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Question for Socateaser: Looking for the legal argument

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Question for Socateaser:

Looking for the legal argument which I can use to persuade the County to sell me the real property... - In July of 2012 a CA County held public sale of real property and during regular Board of Supervisors meeting issued resolution that gave me the right to purchase, in cash, a certain County owned real property at specific price. There was no time constrains attached. The county attorney prepared a County favorable contract which omitted material facts and all mandatory and applicable CA disclosures. I had no option but sign. When escrow was opened they deposited my earnest money in escrow and later, without my knowledge took money form escrow and closed it. I never received rescission notice, which I should in accordance to contract in questions. See below.

Omitting Material Facts: Under “Representations and Warranties” it says (sic)...“Seller has not entered into and will not enter into any lease agreement or contract, or executed any grant or transfer, with respect to the use or ownership of the Property.” – This was apparently not true. After entering into escrow I discovered that the title is encumbered with several liens including a long term lease, which was not disclosed.

Because of this, the closing was delayed due to County’ efforts to clean the title. But then, due to no fault of my own I had to leave the country because of a family catastrophe during which, the County now alleges, they send me a rescission notice, which I did not receive.

The NOTICE section reads (sic)... “All notices shall be deemed given or delivered: (a) if sent by mail, when received by the party to be notified; or (b) if delivered by hand, courier service or Express Mail, when delivered.” -

I never receive such notice and therefore believe (rightfully or not please say it) that “alleged” mailing of rescission notice is invalid and therefor the County should have accepted my cashiers check, marked "final and full payment", which I sent to County Counsel last month. Am I correct? How do you interpret this?

The Board met in executive session 15 days after receiving the check and decided they now do not want to sell the property and will be returning my check. The county counsel says I lost the right to buy this property when they sent me rescission notice, which, again, I did not receive, nor can they present any evidence that I did.

I still want to purchase this property at agreed price stated in Board's resolution but looking for the legal ground/angle to do so.
Submitted: 1 year ago.
Category: Legal
Expert:  socrateaser replied 1 year ago.
Hello,

1. Are there any express terms and conditions in the contract which permit rescission?

2. If #1 is true, then, ignoring the alleged lack of notice for the moment, were the conditions for rescission met?

3. If #1 is false, did the county state a reason for the rescission?

Thanks.

Customer: replied 1 year ago.

 


There is no specific section (in the 7 pages contract) titled “Rescission” or “Cancelation”. Only under “Escrow” section of the contract, it says:



(b) The Parties shall use best efforts to close escrow on or before


August 10, 2012 ("Close of Escrow"). Prior to Close of Escrow, the parties shall both execute and deposit such documents as are reasonable and necessary to carrying out the provisions of this Agreement. Also prior to Close of Escrow, Purchaser shall deposit


funds in the amount of the Purchase Price with the Escrow Holder, together with such additional funds as are reasonable and necessary to carrying out the provisions of this Agreement (e.g., Purchaser's share of closing costs and the cost of any title insurance).



(c)If for some reason escrow cannot close as of August 10,2012, or


such later date as may be mutually agreed upon by the Parties, either party may terminate this Agreement by written notice to the other party and the Parties shall have no further obligations hereunder. In the event that escrow cannot close due to any failure by Purchaser to complete the transaction, then Seller shall be entitled to retain


Purchaser's deposit ($1,000.00) as damages and, in that event, Escrow Holder shall disburse said amount to Seller.


----------------



There is nothing else in the contract relevant to "rescission".



I don't know if "Severability" section is in any way relevant, but the section reads as follows:



Severability. Each provision of this Agreement is severable from any and all other provisions of this Agreement. Should any provision(s) of this Agreement be for any reason unenforceable, the balance shall nonetheless be of full force and effect, provided that the intent of the Parties shall not be impaired thereby.



--------------------------------------------


This are also few additional facts. The property is in Mountain. Delay in closing brought us close to snow season during which I could not do any work (on this distressed property). County wanted extra $3K to hold on the sale until spring but I could not send this money because I was out of country on an emergency.



Expert:  socrateaser replied 1 year ago.
Okay, thanks,

1. The contract permits a termination by either party in writing to the other if escrow doesn't close by Aug 10, 2012.

2. If you tendered payment prior to the closing date, then you win, otherwise, the county had the right to send a rescission notice.

3. You claim that you never received notice, and that the contract provides that notice is complete on delivery. Okay, I can buy that argument, and assuming that you could prove that the notice was not delivered prior to the date that the money was taken from escrow, then you would have a claim for breach of contract.

4. However, the burden of proof here falls to you, not to the county. Evid. Code 641 ("A letter correctly addressed and properly mailed is presumed to have been received in the ordinary course of mail.").

