bought a home from Jar House. The Sandy Springs real estate company says it buys an average of 75 properties every month, sometimes fixes them and then flips them to a new homeowner. All houses sold "as is."

"Basically, assume the worst," Jar House CEO Zareh Najarian explained. "We don't want to mislead you. Hire an inspector."

But a Newnan homebuyer says Jar House never warned him the septic tank system was not functioning properly, even though his lawsuit says Jar House was given just that warning from the previous owner.

"They knew it," complained Matt Thompson.

Meanwhile, a Senoia family has to live in the driveway of their new house, squeezed into an RV, because they discovered mold and termite damage hidden in the "just been renovated home."
    
They're also suing Jar House, accusing the company of "chosing to conceal" the damage.

"They put brand new sheetrock over mold that could not have grown that fast," protested Shelley Hoppaugh.

But Najarian denies it all.

"I can unequivically tell you 100 percent that we did not hide any type of damage," he insisted.

Najarian works out of a suite of offices on Roswell Road. He says he hires third party contractors to do mold remediation on their properties, including that Senoia home. Two years ago, the bank foreclosed on an elderly woman whose home had severe water and termite damage. The bank then sold the property to Jar House.

I pointed out that someone clearly put up new drywall to hide the mold and termite damage there.

"Right," Najarian agreed. "I think that's a fair statement. Multiple people could have done all kinds of work before we ever touched the property."

Jar House had control of the house for about four months. After the family hired an attorney and filed a lawsuit, Najarian offered to buy back the property and give the family an additional $10,000. But they turned him down, saying it still does not cover what they've had to go through since buying the house in May. Their son has also suffered serious health issues.

As for the home with the bad septic tank, Najarian also insists he was under no obligation to warn buyers because it was his understanding the system was not seriously damaged.
    
Turns out, the new owner says it will cost $60,000 to repair.

"Why didn't the buyer do their own homework?" Najarian asked.     

As for that Austell home, a leaking water heater in the kitchen had been pouring into the basement while it was still on the market. But Jar House promised in writing to fix all the damage if Kayla and Jimmy Bhatt bought the house, replacing "any damaged flooring, sub-flooring, sheetrock, ceiling tiles, pipes and any other damage."

"I trusted them." Kayla said.

So eight months pregnant, the couple moved in. Days later, they said the basement smell grew worse. They pulled down the paneling to discover mold everywhere.
    
Too late for Kayla's wedding dress which she had stored in a basement closet.

"The problem was not the flooring," she explained as we walked through the basement wearing masks. "The smell was because the mold was down here. It hadn't gone away."

She says they've been fighting for nearly two years with Jar House.

"We thought the matter was resolved," maintained Najarian. "We hadn't heard from the buyers until just now. Who knows what has happened in the past two years?"

We know a leak happened before they bought the house and Jar House promised to fix the damage.

"As soon as you buy a house, anything can go wrong with it, right?" Najarian asked rhetorically. He refused to take any responsibility for the Bhatt's problems.

"There's a difference between getting a house as-is, and a house like this," Kayla insisted.

Could a home inspector somehow find mold hidden behind new drywall? Joe Griggs is the former president of the Georgia Association of Home Inspectors.

"How fair is it to expect a home inspector to find everything wrong in a house? I asked.

"Not likely and probably won't ever happen," answered Griggs. He says fresh paint can mask the smell of mold, and he's worried some may get fooled if they buy a house "as is."

"We can't look behind walls," he advised. "We can't cut into walls."

Najarian says the same excuse should apply to him, too.

"If the home inspector can't see behind the walls, are we expected to see behind the walls?" he asked "Those walls were never exposed to us."

He says Jar House will start its own construction wing to better control what work gets done for future rehabs. But he's unapologetic about what may have happened in the past.

"We accept our responsibility that hey, Georgia is a buyer beware state. Do your own due diligence."

The Bhatts say that's not enough.

"It's heartbreaking," said Kayla. "People are suffering because of this. And people need to know that this isn't ok. This isn't right. People can't do this."