Real Estate Transaction Misrepresentation

Summary

Misrepresenting intentions in a real estate transaction can lead to legal consequences such as fraud and breach of contract. If the buyer cancels within the inspection period due to high repair costs, they are generally within their rights. However, if the seller believes there was misrepresentation, they may pursue legal action. Consulting a local attorney is recommended for specific advice.

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Okay, My friend is trying to purchase real estate, and they've been communicating over text, nothing was said over the phone. The owner wouldn't bring the price down on the property. My friend told the owner that whatever was deducted from the price on the property (the main one he's trying to purchase,) will be added to this other property the owner is trying to sell. My friend has no intentions of purchasing this other property. The purchase and sales agreement states that during the inspection period, the buyer could back out if they believe the repair costs are too much. My friend wanted to close on the main property and when he closes he'd back out of the other contract. Is this illegal, could this get him in trouble?
Hello ****,
Misrepresenting intentions in a real estate transaction can lead to legal consequences. It's important to note:
*. Fraud: If the seller relies on false information, your friend could potentially be charged with fraud.
*. Breach of Contract: If the agreement is considered a contract, backing out could result in a breach of contract claim.
It's recommended to consult with a local attorney.
The contract states; " Buyer shall have 17 days from Effective Date (“Inspection Period”) within which to have such inspections of the Property performed as Buyer shall desire and utilities service shall be made available by the Seller during the Inspection Period; (b) Buyer shall be responsible for prompt payment for such inspections and repair of damage to and restoration of the Property resulting from such inspections; and (c) if Buyer determines, in Buyer’s sole discretion, that the condition of the Property is not acceptable to Buyer, Buyer may cancel this Contract by delivering written notice of such election to Seller prior to the expiration of the Inspection Period. If Buyer timely cancels this Contract, the deposit(s) paid shall be immediately returned to Buyer; thereupon, Buyer and Seller shall be released of all further obligations under this Contract. "
Based on the contract clause you've shared, your friend has the right to cancel the contract during the inspection period for any reason. However, misrepresentation or deceitful tactics could still lead to legal issues such as a fraud claim, even if the contract allows cancellation. It's always recommended to act in good faith during transactions.
Im trying to tell my friend its not good. What kind of fraud could he get in trouble with ?
Your friend could potentially face:
*. Real Estate Fraud: Misrepresenting intentions during a transaction.
*. Wire Fraud: If any deceptive communication occurred over digital channels.
*. Contract Fraud: Entering an agreement with false intentions.
It's best to consult a local attorney for specific advice.
how is it contract fraud?
In Minnesota, contract fraud can occur if a party enters into an agreement with deceitful intentions, such as promising to do something with no intention of following through. This can be viewed as a misrepresentation of facts, which is one of the key elements of contract fraud.
He says he had the intentions of purchasing, but in all honesty, the repairs are too much. Will that still get him in trouble?
If he genuinely intended to purchase but decided against it due to high repair costs, it's unlikely he'd face legal consequences. This is allowed under the inspection clause. However, if his original intent was deceitful, he may face legal trouble. Always best to consult a local attorney for advice.
Okay, but what about what was deducted on the main price? How would the owner try and get that back?
If your friend deducted an amount from the main property's price with the intention of adding it to the second property (which he doesn't plan to buy), this could be seen as fraudulent. The owner may choose to pursue a claim for damages to recover the deducted amount. It's best for your friend to consult a local attorney for advice.
He planned to buy it, but he said the costs were too much
If your friend genuinely intended to purchase the property but found the costs too high, he's within his rights to back out during the inspection period. However, he should communicate this honestly to the seller. Misrepresentation could still lead to legal consequences. It's recommended he seeks advice from a local attorney.
Okay, he had the intentions of purchasing, but the repair costs are too much. Before he closed on the main property, he was willing to purchase the other property *%, and he was telling the owner this. How would the owner get their money back? The owner thinks this is illegal, is it? The owner went into contract, with the contract stating this; " Buyer shall have 17 days from Effective Date (“Inspection Period”) within which to have such inspections of the Property performed as Buyer shall desire and utilities service shall be made available by the Seller during the Inspection Period; (b) Buyer shall be responsible for prompt payment for such inspections and repair of damage to and restoration of the Property resulting from such inspections; and (c) if Buyer determines, in Buyer’s sole discretion, that the condition of the Property is not acceptable to Buyer, Buyer may cancel this Contract by delivering written notice of such election to Seller prior to the expiration of the Inspection Period. If Buyer timely cancels this Contract, the deposit(s) paid shall be immediately returned to Buyer; thereupon, Buyer and Seller shall be released of all further obligations under this Contract. " will the owner be able to do anything in this case?
If the buyer cancels the contract within the Inspection Period due to the condition of the property, the contract stipulates that they are entitled to a refund and released from further obligations. However, if the owner believes there was misrepresentation, they may choose to pursue legal action. The outcome will depend on the specific facts and evidence. It's best to consult with a local attorney for advice.