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Thread: Question about a potential fraud

  1. #1

    Default Question about a potential fraud

    So I am in a big dilemma and would like to ask this question to someone with knowledge of real estate laws.....

    I am currently living in a private home in the Bronx and last year the owner was foreclosed on....I became interested in the property but the owner wanted to do things her way. So she got a real estate agent who wanted to do a quick flip and make money in the middle. Now this is where it gets troubling, while the house was still under the original owner's name, the real estate agent made up a contract with an LLC name being the "owner" and then selling it over to us. We didn't mind because we liked the property and thought the money we would deposit in an escrow account as a down payment will remain safe no matter what. The whole process took forever and now after 6-7 months the real estate agent says he doesn't want to sell the property and would like to return our deposit along with the appraisal fee.

    Now the question I have is.....Is this illegal? it doesn't make sense that he would hold our money for so long when it's not even under that persons name....this whole thing smells of horse's fieces. Can someone with experience in real estate tell me what they think. The guy wasted so much of my time....Thank you

  2. #2
    Disgruntled Optimist lofter1's Avatar
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    Wouldn't that be covered in the specifics of your contract?

  3. #3

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    The contract was written up as a normal transaction....even my banker didn't know that the house was being flipped....I was able to get the commitment letter and we were 100% ready to close.
    Last edited by NY_Real Estate Seeker; February 8th, 2010 at 10:26 AM.

  4. #4
    Disgruntled Optimist lofter1's Avatar
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    But what does the contract say about the seller canceling the sale?

  5. #5

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    Quote Originally Posted by lofter1 View Post
    But what does the contract say about the seller canceling the sale?
    cancelling the sale is not the issue here. The issue is....the so called Seller never had the property under his name to begin with....it was a still under the person who got foreclosed on.....and the whole time.....the so called seller aka real estate agent had the deposit in his hand which was given to him when the contract was signed. I mean it's been 7 months and the real estate agent still does not have the property under his name but will very soon.

  6. #6

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    Lofter let me give you an example in a very simple term. You are walking around looking for a car to buy and there's a car in the showroom that you like....you sit down and make yourself comfortable in the car just testing it out and so fourth while a guy comes up to you and says ok you wanna buy this car from me? I ask are you the owner and he says yes....I sign the contract where it shows him as the seller and me as the buyer and I leave him a deposit. Now the problem is.....the car is not even under his name....he's going to try to buy the car and then sell it over to me.....but this whole time while I was searching for a car loan...he held my deposit....and now wants to keep the car and return my money.

    I hope that explains it.

  7. #7
    Disgruntled Optimist lofter1's Avatar
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    OK, got it. (Sometimes I'm slow )

    One would think that if they don't own it they can't sell it.

    I'm no lawyer, but it sounds like fraud to me:


    Fraud must be proved by showing that the defendant's actions involved five separate elements: (1) a false statement of a material fact,(2) knowledge on the part of the defendant that the statement is untrue, (3) intent on the part of the defendant to deceive the alleged victim, (4) justifiable reliance by the alleged victim on the statement, and (5) injury to the alleged victim as a result.
    Where is Ali R. when we need her?

  8. #8
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    @Lofter, I'm here, dude, I'm here! You think of me and I hear the psychic whistle ... and I'm going to try to be here more.

    @Ny Real estate Seeker,

    Big I AM NOT A LAWYER disclosure, but if you're using the standard real estate co-op contract, there should be something in Section I (that's the first page) about what interest-bearing account your deposit is held in. Otherwise it was probably in an IOLA, which means that the interest goes to a fund that gives poor people legal help. (you can google iola.org).

    More importantly, in Section 4 on page two, the seller does indeed represent that they own the property and that they can sell it to you.

    Now obviously you're not using the standard co-op contract since this is a house, but your contract should still have these two pieces in it. So the first thing for you to do is to read them.

    I think Lofter's right, if the counterparty (i.e. the other person who signed your contract) signed a contract saying that they owned the property and could sell it, and now it's come out they don't and can't, they've misrepresented themselves .. at which point you should have grounds for action ... but this is all legal territory, so you'll want to call in a lawyer.

    I'm just a real estate agent, I can't give legal advice.

    ali r.
    DG Neary Realty

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