Unfortunately, based on your stated facts, you are not going to win this one in court. The best you can do is to offer more money and see if the county "bites."

Hope this helps.

Customer: replied 1 year ago.


I understand the point. If they show the letter – “rescission notice”, it will be presumed delivered, if properly addressed.


 


But (1) are they entitled to “relief” through recession, when affirmance of the contract were induced by the other party's fraud, through failure to disclose?


 


Also, Laches (2) There is a statutory requirement that notice of rescission be given "promptly" (above), delay in providing timely notice will amount to a waiver of the right to relief based upon rescission only if the delay has substantially prejudiced the other party. [Ca Civil § 1693] In effect, this amounts to a laches defense. They did not send notice until mid-January. I was prejudiced in the way that I was unable to perform at that time because was not in the Country. Also, seller (party) cannot conduct himself so as to derive all possible benefit from the transaction (keep deposit) and then claim the right to rescind, while omitting a score of mandatory disclosures.


 


(3) in a real property purchase and sale transaction, a rescission normally requires the buyer to return the property (title) to the seller and the seller to return the funds received from the buyer.


 


(4) what if the contract was never legally valid? Rescission is a remedy that disaffirms the contract (Ca Civil § 1688 et seq.). The remedy assumes the contract was properly formed, but effectively extinguishes the contract ab initio as though it never came into existence; and its terms cease to be enforceable. [Ca Civil § 1688] Illegality:A contract is subject to unilateral rescission if it is unlawful "for causes which do not appear in its terms and conditions" and "the parties are not equally at fault." [Ca Civil § 1689(b)(5)] – yet, if the contract is legally defective, I am entitled to “legal” transfer of property and if the notices as to defect is given?


 


May the rescission of contract, for any technical violations, such as lack of disclosures, or concealment of material fact in the contract be used to invalidate the contract and restore me to original position, right before the contract was accepted, which wwould be a none time limiting Board’s resolution that allows me to purchase the property?


 


Rescission due to Mistake Of Law: A mistake of law occurs when a party to the contract knows the facts as they actually are but has a mistaken belief as to the legal consequences of those facts.A mistake of law exists only when (i) all parties think they know and understand the law but all are mistaken in the same way, or (ii) one side misunderstands the law at the time of contracting and the other side knows the correct law but does not rectify the other party's misunderstanding. [Ca Civil § 1578]


 


The contract says under: “Specific Disclosures. Property is being sold in" AS IS" condition.” CIVIL CODE SECTION 1102.1 says: “The Legislature did not intend to affect the existing obligations of the parties to a real estate contract, or their agents, to disclose any fact materially affecting the value and desirability of the property, including, but not limited to, the physical conditions of the property and previously received reports of physical inspections noted on the disclosure form set forth in Section 1102.6 or 1102.6a, and that nothing in this article shall be construed to change the duty of a real estate broker or salesperson pursuant to Section 2079.It is also the intent of the Legislature that the delivery of a real estate transfer disclosure statement may not be waived in an "as is" sale, as held in Loughrin v. Superior Court (1993) 15 Cal. App” See also other disclosure requirements.


 


Time is of the essence in real estate transactions and disclosures are no exception. Section 14A of the California Residential Purchase Agreement, or RPA, allows for a certain number of days for the delivery of seller's disclosures to the buyer--usually seven days from acceptance of the RPA. The buyer usually has 17 days from acceptance--or three days after disclosures have been made--to return them to the seller, signed and dated.

Was the time extended when no disclosures were given? Is this failure to comply with Statutory requirement changes the situation?


 


The County cannot just negotiate new price. They are bound by the process and resolution but the County Counsel says that Board's Resolution during which the County awarded me the property does not matter ever since the contract was signed.

Expert:  socrateaser replied 1 year ago.

I'm reminded of the scene in Bladerunner, where Dr. Tyrell, after being offerred a rather unusual chess move by J.F. Sebastian, says, Milk and cookies kept you awake, eh, Sebastian?

 

Anyway, I'll be the judge and rule on your various arguments below.


I understand the point. If they show the letter – “rescission notice”, it will be presumed delivered, if properly addressed.


But (1) are they entitled to “relief” through recession, when affirmance of the contract were induced by the other party's fraud, through failure to disclose?


A: I see no evidence in the record suggesting fraud by defendant. If you can develop your proof during discovery, then fraud would give you a claim for damages against the county. Except that if the county pleads the statute of limitations, the case may be dismissed, because you have only six months from the date when you knew of or reasonably should have known of the fraud to bring a claim against a government agency in California.

