Thereafter, he signed a lease which contained an option to buy after 3 years.
Initially, the buyer had approached the real estate agent to find out information about the property. The information was given and the multiple listing sheet had described the gas station, its sales price and the annual income and expenses. The multiple listing sheet at the bottom had the usual phrase “information shown on this sheet is believed to be accurate and reliable, but is not guaranteed and is subject to correction.”
In the lease there was a clause that indicated that the buyer had an opportunity to undergo a program of due diligence and to review documentation.
However, the buyer did not do due diligence in getting the tax returns or the financial statements of the gas station. When the lease soured and he was evicted, the buyer sued the broker claiming misrepresentation. The Court of Appeals denied relief because he had not reasonably relied on the broker’s statements and he had not done due diligence in leasing or purchasing the property.
There is a lesson for all of us in this case!
When you as a buyer do not get the information that one would expect in a major transaction you should walk away from signing any lease with option to buy before it is too late.