Determination
62
Minnesota
News Council
In the Matter of the Complaint of
Century 21-Granite City Real Estate against KSTP-TV
On its 10 p. m. news broadcast, KSTP-TV features from
time to time "On Your Behalf," a segment wherein the station investigates
consumer complaints of listeners and attempts to resolve them. On July
15, 16, and 17, 1985, "On Your Behalf" presented the plight of a young
St. Cloud couple, Jodie and Mike Peschl, who had purchased a home which
proved to be uninhabitable. The program was critical of the part played
by, among others, Century 2l-Granite City Real Estate, the real estate
agency that sold the home to the Peschls. Granite City claims the portrayal
of its role on the television program was unfair, superficial, and lacked
balance.
Present on behalf of the grievant was its owner,
Betty Lou Berg. There was no appearance by KSTP-TV, which declined
to participate.
Background: The Council viewed four segments
of the television program and had a transcript of what was said. Betty
Lou Berg, owner of Granite City, testified. The Executive Director
also talked by telephone with the St. Cloud housing inspector's office.
The first segment begins with the announcer stating, "Sounds like
a real bad deal" The narrator then says, "Buying a home is still the
American Dream, but when that dream is shattered and turns into a
nightmare, it's very sad...." The program then explains that the Peschls
had "last year" purchased a two-bedroom rambler for $26,000 with a
loan through the St. Cloud Housing and Redevelopment Authority. Two
weeks after the purchase, the Peschls noticed the roof leaked during
a rain storm. It became apparent that there were major problems: the
roof, though new, had been improperly installed (new shingles ineptly
placed over two layers of old roofing); the foundation was cracked;
some of the windows were rotting and could not be opened; some electrical
wiring was not up to code; the ceilings were less than the required
seven-foot height; and the house did not meet code. The Peschls were
told by the city that the house had to be either renovated or replaced
or they would have to move out. According to the narrator, the Peschls
"blame the realtor and the mortgage company for this mess," and he
asked, "How could a couple be sold a house in such bad shape? They
thought they were getting professional advice from trustworthy experts."
On the screen, the viewer was shown the house with a corner of damaged
siding, the poor roof, a cracked foundation, low ceilings, a bad chimney,
and windows covered with plastic.
In the second segment, the narrator explains that
Jodie Peschl had been unable to get a copy of the appraisal report
from the real estate agent. There was a further explanation of how
the house failed to meet code and, contrary to zoning regulations,
was built too close to the alley. The narrator reported that, "After
the Peschls found out about these problems, they tried to contact
the previous owner. No luck." And, further, neither the real estate
agent nor the mortgage company would help. The executive director
of the St. Cloud Housing and Redevelopment Authority appeared on camera
and said everybody from the realtor to the lender had "dropped the
ball" and had taken "advantage of the situation." The announcer then
asked the narrator, Neil Murray, what the legal responsibilities of
a prospective buyer were, and Murray replied, "I think all the buyer
has to do is show up with money at the closing...."
The third segment begins with the announcer stating,
"What a mess, huh?" The narrator then says that the Peschls' "biggest
mistake was trusting the so-called professionals who were involved,"
stating that the real estate agent had told the Peschls he did not
know the house was not up to code, and the mortgage company had hired
an appraiser who failed to report the house's poor condition. The
executive director of the Housing Authority again appeared on camera,
stating he would use leverage to get the realtor, the mortgage company,
and the appraiser to rectify the problem.
The fourth segment, a follow-up show two months later,
recapitulates the Peschls' problems with the house, and reports the
Peschls had been able to acquire another home. The director of the
Housing Authority and the president of the mortgage company appeared
on camera, stating the importance of developing an inspection program
to prevent reoccurrences of the problem the Peschls had experienced.
Granite City points out the television program reported
the Peschls had bought the house "last year," which would have been
in the summer of 1984, when in fact the house had been purchased two
years before, in August 1983. Also, at the time the sale was closed,
there was no damage to the siding, no signs of roof leakage in the
house, no cracks in the foundation, nor was the chimney exposed as
shown on television. At closing, the house was apparently in a neat
condition, with new carpeting and, as the appraisal report states,
"Pride of ownership is evident."
Granite City explains that, as a reputable, long-established
real estate broker, it showed the house to the Peschls on behalf of
the seller and that it was unaware of any structural defects. Indeed,
following its customary practice, Granite City had obtained from the
seller a signed written warranty and disclosure statement. In this
statement, the seller expressly stated she had never had any problems
with the foundation or any structural elements and added, as to the
roof, "New roofÑno leaks now." The seller also expressly warranted
the appliances, furnace, wiring and plumbing were all "in proper working
order."
Granite City further points out the Peschls dealt
directly with the mortgage company in obtaining their house loan,
and Granite City was not involved in this process. The mortgage company
hired the independent appraiser who submitted his report to the mortgage
company. Granite City never had a copy of the appraisal.
