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From what you have described you likely have a cause of action against this seller for fraud.
The seller made a material misrepresentation in their disclosure "they knew of no lawsuits pending" when they knew "or reasonably should have known" that this was false. The lawsuit disclosure is a "material" part of the purchase agreement and you reasonably relied upon this disclosure. Your reliance caused you to suffer material loss (the sale of your home with no replacement).
This meets all of the elements for a cause of action for fraud. In addition, there is the lesser claim for "negligent misrepresentation" which can also be plead in the same complaint, the only significant difference in damages is that unlike with actual fraud, you cannot get punitive damages on top of your actual damages if you win.
How do you suggest we proceed? Our realtor is trying to get the the seller to allow us to rent until and if we get a mortgage. He asked if I would sign a Hold Harmless Agreement.
Unfortunately I cannot give you strategic advice. What I can tell you is that the realtor is working to negotiate a pre-litigation settlement between you, the seller, and anyone who should have looked into the disclosure in more detail.
A hold harmless agreement is something you should consider carefully before signing. If you sign one you will be waiving your right to sue later if that becomes necessary. (I am not saying that it is always necessary to sue, but it is important to consider the risks and benefits before you give up that right, particularly when you do not yet know what your damages are).
Who really is at fault here? The selling agent? Our agent for not asking more questions? Us for not knowing the correct questions to ask? The sellers for not providing truthful information?
Can we sue them all?
If it weren't for the mortgage company doing their due diligence we would not have know there was any litigation vs. the HOA.
The seller made a factual misrepresentation in the disclosure (I don't know what their disclosure looks like, but they are usually a strong affirmation, some are even under oath - it really doesn't make a huge difference except from impeachment purposes later on, but it certainly does mean they should have been aware).
The remainder (the agents) may have been aware, or may have been required to look into this more closely. If the seller's agent knew of the litigation but failed to disclose it even though the disclosure was false, they too can be held liable for fraud.
Your own realtor has a duty to you. If they failed to perform as a reasonable realtor should have in this circumstance (I do not know the specifics of your purchase so I cannot comment on the duty specifically), they may be responsible to you for negligence. If they also were aware of the litigation but failed to tell you, that also would be a matter of fraud, and you could also file a claim for breach of fiduciary duty (the realtor owed you a duty, but instead was looking after their own interests).
You do have the option to sue all 3 at the same time, it is usually worthwhile to visit with a civil litigation attorney first and see which parties represent the most viable defendants and if any should be ommitted (this really is a strategy call), to help keep your case as strong as possible from a procedural perspective.
Given the fact that they want to force a "hold harmless" on you now, you may want to invest a couple hundred dollars in visiting with a civil litigation attorney now and seeing what your options are after they have a chance to look at the documents you have in front of you, and discussing with you in a little more detail your relationship with these realtors. While the realtors may want to settle, it may be a good idea to have an idea of what you are entitled to (and what a realistic outcome is) if things do turn to litigation.
Ok the hold harmless agreement was to let us rent the condo we have the P&S on until our mortgage clears.
I do not like the title of this document and I think I should request that it be changed to something else.
Read the terms of the document carefully. I would still suggest that you speak with an attorney before signing.
OH NO!!! Can I rescind it?
I don't know whether or not you have grounds for recision here (the grounds for recision are based on fraud in the inducement of the contract itself (did they say something to you to cause you to sign this second contract that was false or untrue)). I do know that speaking with an attorney in a matter such as this (even if it is only for a quick consultation so that they can review your documents and give you a specific legal analysis of your position) is worthwhile.
I have contacted a local civil litigation lawyer in my area.
Thanks so much for your help today!
You are welcome. I do wish you the very best of luck in this matter.
Thanks-I feel so duped right now:(
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