 

Also, Laches (2) There is a statutory requirement that notice of rescission be given "promptly" (above), delay in providing timely notice will amount to a waiver of the right to relief based upon rescission only if the delay has substantially prejudiced the other party. [Ca Civil § 1693] In effect, this amounts to a laches defense. They did not send notice until mid-January. I was prejudiced in the way that I was unable to perform at that time because was not in the Country.

A: This is the year 2013. Not being present in the USA would not prevent anyone from completing a purchase transaction of real property. Moreover, the defendant is not responsible for your inability to perform due to reasons beyond the defendant's control.

Also, seller (party) cannot conduct himself so as to derive all possible benefit from the transaction (keep deposit) and then claim the right to rescind, while omitting a score of mandatory disclosures.

A: Breach of the implied covenant of good faith it would be your burden to prove. I see no evidence in the record suggesting that the county intended to deceive you into the deal, or decided after the contract was signed, to prevent you from obtaining the benefit of the contractual bargain.

(3) in a real property purchase and sale transaction, a rescission normally requires the buyer to return the property (title) to the seller and the seller to return the funds received from the buyer.

 

A: Not true. Rescission in the case of the contract was expressly agreed to under its terms. If the deal was not consumated by Aug. 10, 2012, the defendant was entitled to rescind the agreement. Legally, this was a mutual rescission, agreed to in advance under the terms and conditions of the contract.

 

(4) what if the contract was never legally valid? Rescission is a remedy that disaffirms the contract (Ca Civil § 1688 et seq.). The remedy assumes the contract was properly formed, but effectively extinguishes the contract ab initio as though it never came into existence; and its terms cease to be enforceable. [Ca Civil § 1688] Illegality:A contract is subject to unilateral rescission if it is unlawful "for causes which do not appear in its terms and conditions" and "the parties are not equally at fault." [Ca Civil § 1689(b)(5)] – yet, if the contract is legally defective, I am entitled to “legal” transfer of property and if the notices as to defect is given?

A: An illegal contract is void. An illusory contract (one which makes a nonbinding promise under the control of the promissor, could be fraudulent, or simply not a contract at all. In either case, were that proved, you could have damages for that which you reasonably relied upon in the contract -- i.e., the property. But, it's your burden to prove, and once again, I see nothing in the record that the county has engaged in any deceitful conduct.

May the rescission of contract, for any technical violations, such as lack of disclosures, or concealment of material fact in the contract be used to invalidate the contract and restore me to original position, right before the contract was accepted, which wwould be a none time limiting Board’s resolution that allows me to purchase the property?

 

A: No. Prove of a failure to disclose/active concealment would give you damages for misrepresentation, which means either rescission and restoration to the place where you were at prior to the contract siging (meaning you would get your $1,000 back), or reliance damages, i.e., the value of what you were supposed to receive under the contract -- which could mean specific performance, i.e., transfer of title to you.

 

Rescission due to Mistake Of Law: A mistake of law occurs when a party to the contract knows the facts as they actually are but has a mistaken belief as to the legal consequences of those facts.A mistake of law exists only when (i) all parties think they know and understand the law but all are mistaken in the same way, or (ii) one side misunderstands the law at the time of contracting and the other side knows the correct law but does not rectify the other party's misunderstanding. [Ca Civil § 1578]

A: Plaintiff and defendant are reasonably experienced in business matters. The better rule is that parties are expected to understand the consequences of their actions and the agreements that they make. This claim will be dismissed at summary judgment.

The contract says under: “Specific Disclosures. Property is being sold in" AS IS" condition.” CIVIL CODE SECTION 1102.1 says: “The Legislature did not intend to affect the existing obligations of the parties to a real estate contract, or their agents, to disclose any fact materially affecting the value and desirability of the property, including, but not limited to, the physical conditions of the property and previously received reports of physical inspections noted on the disclosure form set forth in Section 1102.6 or 1102.6a, and that nothing in this article shall be construed to change the duty of a real estate broker or salesperson pursuant to Section 2079.It is also the intent of the Legislature that the delivery of a real estate transfer disclosure statement may not be waived in an "as is" sale, as held in Loughrin v. Superior Court (1993) 15 Cal. App” See also other disclosure requirements.


A: There is nothing in the record suggesting that a real estate agent was involved in this transaction. Therefore, this claim will be dismissed on demurrer or at summary judgment.


Time is of the essence in real estate transactions and disclosures are no exception. Section 14A of the California Residential Purchase Agreement, or RPA, allows for a certain number of days for the delivery of seller's disclosures to the buyer--usually seven days from acceptance of the RPA. The buyer usually has 17 days from acceptance--or three days after disclosures have been made--to return them to the seller, signed and dated.