Also, under the St. Cloud Housing Code, it appears
a majority of older residential homes may not "meet code" in various
respects, but, under a grandfather clause, the owner is not required
to bring the house into compliance with the current code unless and
until improvements are made. Apparently, there is no requirement for
a building inspection to qualify for financing through the St. Cloud
Housing and Redevelopment Authority.
Granite City says the Peschls never registered any
complaint about the house with it, but if a complaint had been made,
they would have been told to contact the seller. The Peschls claim
they did complain to the real estate agent. The News Council is not
in a position to resolve this issue, and the television program makes
no mention of this factual dispute. Granite City claims the first
notice it had of any complaint by the Peschls was a phone call followed
by an undated letter from KSTP-TV in June 1985, asking for a written
response because "[e]very situation has two sides...." Betty Lou Berg
declined an invitation to appear on camera when the offer was first
made because the facts of the complaint were unknown to her. When
the film crew later came to St. Cloud, Berg was in San Diego attending
her son's wedding. Even so, Granite City's attorney wrote a letter
to KSTP-TV on June 18, 1985 - a month before the television program
was shown - giving Granite City's explanation of the Peschl sale.
Yet no mention of Granite City's position was used in the television
program.
Discussion: The News Council believes it was
a serious omission for the television program not to state that the
Peschls had purchased the home two years, not one year, earlier, and
to explain that at the time the house was purchased, the leaky roof,
the cracked foundation, the exposed chimney, and the damaged corner
siding - shown so vividly on the screen - were not present. It should
have been explained that the sale of this older residential home,
though not up to current code, did not violate the code, and that
a variance could be sought for the zoning setback if improvements
were contemplated. Further, although questions come to mind about
maintenance and remedial repairs of the house during the two years
of the Peschl occupancy, the television program leaves these questions
unanswered.
It is unfortunate the seller's responsibility was
ignored by the television program. The program mentions briefly the
Peschls had tried, without luck, to contact the previous owner. It
is unclear if any attempt was made by "On Your Behalf" to interview
the previous owner, although it appears she was still living in this
state. We think the role of the real estate broker should have been
clarified. "On Your Behalf" should have reported that the prior owner
had furnished Granite City with a written, signed statement that there
were no problems with the roof, foundation or structure of the house
and that Granite City did not have the appraisal report. Moreover,
not only does the television program make no mention of a buyer's
responsibility to make some investigation into a home about to be
purchased, but the narrator incorrectly states there is no such responsibility,
that "all the buyer has to do is show up with money at the closing."
Although the television program does not say that Granite City misrepresented
the condition of the house, nor do the Peschls make that claim, the
program leaves the impression that it was the real estate broker,
not the prior owner, who failed to disclose the true condition of
the house.
No representative of Granite City appeared on the
program. While Berg was invited to appear on camera, it is unclear
if the invitation was made at a time she was available. On the other
hand, it is also unclear if Berg would have chosen to appear on camera
if given a feasible opportunity to do so. Whether or not Berg might
have appeared on the program, we think it was incumbent for "On Your
Behalf" to have made itself aware of Granite City's position and to
give its "side of the story," and at least to have mentioned the explanation
given by Granite City's attorney. Perhaps some other representative
of the real estate industry could have appeared on the program to
explain a real estate agent's role and to have given the program some
balance.
The thrust of the program, however, from the start,
was to put blame on the real estate agent, appraiser, and mortgage
company, all lumped together: the good people against the "bad guys."
Thus the emotional lead-ins to the segments ("Sounds like a real bad
deal.... What a mess, huh?"); and the reference to "so-called professionals."
We conclude that the "On Your Behalf" presentation of Granite City's
participation in the Peschl matter was unbalanced and unfair. Consumer
reporting is an important news function, and "On Your Behalf" performs
a worthwhile service. In this case, for example, a young couple bought
a house that some time after purchase developed problems, largely
due to a defective "new" roof, that were not discernible to a casual
inspection. The television program rightly points out the need for
some kind of city inspection or truth-in-lending program.
But it should also be remembered that "On Your Behalf,"
appearing on prime time evening news and utilizing the immense visual
impact of the camera, can be a powerful and intimidating force, and
it is important, therefore, that the program discharge its responsibilities
with care and concern for all involved. Here, in an effort to help
the home purchasers, a complex situation was over-simplified and Granite
City's role unfairly presented. Grievance sustained.
Concurring: Ashmore, Beaulieu, Bednar, Brooks,
Chucker, Clark, Earley, Falkman, Mundale, Parker, Parrish, Persons,
Ryan, Simonett, Stone, Sundin, Warder
Abstaining: Casey
April 25,1986
Read
Determination 63
Back
to Main Determination Index
Want
to comment? Send a message
to the News Council.
