Accuracy is key when it comes to selling real estate

Selling real estate is the largest financial transaction most people undertake.  In order to maximize their return, some sellers misrepresent the condition of their property—often to their own peril.  The importance of being accurate when advertising your property for sale was recently addressed in Cheng Song v. Thomas and Theresa Iatarola, 2017 WL 1908400, _____ N.E.3d _____ (Ind. Ct. App. 2017), reh’g denied (July 06, 2017).  In Song, the Iatarolas advertised 10 acres for sale and represented that it was zoned I-2 Industrial suitable for warehousing and other light industrial uses.  The Sellers knew the property was zoned Agricultural because Ms. Iatarola refused to sign the Listing Agreement until the zoning error was corrected.  Despite Ms. Iatarola’s refusal, the property was listed for sale as I-2 industrial land.  Cheng Song approached the Iatarolas about purchasing the property and disclosed that he intended to use the property for an imported tool warehouse.  The Iatarolas did not inform Song that the property was zoned agricultural—not industrial—and they subsequently entered into a purchase agreement.  At the final inspection, Mr. Iatarola informed Song that the property was actually zoned agricultural.  Song subsequently terminated the purchase agreement and requested the return of his earnest money.  When the Iatarolas refused, Song sued them for fraud and won.  Song was victorious despite the Purchase Agreement not containing an express representation regarding the property’s zoning designation.

When Selling real estate, it’s critical that the listing, the offering memorandum (if any), and the Real Estate Sales Disclosure Form are each accurate.  In addition, the Seller should have a lawyer-drafted purchase agreement that sets forth the Seller’s specific representations and warranties and that the Seller makes no representations and warranties other than those expressly contained in the Purchase Agreement.  Otherwise, you may end up in a legal quagmire if the condition of the property differs from your representations.  Whenever you are considering buying or selling real estate, please contact Attorney Justin Leverton (jleverton@kgrlaw.com) to help with your legal needs.