Was the time extended when no disclosures were given? Is this failure to comply with Statutory requirement changes the situation?

 

A: A residential sales disclosure is not required, where a transfer is made by a governmental agency. Civil Code 1102.2(j).

 

The County cannot just negotiate new price. They are bound by the process and resolution but the County Counsel says that Board's Resolution during which the County awarded me the property does not matter ever since the contract was signed.

A: Based on the facts in the record, the county terminated the contract according to its terms, when you did not pay the requested within the time period required by the contract. After that, the county owed you no further duty.

Summary judgment in favor of the defendant on all counts, except fraud and false promise. Those claims will go forward (assuming that you have developed credible evidence of fraud or false promise prior to the motion for summary judgment.

Hope this helps.
Customer: replied 1 year ago.


Thank you. No, there was no agent involved. So, I will drop the "other arguments" and would like to test concealment/fraud theory. I will also assume, based on what you said, that pursuant to Civil Code 1102.2(j) Government has "lesser" level of burden to provide certain disclosures and is exempt form giving "Transfer Disclosure Statement" but common law imposed obligations remains?


 


I also know that Waiver Of Statutory Disclosures Is Prohibited By Law.


 


If there was some other material defect in the property, the title to the property, or other material matter that would affect the buyer’s decision, the delivery of the disclosure statement would not relieve the seller or the seller’s agent from the duty to disclose such other material matters. Civ. Code, §1102.8. - Correct?


 


The above "Government related subsection" does not relieve government from common-law duty to disclose defects in the property or other material matters that were known or reasonably should have been known. For example, a seller or seller’s agent who obtained two experts’ reports has a duty to disclose both reports to the buyer. Godfrey v. Steinpress, 128 Cal. App. 3d 154, 172-173 (5th Dist. 1982); Gilbert v. Corlett, 171 Cal. App. 2d 116, 118 (1st Dist. 1959)


 


And what about the law effective since 1991, the Seismic Hazard Mapping Act, which requires disclosure of real estate property in danger of liquefaction and landslides... and the law that went in effect in 1990 to require the seller to disclose any knowledge of any substance, material, or product on the property that could be an environmental hazard, and Statutory Lead Base Paint or any other statutorily required disclosures after the buyer has signed the Purchase Agreement, which commonly triggers a cancellation period of three (3) days from personal receipt or five (5) days if delivery is by mail?


 


As I understand "The seller or seller’s agent is also obligated to conduct a reasonably competent, visual inspection of accessible areas. They must disclose any visual signs that may indicate the presence of any hazard or defect." - ( On the sidelines... not having this disclosures when purchasing the property will, as I understand it, give buyer right to seek damages for all costs of repairs after the defects are discovered).


 


There also remains a common-law duty, that a party must disclose all material facts known to the seller and the seller’s agent that are not within the reach or observation of the buyer, and this applies to the sale of any type of property, including commercial property. Miller & Starr, California Real Estate, (3d), §§1:140 to 1:145.Can absence of this be used to void contract and entitle me to restitution and claim for specific performance?


 


Here, it is important to add that the section of the contract 3. Disclosures, Representations, and Warranties. (a) Specific Disclosures. Property is being sold in" AS IS" condition. (b) Representations and Warranties. Seller makes the following representations and warranties: (1) Seller has the power to sell, transfer and convey all of its right, title and interest in and to the Property; and (2) Seller has not entered into and will not enter into any lease agreement or contract, or executed any grant or transfer, with respect to the use or ownership of the Property.



Section 5. Title. Seller shall convey to Purchaser all rights, title, and interest which it has in the Property. Title conveyed shall be subject to all liens and encumbrances, easements, rights of way, taxes and assessments, if any, and deed and tract covenants, conditions, and restrictions, whether recorded or not.



Should there be disclosures relative to "liens and encumbrances, easements, rights of way, taxes and assessments" that would prevent title policy form being issued. If yes, they did not provide such disclosures. As stated above, it has been determined by to Escrow that a long term lease was clouding the title and there was also some liens.



If the title was clean I would have closed the transaction by August 10, 2012. Yet, the delay occurred when the title insurance would not issue. While waiting title to be "cleaned" and issues resolved, an unforeseen event occurred that took me out of position to close. IIn a sense, failure to disclose has prejudiced me.


 


I need to say that we had a discussions for me to deposit another $3,000.00 for County to hold the closing of sale until May 30, 2013 but this did not happen.


