Archive for August, 2015

Real Estate Story No. 3 – Document Everything

by: Maria Hass –
A couple of years ago, a buyer who is also an experienced builder was interested in buying a one-acre lot backing out to State land. He asked his Realtor if anything would be built behind the lot that he was interested in.
According to the buyer, his Realtor responded, “Nothing will be built because it is State land.” But the buyer’s Realtor indicated that he told his client, “I don’t know; you will have to check with the city and other resources to find out.”
The buyer bought the acre lot. Two years later, the family’s dream home was built and the family moved into their new mansion worth $2 million. A few months after moving in, construction trucks rolled in behind the buyer’s custom home. The trucks were preparing to construct a sewage treatment facility.
The buyer was horrified. The value of their home was suddenly $1 million lower. The buyer filed a $1 million dollar lawsuit against the seller and the seller’s Realtor for non-disclosure. The buyer also sued his own Realtor for not complying with his fiduciary duties of care and honesty.
The court ruled against the buyer after more facts surfaced during the trial. The buyer bought the land in 2005 when the market was at a peak — and as soon as the house was constructed, the market tanked. The buyer owed more than what the house was worth. The buyer had to short-sell the house. His lender forgave his debt due to the debt forgiveness act and he owed nothing towards the house. The jury found the buyer’s intention to claim $1 million as a way to profit from his loss and his intention was quickly declined by the jury.
Realtor Tips:
Always document your conversations regarding important subjects via email or in writing. In the case above, for example, it would have helped if the buyer’s Realtor had documented his conversation with the buyer about the possibility of future construction in the area.
For land purchases, be certain to have the buyer sign documents acknowledging receipt of a copy of the public report.
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August 21, 2015 at 10:59 am Leave a comment


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