In June of 06 I, as an individual investor, was represented by a realtor, a personally connected mortgage broker and title company, who was working for a high end brokerage firm in my effort to acquire rez property.
Already being represented by this same realtor in my last acquistion and in my interest to acquire a new property, subject to the sale of my other 2 properties (1 income and my primary residence, as any equity was to be used for down payment on new acquisition), I felt as if there was no way to move forward.
What the realtor came up with next was totally off the hook in the rapidly changing market, but convinced me and the title company to go along with it in order to close the deal so her and her mortgage friend could collect their commissions.
She said she had a private investor who would come up with the 20% down payment of $330,000 and that the seller would carry that cost in a 3rd position with an interest only pay due in full when project was completed (built out by over 100% in size) and sold. This same investor, was to fund the project to completion.
This all sounded good and as the deal unfolded, even her broker could not believe how she was going to make this deal happen, (the realtor was later fired because of this deal) Even the title company offficer said, at closing, that he did not want to know anything about this 3rd position as there were not any recording instructions to follow.
Well, it turned out that to make a long story short, the seller, an 85 year old lady,was to hold a note in 3rd position in the amount of $450,000. The down payment of (330,000) closing costs (25,000) and (95,000) paid to me. I was then to be responsible to get the project started and to pay for the debt service on all three notes, which totalled about $18,000 a month not to mention the property taxes and many other well documented preliminary building costs until the private investor was to begin funding the rest of the project.
Well now that market conditions paled, the project was over 100% leveraged and the private investor had not stepped up, but only came up with a fraction of the working capital of $20,000 and money given to me at closing of $95,000 was almost gone, there was no alternative, but to let the property go into foreclosure, which it did and was sold in a court ordered sale at a loss.
I feel that, under the circumstances, and in the marketplace at that time, all parties to the transaction were not performing in my best interest and subsequently breached their fiduciary responsibilities to me causing irreparable and extensive financial loss and hardship I am now experiencing.
The result of our attempt to acquire and build out the new single family residence, was lost in forclosure, along with my other income property I controlled. Additionally, I have lost my next project and job interest, as contractor and my potential income over the next 1-2 years of construction from this failed new acquistion, which of course was never realized...I am also left with a 23,000 debt for demolition charges, $11,000 for short term down payment interest, creditdamage and many other well documented charges, for which I am partly obligated to pay for.
As the market was deteriorating at the time our offer was accepted, and neither of my other two properties, had any potentially equitable offers on the table, allowing the new property a chance to succeed, did the firms act properly and represent my best interests, I think not? There was no way I could afford to make new mortgage payments and pay for building costs and the people I thought who were working in my best interests knew my financial strength was not capable in this regard.
My question is: Were the professionals in the businesses... realty, mortgage and title companies performing within their legal fiduciary responsiblilties to me, the loser in this transaction?
Is there sufficient evidence for legal claim vs these firms?
