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trying to buy a house

Question: Ok, any help at all will be appreciated GREATLY! My Husband and I put an offer in on a house, which the Seller accepted. As to the terms of the agreement, I paid for a home inspection, a house appraisal, a survey and a few other things. It turned out that the Lady was in the midst of filing bankruptcy and was trying to sell the house w/out her creditors knowing about it. Well – the rest of us- who are intelligent people – know that is not possible. The amount she agreed to sell for was 12K less than she owed on the liens. She kept telling the Listing Agent to talk to her Atty. who in turn told the Agent that the Woman could not sell the house – and that he advised her to stay in the house until the Bank foreclosed on her and got her out which would take approx 6-9 months. He also informed her that if I decided to sue – he would just include the amount owed into the Bankruptcy and I may get 50 or 60 dollars for the thousand dollars that I am out.

I felt that the Company that listed the Property (Century 21) should have been help at least partially responsible. Another reason for that is the fact that the property is actually owned by her Husband (who is in jail) and not owned by herself at all. In my mind, that is the same as a renter trying to sell a house that they dont’ even own! you would think that the Broker would look into it before I spent all the money on it that I did. The Listing agent knew there was a problem with the title work for almost 30 days before I found out. We were all ready to close with no indication there was a problem. At this point – we have bought another house. However, I would really like my money back on this. If anyone has any thoughts, I would like to hear them. I feel like we got the short end of the stick all the way around.

Answer: It was not clear to me whether you had an agent or not. So, I will assume that you did. In this case, the listing agent should have done some due diligence to ascertain the property status and any material facts that could have been found out by her/him. If you are in California, at lease one of the following or a combination of them may have taken place:

1. The agent did not disclose a material fact which he/she could have known about if a preliminary tilte check was done. An agent in California, is held responsible for not only what he knows but what he could have known that can be considered a material fact detrimental to the transaction such as the case here.

2. A fraud is an intentional act to misrepresent. It is criminal and may apply if the agent knew about the condition of the seller and did not disclose it. If the misrepresentation was not intentional, it is not a criminal act but the agent is liable under torts of misrepresentation.

If any of the conditions above apply, you may want to file a complaint with the real estate office requesting a compensation for expenses incurred. They may remedy the situation since it is cheaper than litigation and they do not want a complaint filed with then state department of real estate. There are two legal options that I can think of, but I have no clue how the law actually reads. First, you could try to sue for non-performance in civil court. It might be that in your state that civil judgements cannot be discharged via bankruptcy. Second, it might be possible to wait until after she clears bankruptcy, and then sue for non-performance. If the case is started after her bankruptcy closes, the judgement would be considered to be a new debt, and she would not be able to file for bankruptcy again for 7 more years. I don’t know if either angle would work, so check with a weasle.

The other option is to persue the realtor. The realtor should have known the status of the property. I would think that the realtor would want to make you whole again to avoid dragging him/her in front of the realtors board to investigate their ethics. If they are not willing to settle, then I would either follow the realtors board path, or sue them for negligance.

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