Legal Question in Real Estate Law in California

Re: Do I have to pay back money I never received?

You may have a case and it depends on the paperwork you have. Please call Mary at my office to set up an appointment.

Re: Do I have to pay back money I never received?

"Receiving" borrowed money is not strictly necessary in order to be liable for its repayment. For example, when you borrow money to buy a house, the seller receives the money, and you receive the property (subject to a mortgage).

Similarly, in this deal you may have received all the value or benefit that was intended or promised to you, even if you didn't get all the money you borrowed in your own hands.

Further, promissory notes usually start out saying "For value received, I promise to pay...." which raises a strong legal presumption that you received full value.

Therefore, the question as to whether you are obligated on the promissory note is likely to boil down to whether the other parties breached any part of their agreement with you, or whether you were defrauded. Merely "not getting the money" is not necessarily a defense...maybe it wasn't intended that you get it; rather, only that you get some benefit.

Nevertheless, based on the facts you've given, I think a strong case MAY exist that you didn't get all you bargained for, or that you were cheated. Your defense against the note probably must be based on establishing fraud or breach of contract on some aspect of the entire deal other than the note itself. Further, if the note is negotiable and is sold off to an innocent "holder in due course," you may have no defense against that holder. You would have to pay up and then go after the original lender offensively, charging breach of contract and/or fraud.

The 12.89% interest rate may or may not be usurious, depending upon prevailing rates when the loan was made and the classification of the lender and the loan. However, this is an additional defense to consider.

Probably the lender is required to be licensed by the Department of Real Estate. You could contact the DRE to see whether there are other complaints against this lender and whether the DRE sees any problems with the lender's tactics.

The amount of money in question is enough to make it worth contacting a lawyer for an initial review of the documents and facts and paying for an analysis of your situation with respect to breach of contract, usury, fraud and DRE violation issues.