 


[Different law may apply for the dwelling consisting of more than 4 units, which this property is. The NHD Form is required to be used to make the Six Natural Hazard Zone Disclosures (Earthquake Fault Zone, Seismic Hazard Zone, State Fire Responsibility Areas, Very High Fire Severity Zones, Flood Zone A And Inundation Zones) only on 1-4 unit residential property. However, the disclosures are usually required (even if a form is not required) in all real property transactions, i.e., residential, commercial, industrial and agricultural.]

Expert:  socrateaser replied 1 year ago.
Thank you. No, there was no agent involved. So, I will drop the "other arguments" and would like to test concealment/fraud theory. I will also assume, based on what you said, that pursuant to Civil Code 1102.2(j) Government has "lesser" level of burden to provide certain disclosures and is exempt form giving "Transfer Disclosure Statement" but common law imposed obligations remains?

A: Yes. Calemine v. Samuelson (2009) 171 Cal.App.4th 153 (A real estate vendor has both a common law and statutory duty of disclosure to the purchaser.)

I also know that Waiver Of Statutory Disclosures Is Prohibited By Law.


A: You must cite the legal authority for your statements or I must give them no weight in my deliberations.


If there was some other material defect in the property, the title to the property, or other material matter that would affect the buyer’s decision, the delivery of the disclosure statement would not relieve the seller or the seller’s agent from the duty to disclose such other material matters. Civ. Code, §1102.8. - Correct?


A: See above. But, understand that the duty to disclose implies that proof of seller's knowledge of the defect exists. No proof means you lose, because seller is going to deny that there was any failure to disclose that cannot be proved via objective evidence.


The above "Government related subsection" does not relieve government from common-law duty to disclose defects in the property or other material matters that were known or reasonably should have been known. For example, a seller or seller’s agent who obtained two experts’ reports has a duty to disclose both reports to the buyer. Godfrey v. Steinpress, 128 Cal. App. 3d 154, 172-173 (5th Dist. 1982); Gilbert v. Corlett, 171 Cal. App. 2d 116, 118 (1st Dist. 1959)


And what about the law effective since 1991, the Seismic Hazard Mapping Act, which requires disclosure of real estate property in danger of liquefaction and landslides... and the law that went in effect in 1990 to require the seller to disclose any knowledge of any substance, material, or product on the property that could be an environmental hazard, and Statutory Lead Base Paint or any other statutorily required disclosures after the buyer has signed the Purchase Agreement, which commonly triggers a cancellation period of three (3) days from personal receipt or five (5) days if delivery is by mail?

A: If the code doesn't expressly except government, then government is liable under the law. Check the code.


As I understand "The seller or seller’s agent is also obligated to conduct a reasonably competent, visual inspection of accessible areas. They must disclose any visual signs that may indicate the presence of any hazard or defect." - ( On the sidelines... not having this disclosures when purchasing the property will, as I understand it, give buyer right to seek damages for all costs of repairs after the defects are discovered).


A: Only a real estate agent is required to conduct a visual inspection. The seller is not so required. Even if seller were required to inspect, the Civil Code 1102.2(j) waives government from the inspection provisions of the article, and the common law does not require a visual inspection. It only requires that seller disclose what seller knows about the property.


There also remains a common-law duty, that a party must disclose all material facts known to the seller and the seller’s agent that are not within the reach or observation of the buyer, and this applies to the sale of any type of property, including commercial property. Miller & Starr, California Real Estate, (3d), §§1:140 to 1:145.Can absence of this be used to void contract and entitle me to restitution and claim for specific performance?


A: Your claim must be that the seller misrepresented the property to you before you signed the contract, and thereby fraudulently induced your liability for the $1,000 penalty, if you could not perform timely. Your only recourse would be rescission and the return of your $1,000. I do not see how you could affirm the agreement, and thereby force a transfer to you, unless, your failure to perform was due to your discovery of facts about the property which the seller knew of and failed to disclose. You state that your failure to perform was due to your being out of the country, and if it were my court, that would not suffice -- because as previously mentioned, completion of a real estate transaction in the year 2013 can be accomplished from anywhere on Earith that has wireless service available.

 

Here, it is important to add that the section of the contract 3. Disclosures, Representations, and Warranties. (a) Specific Disclosures. Property is being sold in" AS IS" condition. (b) Representations and Warranties. Seller makes the following representations and warranties: (1) Seller has the power to sell, transfer and convey all of its right, title and interest in and to the Property; and (2) Seller has not entered into and will not enter into any lease agreement or contract, or executed any grant or transfer, with respect to the use or ownership of the Property.


Section 5. Title. Seller shall convey to Purchaser all rights, title, and interest which it has in the Property. Title conveyed shall be subject to all liens and encumbrances, easements, rights of way, taxes and assessments, if any, and deed and tract covenants, conditions, and restrictions, whether recorded or not.



