House demolished within days of purchasing! Who’s responsible?

House demolished within days of purchasing! Who’s responsible?

Member since 2018 · 6 posts · 1 vote

Happy Wednesday! I'm a new investor in Atlanta. I purchased a home about a year ago. Within 3 days of me closing on the home the house was demolished by the city due to a known (but not disclosed) title issue. I went through the title claim process and was awarded a settlement however I didn't receive any compensation for my attorney fees, the incremental holding cost required while claim process was in progress and fees involved with new construction as opposed to a flip. Additionally through peeling back the onion I found out that the person who did the title search/owned closing office knew the demolition had been ordered and was trying to push the deal thru in hopes she could outpace it. To add to the drama she was a previous owner of the home via a LLC. I've gotten mixed reviews on the civil/criminal implications involved with this deal gone wrong as well as who professionally is responsible. I would like to litigate to try to recoop some of my damages but don't want to do so in vain. Any one have any experience/guidance they can share? Am I as the buyer able to sue the owner of closing company/person who conducted title search due to fraud/negligence or do I only have a breach of warranty case against the previous seller (who is a master of setting up and dissolving LLCs to conduct similar high risk deals - unknown when transaction began)?

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
7y
Originally posted by @Kiah Davis:

@Tom Gimer - correct on the title policy so I know there’s nothing else that I can recover there. 

In the warranty deed that was executed the seller swore to defend my right and title to the Property and all improvements thereon against all others. No verbiage says there’s anything about me accepting a violation

I'm not referring to the deed... pull the sales contract and report back on what it says regarding property condition. If there is a warning, statement or disclaimer regarding purchaser conducting its own due diligence or similar then the property could easily have been sold subject to existing problems.

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  • Member since 2018 · 3 posts · 0 votes
    7y

    Maybe, maybe not. the Title insurer likely has subrogation rights, meaning they have the right to sue the responsible parties since they paid you off. I'd talk to an attorney though. 

  • Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    7y

    @Kiah Davis While I'm sure there are a lot more details to the situation, what you are describing might constitute fraud on the part of the person doing the title search. Were they an employee of the title company?

    You definitely need to talk with an attorney with real estate litigation experience on this one.

  • Member since 2018 · 6 posts · 1 vote
    7y

    Thank you both!

    @Stanley Bronstein - the person who did the title search worked for the closing office but not the title insurance company. She is also the one who was a previous owner of the home via her LLC. According to the investigation she attempted to quiet the title and when she couldn't identified chain of buyers to remedy her problem to my financial detriment

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Yeah, sounds like fraud on the part of the title co. owner. The LLC previous owner is likely fruitless unless you can pierce the LLC veil.

    But, please do tell....I’ve never heard of a demolition order due to a “title issue”?

    @Tom Gimer thoughts?

  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y

    Sounds like the property was condemned and razed due to health/safety concerns. With title problems there is no incentive for anyone to address condition.

    Owners title insurance doesn’t cover consequential damages... read the policy, it is clear how damages are calculated and when.

    Check the contract... does it say the buyer takes the property subject to violations, etc.

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  • Member since 2018 · 6 posts · 1 vote
    7y

    Thanks @Wayne Brooks! Sure thing - it was a health/safety issue to @Tom Gimer‘s point (asbestos abatement). When the previous owner didn’t treat the issue as mandated by the city the ordered & completed the demo

  • Member since 2018 · 6 posts · 1 vote
    7y

    @Tom Gimer - correct on the title policy so I know there’s nothing else that I can recover there. 

    In the warranty deed that was executed the seller swore to defend my right and title to the Property and all improvements thereon against all others. No verbiage says there’s anything about me accepting a violation

  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y
    Originally posted by @Kiah Davis:

    @Tom Gimer - correct on the title policy so I know there’s nothing else that I can recover there. 

    In the warranty deed that was executed the seller swore to defend my right and title to the Property and all improvements thereon against all others. No verbiage says there’s anything about me accepting a violation

    I'm not referring to the deed... pull the sales contract and report back on what it says regarding property condition. If there is a warning, statement or disclaimer regarding purchaser conducting its own due diligence or similar then the property could easily have been sold subject to existing problems.

    Gimer Law516 Reviews
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