broker fraud? on property

15 Replies

Hello, So I purchased a commercial property about 8 months ago. All went well until we started to discover things that were not disclosed. 

to make a long story short, the seller and broker both knew (have proof) of converting a aerobic field into a parking lot and leaving the aerobic system in back of the property which fills up with rain water and leaves my sewage system useless. they literally abandoned the sprinkler and pump system and covered it with material. 

When I purchased it, the broker told me that new "Holding tanks were installed" in the rear. which is false! 

it is very costly to install these now. and the broker is giving me the run around. 

No sellers disclosure was signed by me or the seller, nor presented at the time of closing. And I did not get an inspection on the property, but it does not say I bought it AS-IS on the contract.

Advise please? 

not sure the real estate commission will do anything with this.. but the realtors E and O would as long as they have it and you can prove they hid this from you and that they had prior knowledge .. same with seller..

Originally posted by @Seth Parmelee :
@Jay Hinrichs here in N.C. our realtors commission wil revoke or suspend our licenses for year or so for that.

 yup totally state specific.. but most agents have E and O and this is clearly and Error and omission that is were I would be going. 

Im surprised no one mentioned this yet....but in most places as far as I am aware, commercial properties are exempt from disclosures.  Rule of thumb is buyer beware and buyer is fully responsible for any due diligence.

I did not get an inspection or disclosure, But  the broker and seller intentionally not mentioning a major issue with the sewage system is a problem no matter what, The broker was representing me an the seller, which is a red flag as well. 

Originally posted by @Russell Brazil :

Im surprised no one mentioned this yet....but in most places as far as I am aware, commercial properties are exempt from disclosures.  Rule of thumb is buyer beware and buyer is fully responsible for any due diligence.

In our state even on resi  disclosures are NOT mandatory.. but if you do not get one you may back out at anytime prior to closing and get your EM back ..  

I would seek advice from an attorney.

I did not get an inspection or disclosure, But the broker and seller intentionally not mentioning a major issue with the sewage system is a problem no matter what,

Not necessarily.  As @Russell Brazil says, the rules for commercial transactions are much more relaxed than for residential transactions.  You really must take much more care in a deal like this than if you were buying a house.  Did your lender not require an environmental study?  It might have caught something like this.

Verbal representations are worth the paper they're written on.  Which is to say, absolutely nothing.

They may well have know.  They may well have misrepresented the situation.  You still may have no recourse other than to sue.  Even then you may not win.  You need to talk to an attorney.

@Dan Wells

As others have said, Texas does not require a seller's disclosure on commercial property.  On the no AS-IS stipulation, my guess is a court would surmise that purchasing as-is is implied especially with a commercial property

Where is the property located ?  This matters greatly on the parking lot issue.  My experience has been that in places like Austin you would need a site plan, permits and the such so the covering up of the sprinkler system would never fly. In many rural areas, permits and site plans just don't exist

What is the cost to repair?  My guess is the cost to bring a suit and attempt to collect(difficult) will exceed the cost to repair

What proof do you have that the Broker was aware of the issue ?  This could be your saving grace as you can file a complaint with TREC and possibly get at his E and O insurance.  Keep in mind that proof would be needed that the Broker withheld a material defect 

I would get with an attorney, deliver the provable facts as you know them and then send a demand letter to see what happens. You need a hard numbers as a loss though so that needs to be determined up front.

Try Attorney Alan Ceshker who is local in Austin.