Manager should start investigation as soon as complaint is brought to his notice. He must not wait for the charge to be proven. He should be the one taking lead on the investigation and responsible for investigation. And after investigation if charge is proven then he is supposed to apply penalty according to company's policy. And if not proven then talk to individual who brought the charge and give them proof.
The action against the seller by Kelly would not be successful. This is because, the contract agreement drafted by the seller contains that clause "as in" condition. <em>It would be believed that, Kelly saw the condition in the contract, but still went ahead to purchase the house by signing the seller's contract agreement of sell. Whatever state the house is in would be taken by Kelly.</em>