When an individual works with a real estate company or real estate broker in California, they expect the property that they purchase to be in the exact condition that the real estate agent represented it to be in.
A Real Estate Agent's Duty to the Buyer
When an agent sells a home without disclosing all of the known information about it, the seller may be charged for misrepresentation of real estate.
For instance, many homebuyers are interested only in brand new properties because they are typically free from problems found in older homes. If a real estate agent were to lead a buyer to believe that a home was brand new, when it had been previously lived in, this would be a misrepresentation of real estate, and the seller would be liable for real estate fraud.
In California, a real estate agent has the duty to disclose to the buyer any facts regarding a home or property that could affect its value or desirability. However, a seller is only required to disclose known facts, or facts that are within reach of the diligent attention and observation of the seller or buyer. A real estate agent is not responsible for unknown defects, or latent defects that pop up once the real estate transaction is complete (Stats. 1985, ch. 1574, Section 2, p. 5788).
Furthermore, the seller is required to provide the buyer with a Real Estate Transfer Disclosure Statement (Civ. Code SubSection 1102-1102.15), which must include the following information about a property:
1. The physical condition;
2. The existence of hazardous materials or dangerous conditions;
3. Encumbrances on the property, including encroachments;
4. Any other factors that may influence the buyer's decision; and
5. Lawsuits against the seller threatening to affect the property.
Any waiver of these requirements is void, as such a waiver would go against California's public policy regarding real estate transactions (Civ. Code Section 1103(d)).
Damages for Misrepresentation of Real Estate Property in California
If a seller were to defraud you or your business in a real estate transaction, you may be able to open a case of fraudulent misrepresentation. In the event that you go to court and win, you may be awarded one or more of the following:
1. Compensatory Damages: If the seller is found guilty of misrepresentation, they may be forced to pay you for any out of pocket cost you had to put forth to correct the concealed defect, or to cover the diminution in property value that resulted from the defect.
2. Punitive Damages: If you can prove that the real estate agent acted out of malice in their fraudulent misrepresentation, you may be able to collect punitive damages as well as compensatory damages. Punitive damages are meant to punish individuals for any wrongdoing done to another in the hopes that it will deter them from doing it again.
3. Rescission: In rare and more serious cases of fraudulent misrepresentation of real estate, the purchase agreement may be rescinded entirely, and you would get your money back. The seller would, of course, be given the property back.
Additional resources provided by the author
At Garcia & Gurney, ALC, our Pleasanton real estate lawyers represent businesses in the Pleasanton, Alameda, and Contra Costa areas. If you were the victim of real estate misrepresentation, contact the legal experts at 925-468-0400 to schedule a consultation right away.
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