Legal Question in Business Law in California
What is ''Adequate Disclosure''?
In 1996 I purchased a zoned commercial property on a rural Highway. The title company that handled the sale, negotiated the transfer of a stock in a mutual water company. At the time of the sale, the title company paid the fees requested by the water company and asked no questions about the company. The Water Company(a California non-profit corp.) did not disclose any information about the company or the rights and obligations of the stockholder until four months after the sale closed escrow.
All seemed fine until Dec. of 2000 when the water company changed the wording of the bylaws to say no water can be used for commercial use directly or indirectly. Now I have a commercial property that cannot use water for commercial use.
What disclosure of restrictions was required of the water company(created in 1925) to provide to a prospective stockholder prior to sale of property and transfer of stock?
2 Answers from Attorneys
Re: What is ''Adequate Disclosure''?
It is not at all clear to me that the title company breached any duty to you, or is in any way at fault, but I could be wrong. Ordinarily, due diligence on a real estate purchase falls upon the brokers/agents and the buyer, and duty to investigate and disclose upon the brokers/agents and the seller, in differing degrees.
Also, you maybe jeopardizing your claim, if any, by having waited so long.
I recommend you seek an initial free consultation with a real estate lawyer in the county where the property is located, and also that you focus on the seller and the agents as possible suit candidates. You should do so sooner rather than later as you may be facing statute of limitations problems.
Re: What is ''Adequate Disclosure''?
Have they turned off the water to you?
You could probably sue the water company, and get a court order requiring them to provide you with water. Majority stock holders cannot make changes in by laws that materially damage minority stock holders.
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