Should there be disclosures relative to "liens and encumbrances, easements, rights of way, taxes and assessments" that would prevent title policy form being issued. If yes, they did not provide such disclosures. As stated above, it has been determined by to Escrow that a long term lease was clouding the title and there was also some liens.


A: I see nothing in the contract terms which requires seller to affirmatively provide a title report or guarantee to buyer. The only promisee made is that seller can transfer its interests (which is illusory, because seller's interests may be nothing at all); and that seller agrees not to lease or sell the property to a third party during the pendency of the transaction.

If the title was clean I would have closed the transaction by August 10, 2012. Yet, the delay occurred when the title insurance would not issue
. While waiting title to be "cleaned" and issues resolved, an unforeseen event occurred that took me out of position to close. IIn a sense, failure to disclose has prejudiced me.


A: Again, if you can show that seller knew title was clouded and induced you into the contract knowing that it would not be reasonably possible for you to resolve these issues prior to closing, then that could be a fraudulent inducement, which could be used to force the transfer of the property. Otherwise, the best you will do is get your $1,000 back.

I need to say that we had a discussions for me to deposit another $3,000.00 for County to hold the closing of sale until May 30, 2013 but this did not happen.


A: Then, it's irrelevant. It's also inadmissible into evidence to show liability, under Evid. Code 1152.


[Different law may apply for the dwelling consisting of more than 4 units, which this property is. The NHD Form is required to be used to make the Six Natural Hazard Zone Disclosures (Earthquake Fault Zone, Seismic Hazard Zone, State Fire Responsibility Areas, Very High Fire Severity Zones, Flood Zone A And Inundation Zones) only on 1-4 unit residential property. However, the disclosures are usually required (even if a form is not required) in all real property transactions, i.e., residential, commercial, industrial and agricultural.]

 

A: California law is strictly construed where the legislature has evidenced its intent in unmistakable terms. You will not be able to fudge this, which means that the other nondisclosure issues will be resolved against you.

 

The sole question remains as to what the seller knew about the property in advance, that was not reasonably related to you prior to entering into the contract as a means of inducing your detrimental reliance. If the seller's knowledge could be proved to be material (e.g., title defects), and it was obvious that no reasonable person would have been able to complete the transaction by the closing date, then that would be a fraudulent inducement, and you could have damages in reliance upon what you supposed to receive. Otherwise, you are going to lose (in my humble opinion).

 

Hope this helps.

socrateaser, Lawyer
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Customer: replied 1 year ago.

If the Code does not except the Government from specific disclosures, such are Seismic Hazard Mapping Act, environmental hazard disclosure and Statutory Lead Base Pain disclosure,to name few, then how is this reflecting of what I am interested in doing here, which is to force the performance (transfer of ownership)? ( I either have the ground to try to salvage the transaction or am wasting time).


 


As far as lack of disclosures is concerned, I would like to add also that the property was used as half-way home. I believe that this is material in decision making process and should have been disclosed. (Agree - Y or N?) Is this relevant considering that I still want to purchase the property is a different matter, but the fact remains that history affects desirability due to a stigma the property carry as such.


 


You said - A: Again, if you can show that seller knew title was clouded and induced you into the contract knowing that it would not be reasonably possible for you to resolve these issues prior to closing, then that could be a fraudulent inducement, which could be used to force the transfer of the property. Otherwise, the best you will do is get your $1,000 back.


 


This seems to be the most proper avenue to explore.


 


As I understand you here, if the seller fails to disclose material facts that would adversely affect the sell, such as that there are liens on the property, I would have to prove the seller knew about the “defects”. I don't think this is a problem. If the seller, County, was part of the transactions which created those clouds, how could they reasonably claim they did not know about the transactions of which they were the part of? Also, as far as failure to disclose prior use and condition, if they used the property as half way home prior to putting it on sale, how could they not known that there is a gas lines and the entire kitchen missing and that shingles are peeling off, etc? (Provided this can be used as additional, useful, evidence).


 


I believe that the County knew about the clouds, otherwise why would they in very short contract put close that oblige me to accept all defects and clouds in a convoluted, masked way as follows:


 


Title. Seller shall convey to Purchaser all rights, title, and interest which it has in the Property. Title conveyed shall be subject to all liens and encumbrances, easements, rights of way, taxes and assessments, if any, and deed and tract covenants, conditions, and restrictions, whether recorded or not.” If they knew the title is clouded, which I think they did, this explains why they put in the contract as follows: Title Insurance. Purchaser shall pay the cost of any title insurance policy that Purchaser may choose to obtain. ( In time when they knew clouds will prevent tittle insurance to issue.)


