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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 116287
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I invested as a silent partner in an LLC to purchase an apartment

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I invested as a silent partner in an LLC to purchase an apartment bldg. The Managing Partner (MP) provided me with the Income/Expense statement from seller signed by MP and broker. Statement showed large positive cash flow and gross revenue. MP also provided a letter stating he has 18 years of commercial real estate experience, experience in area, and in the specific neighborhood (out of state). Based on this, I invested in the LLC and signed a personal Guaranty for the mortgage. Apartment never generated close to revenue represented and operated at a large loss every quarter. I discovered MP did not verify the seller’s revenue claims, knew building was in a high crime area and that 3% vacancy rate claimed was unrealistic. The guaranty signed contained following: “Guaranty shall…be unconditional irrespective of the genuineness, validity, regularity or enforceability of the Note, the Security Instrument or any other Loan Document and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or guarantor.” I contend that I was induced to sign the Guaranty under either fraud or mistake of fact, and possibly mutual mistake of fact (the bank relied on the same info). Would the aforementioned Guaranty verbiage nullify such a claim? Also, would this be subject to the statute of limitations related to contracts?
Submitted: 7 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 7 years ago.
Unfortunately, the guaranty verbiage would not be nullified and you would still be potentially liable. However, you have a potential fraud/misrepresentation claim against the managing partner and in Nevada breach of contract claims have a 6 year statute of limitations from the date of the breach, which would be the date you discovered the fraud or misrepresentation and this is what you would have to sue over. You would sue for fraud/misrepresentation against the MP and LLC and seek your damages as the pay off for the surety you signed and any other damages.

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