Seller lied about rent roll & building condition, best recourse?

[Daniel Bogart]

Recently a few business partners and I invested in a 16 unit apartment complex in Phoenix, Arizona. We were given rent roll for 4 months prior to purchase that showed 15/16 units filled with paying tenants. The P&L statement showed cashflow positive, and aligned with the rent roll. We were also provided with copies of all the current leases. 

We had an inspector we had never worked with look at the property, and he came back with only minor necessary repairs, so we moved forward with the purchase of the complex. Following purchase, we quickly found that only 10/16 units were filled, and only 6/16 units were actually paying rent. 

Units were in disastrous condition, and since purchased, tens of thousands of dollars has been invested in repairs, evictions, and filling the empty units. Our inspector clearly didn't do thorough work, and the rent rolls provided by the seller were fraudulent. We are considering taking legal action against the seller, and possibly the property inspector. What is the likelihood of recovering our losses? What is the effort involved in this type of litigation? Any advice is much appreciated.

[Eric Delcol]

Folks,

Let's try and help Daniel instead of criticize.

Daniel,

I'm assuming you have passed your inspection time clause? If not - cancel the sale due to failure of passing inspection.

Unfortunately for you there is no "cooling off" period for real estate except for time shares. (Your chance to rescind your offer is based on your conditions).

what evidence were you provided that the rent roll was what the seller made it out to be?

I'd gather everything you were given and present it to an attorney.