 


County counsel uses this part of the contract to argues that because the contracts says “Title conveyed shall be subject to all liens and encumbrances”, I was liable for taking the property with all the liens and clouds, out of which none was ever disclosed.


 


Prejudice: Lack of disclosure and ability to obtain Title Insurance so I can close by due date, as intended, prejudiced me in the way that I could not see the rescission notice or perform in any way while out of Country. In time, later on, when the County wanted to complete transaction and asked for my signature on First Amendment to Purchase Agreement, in which the County wanted to secure additional $2,000 in order to extend the escrow till April 30, 2013, I was not present to do so. Have I been given opportunity to close escrow on time, I would have closed it.


 


You said - A: Your claim must be that the seller misrepresented the property to you before you signed the contract, and thereby fraudulently induced your liability for the $1,000 penalty, if you could not perform timely. Your only recourse would be rescission and the return of your $1,000. I do not see how you could affirm the agreement, and thereby force a transfer to you, unless, your failure to perform was due to your discovery of facts about the property which the seller knew of and failed to disclose.


 


Please also take in consideration that contract has close that reads as follows: “Severability. Each provision of this Agreement is severable from any and all other provisions of this Agreement. Should any provision(s) of this Agreement be for any reason unenforceable, the balance shall nonetheless be of full force and effect, provided that the intent of the Parties shall not be impaired thereby.”


 


Considering that (a) Title Insurance could not reasonably obtainable by the due date designated for closing and for discussed reason (b) there was no follow up agreement in writing to extend the closing prior to County’s issuance of rescission notice (which allegedly occurred in time when County was on notice that I am out of Country), and as such was not received, because I do not object to the purchase price or other terms then the actual date of closing, the question remain by when should I then close the escrow if the fraudulent concealment of material facts prevented transaction to close by due date and how could I use this situation to force the transfer now?


 


As stated previously I sent them the cashier’s check marked “Full and Final Payment” on or about June 10, 2013 but they stated lack of interest and contractual obligation to perform. Considering the above facts, and the following, quoted, section of contract, do I have grounds to demand performance from County or should I (in your humble opinion), drop the mater and move on, in absence of strong grounds?


 


"Purchase and Sale. (a) Seller agrees to sell to Purchaser, and Purchaser agrees to purchasefrom Seller, the Property on the terms and conditions set forth herein. (b) Seller will convey the Property to Purchaser by grant deed subject to the terms and conditions of this Agreement."


 


"Purchase Price. (a) Seller agrees to sell to Purchaser and the Purchaser agrees to buy from Seller the Property for a purchase price equal to XXXXX Thousand Dollars ($XXX,000.00) (the "Purchase Price"). (b) Method of Payment. The Purchase Price shall be payable in cash on Close of Escrow (as defined below) after crediting a deposit made by Purchaser to Seller in the amount of one thousand dollars ($1,000.00). The Escrow Holder shall disburse sales proceeds to Seller (County of Mono)."


 

Customer: replied 1 year ago.


I don't know if you've missed my last questions below, which I posted on Monday afternoon. I need specific answers so I know what to put in my demand letter to county counsel. Please see below.

Expert:  socrateaser replied 1 year ago.
If the Code does not except the Government from specific disclosures, such are Seismic Hazard Mapping Act, environmental hazard disclosure and Statutory Lead Base Pain disclosure,to name few, then how is this reflecting of what I am interested in doing here, which is to force the performance (transfer of ownership)? ( I either have the ground to try to salvage the transaction or am wasting time).

A: In order to recover any damages from the county, you must show why you were unable to close within the requisite time period. Unless the county's failure to disclose is cause of your failure to close the transaction, then the county's breach of duty did not cause your injury under the contract, and you will not be able to recover.

I think you may be misunderstanding the fact that fraud occurs before a contract is made. It is the inducement to enter into a contract that you would not have made, but for the misrepresentation of material facts. The point is that it doesn't matter what the contract actually says, concerning your rights and duties. What matters is whether or not a misrepresentation occurred which induced you to make the contract and thereby caused you damages. So, statements in the contract about your purchasing in "as is," and with "all liens and encumbrances," etc., are irrelevant. The issue is whether or not the county told you that there were no liens or encumbrances as an inducement to enter into the contract.

The issue of the halfway house, in my view is entirely irrelevant (unless you could show that the residents were mxing meth or similar on the premises, and that the chemicals are in the walls or soil and are a public safety hazard that the county was trying to dump onto a private person.

