This is a fairly hardcore legal question, so I'm doubting anyone can help much but I wanted to throw it out there.
I bought a property in Florida last year and paid the whole sum upfront- no EMD, just the full sale price. AFTER I paid this I was sent a conditional re-occupancy certificate which basically says the city has inspected the property and found it to be gutted and it has been turned into a 3 unit property when it's only meant to be a SFR. The conditional re-occupancy certificate says the new buyer has 365 days from closing to complete rehab the property and either return it to a SFR or acquire the permits to change its usage to a MFR.
I told the closing attorney immediately that I didn't agree to these conditions, I no longer wanted to buy the property knowing the new information and I wished to back out of the sale.
The closing attorney informed me I would lose my entire $150,000 if I didn't sign the paper. I reluctantly signed it as I didn't want to lose $150,000.
I am wondering if there is an action for recourse and who I would take legal action against in this matter?
Unfortunately the only party that did anything wrong, was yourself. You apparently put up $150k EM, the full purchase price, when you signed the initial contract. Apparently, you did not know about the required RE-occupancy inspection and requirements, and apparently you had no inspection clauses to give you time to investigate properly. I am assuming that you were Not represented, or helped with this, at all since no one ever looking out for your interest would have advised doing this. The only recourse you might have is if someone was actually "representing" you in some capacity, as this was an extremely foolish and uniformed way to enter a transaction. If there is more to the story, feel free to PM me if you wish. Sorry you learned such a harsh lesson.
Honestly, I'd be surprised if the cost of legal action (if it goes to trial) is going to be cheaper than just getting the permits sorted out for a MFR or converting back to SFR.
One of my colleagues/real estate agent had the same happen to her. Apparently it's very common down here in Miami for people to break up single family homes into 2-4 efficiencies without the permitting because the code inspector hardly goes into the house and it's so costly and time consuming for permitting. She tore down all the walls to convert it back to single family.
@Nat Chan any updates?
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!