Legal Question in Real Estate Law in New York

Re: Fraud by homeowners and real estate agent

You have my sympathy, if nothing else. This nightmarish situation requires more in the way of legal service than is possible on a bulletin board.

A lawsuit for fraud sounds appealling, but fraud lawsuits are notoriously difficult to prosecute successfully. Despite the tremendous advances made in the law in the past generation, resales of residential housing are still subject to the rule of caveat emptor (let the buyer beware).

You might have a lawsuit against the home inspector. The lawsuit might actually be worth something, especially if the inspector carries enough insurance to pay for the repairs. Somewhat less valuable if he does not have insurance but does have assets, since he will fight tooth and nail to keep his assets, while an insurance company views paying claims as part of doing business.

Whether you could sue the seller(s) depends on the exact language of their statement(s) and the terms of the contract of sale. Generally speaking, in New York, we have a doctrine of "merger in the deed," which normally means that in a real estate deal, all of the undertakings, promises, set-ups and so forth that are made in the contract die when the title closes. Getting around that doctrine is the number 1 problem in suing the seller. The number 2 problem in suing the seller is the fact that fraud is one of the few claims that avoids the merger doctrine, and fraud is horribly difficult to prove. So I would not look at a suit against the seller as a primary route to getting satisfaction.

The number 3 problem (both for suing the seller or the inspector) is that you cannot wait for the lawsuit to be settled or tried before you address these (sound like very) serious problems with the house. You should get a good contractor in right away to establish a scope of work, priorities and budget, and you should probably do what is necessary to stabilize the house on the foundation.

You need to consult with a legal, business or insurance adviser about whether you need to notify your insurance carrier, and whether you wish to do so.

This post is not legal advice and does not create an attorney-client relationship. It is a comment on the legal question posed by the poster and should not be relied upon unless and until an attorney-client relationship is entered into. Doing so would require signing an engagement letter and depositing a retainer to secure payment of legal fees.

Re: Fraud by homeowners and real estate agent

Where is your lawyer? Was your lawyer referred to you by the real estate agent? Did you have a lawyer? If you don't have a lawyer or the lawyer came to you via the broker, then you need to take all of your closing documents, including by not limited to the Contract of Sale, Riders, Affidavits, title, survey engineer and other related reports for careful examination before a possible remedy can be found.

Some things may "survive" closing on the house. But, what they are cannot be determined until examination of your documents by an experienced real estate attorney.

In the meantime, please attempt to abate the physical defects, in order to protect your investment.

Good luck,

Phroska L. McAlister,ESQ