This seems to be the exact opposite of what's going on. The county thinks the property is worth more, not less than you agreed to. You had a bargain at the time of purchase, and you failed to close timely. This means that you breached the contract, and that leaves you with proving that you would never have made the contract because of a fraudulent inducement. You must show that the inducement caused you to enter the contract, and that the county knew or reasonably should have known that the inducement would have prevented you from closing the purchase timely.

Every other route leads to a loss in court, in my opinion.

Hope this helps.
Customer: replied 1 year ago.


But if I understand you correctly this is an argument that would leave me with right to request $1,000.00 not to request that the County close.


 


("...that leaves you with proving that you would never have made the contract because of a fraudulent inducement. You must show that the inducement caused you to enter the contract, and that the county knew or reasonably should have known that the inducement would have prevented you from closing the purchase timely. )


 


So what do I tell County... that I demand that County close the deal now and transfer the ownership to me regardless of the rescission notice they sent me, because the inducement caused me to enter the contract, and the county knew or reasonably should have known that the inducement would have prevented me from closing the purchase timely, so with that in mind I should be allowed to close now?


 


Is that the final and only argument?


 


Thank you in advance!

Expert:  socrateaser replied 1 year ago.
Proof of fraud entitles the injured party to either rescind or obtain damages in reliance upon the promise made by the defrauding party.

Assuming you are able to prove that the county knew you would not be able to close within the contract time limit, then you could rescind and get your $1,000, or you could affirm the contract and obtain specific performance to transfer title.

That's the theoretical ideal. The reality is that proving fraud is always very difficult.

Hope this helps.
Customer: replied 12 months ago.


By engaging Escrow and Title officers I had a chance to review liens on the title that County failed to disclose. The first lien was a 40 years (unfavorable) ground lease that ends in 2037. The County signed this lease with the Municipal Service Group, Inc, Littleton, CO 80128 whereas MSG (sic) “seeks to lease the building and sublease the land pursuant to Option Agreement”. MSG has the right to assign its rights or sublease the rights under this agreement without County’s permission. And in case of default under the Agreement, MSG shell have the right to possession of the project for the reminder of MSG lease Term and shell have the right to sell its interest in the Project and this ground lease upon whatever terms and conditions deems prudent. Signed by Chairman of the Board of Supervisors and Mono County Counsel, which judging based on signature is the same guy who I dealt with.


 


The second lien was UCC Financial Statement, apparently Wels Fargo lease for equipment. Dollar value is presently unknown. The third was some kind of financing agreement in the amount of $220.000.


 


Considering that they gave me the appraisal that suggested property worth $450.000, without ever disclosing any line on the property let alone three they clearly knew about it, being active participants in the agreement that caused lien on the title, I do not know how this information changes your opinion, but I think that I have solid grounds to claim fraud trough active concealment.


 


I also found that county now considers this property, which is located in residential neighborhood, for housing of inmates because XXXXX XXXXX offers counties money to not send prisoners to State prisons due to overcrowding. The property was previously alcohol rehab but can you just convert residential property into any kind of correctional facility?


 


I’ve sent the letter to County Counsel and told them that we have been advised to communicate to him that we feel that in light of the fact that


County concealed the liens on the property and failed to provide mandatory disclosures, the County knew I cannot reasonably close by August 10, 2013, which was contractual day after which either party can rescind.


 


I also said, Notice to Perform prior to rescission was never received nor I received proper Rescission Notice before sending the final payment which the County rejected. The County also failed to comply with statutory disclosures requirements to which the buyer is entitled legally.


 


I said: In short, failure to perform common law duty and failure to disclose/active concealment gives us the right to damages for misrepresentation, which means either rescission and restoration to the place where I was prior to the contract signing (meaning I would get $1,000 back), or reliance damages, i.e., the value of what I supposed to receive under the contract, which means '"specific performance" i.e., transfer of title to me will be ordered by the Court if the issue is not resolved by an amicable agreement. By misrepresenting the property to me before signing of the contract, I was fraudulently induced to detrimental reliance and liability for the $1,000 penalty, if I could not perform timely.


 


He only asked me if I am now represented by counsel and I‘ve herd nothing form him in a week. I said we should resolve this amicably or I will turn this to my attorney to pursue it legally. Any thoughts and/or suggestions based on the update?

Expert:  socrateaser replied 12 months ago.
Hello again,

The facts are more compelling. I still don't see that you have proved that the county intended to induce you to either purchase the property in a defective state, or to lose $1,000 for failing to fall victim to the county's active concealment of the property defects. It's a difficult case to prove, because it "feels" outlandish -- not something that a government agency would do.

On the other hand, no one expected the IRS to be blue lining groups seeking tax exempt status, either, so maybe it's not so outlandish after all.

Hope this helps.

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