Deposit should be returned if property is misrepresented

Updated 11/2/2012 5:55 AM

Q. We bought a home in Virginia but did not actually see it during the escrow because we are serving in the military. The house was listed as 2,300 square feet, four bedrooms and having a "lake view." During the escrow, we learned the house is only 2,000 square feet, one of the bedrooms was added to the building without a permit, and the "lake" is actually a retention pond because of drainage problems in the area.

We contacted our agent and he advised us to consult an attorney. None of the local real estate attorneys would represent us because they had a conflict of interest with the agent. We hired an attorney who was not familiar with real estate law, and he didn't have any definite answers. We were afraid of losing our deposit, so we closed the deal. What can we do to recover our losses?

A. It is always disappointing to hear of someone closing a deal because of perceived financial pressure. In your case, it is particularly irritating to know this happened while you are in the service of our country. Your agent should have done more to serve you interests, rather than rushing you off to an attorney.

When you learned that the listing details were false, you had every right to cancel the sale. The sellers could not have gotten your deposit without taking legal actions, and it is not likely that they would have prevailed.

The sellers and their agent appear to be liable for misrepresentation and false disclosure, but you were in a better position to press that point before you closed the deal. The attorney you consulted should have known enough to advise you against closing. At this point, you need some advice from a competent real estate attorney. If none is available in your area, try someone in the next town.

Q. We are buying a foreclosed home, and there is work that needs to be done before we move in. The inspector said there is a carbon monoxide leak in the attic and there are no carbon monoxide detectors in the home. We are being told that this is an as-is sale, so no repairs are being done by the bank that is selling the property. Does this sound right to you?

A. When banks sell a foreclosed home, it is typically an "as-is" sale. However, the bank is still required to install carbon monoxide detectors as a condition of the sale.

More importantly, the presence of carbon monoxide in the attic demands immediate investigation because that can be a life-threatening condition. You can have this checked by the gas company to determine the source of the CO. Once that is determined, a contractor will be needed to correct the problem: a heating contractor if it is the furnace, a plumbing contractor if it is the water heater, and so on. You should not occupy the home until this issue has been resolved.

• Email questions to Barry Stone through his website,, or write AMG, 1776 Jami Lee Court, Suite 218, San Luis Obispo, CA 94301.

Distributed by Action Coast Publishing

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