Legal help! Should I sue?

Question

We recently purchased our first investment 2 flat for $280k. Our real estate agent/broker sold us on the property because it had a side lot. He said "selling this lot for $175k would be a fire sale.l, easily worth $200k." Well it turns out that you cannot build on the lot as it is not wide enough. He also said we could rent the basement of the property but due to local laws we are not allowed and he also inflated the cashflow to $2,000$ a month (based on basement rental included). We currently receive  $1,000 in cashflow a month so it is not a total loss.

After talking with some friends and other acquaintances about it, they said that I should sue. One former real estate agent said that they have insurance and I could sue under Errors and Remittances or something like that.

Considering none of these guys are real estate professionals I wanted to get some input from the BP community about it.

Thank You!

Scott Weaner · Answer

You should sue yourself for not doing the proper due diligence.

Trust, but verify.

Bill F. · Answer

@Samuel Liapis Can you prove any of your statements through emails, text, voicemail, ect?

I'm not familiar with IL agents, but I know most around here have you sign something saying not to solely rely on the agent's advice when making an investment decision.

You've learned a valuable lesson, trust but, verify. You trusted, but didn't seek out answers for yourself.

Samuel Liapis · Answer

He was my agent/broker. Unless those papers were presented at closing then no i didn't sign anything.

I believe if someone wanted too they could demolish the house and build a wider house? But I'm not so sure about that. Due to parking conditions on the streets there, they only allow 2 flat buildings. This isthe reason they gave me for not allowing me to turn the 2 flat into a 3 flat.

Mike Cumbie · Answer

DISCLOSURE: Not legal advice given just the ramblings of some dolt on the internet. Always consult a legal professional in your area of investing to find the most accurate advice. Also I am an agent in another state as well so anything I say may be of zero use to anyone and should be treated with similar value as one would take from a fortune cookie, a ZOLTAR machine or a magic 8 ball.

That being said, was that your agent or theirs? Did you have your own representation or did you choose to use the sellers agent? Did you sign an "exclusive right" or a "Dual agency". Will make a huge difference on their duty to you and if they owe "full disclosure" or simply "fair an honest dealing"... or neither.

I wish you the best of luck in your investing!

Vic Iyer · Answer

You should hire a real estate lawyer and review the situation/purchase contract. Be well prepared by getting all the communication with the broker and take it with you to the lawyer and seek legal opinion. Were there any seller disclosures given to you (depends upon your state law). If so, Did it specifically state that you cannot build the structure as you mentioned? IF they did not disclose then you may have a valid case against seller.

Legal help! Should I sue?

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