Suing over sale 30 years ago

 

Ron Rossi Real Estate Attorney at Rossi, Hammerslough, Reischl & Chuck
Ron Rossi Real Estate Attorney at Rossi, Hammerslough, Reischl & Chuck

Iam always amazed what people will do. A recent case struck me as borderline insane. Our clients were given a piece of property in the Sierra foothills by their folks in 1954. This was done in celebration of our client’s first child. The parents had owned the property for 14 years.

Our clients ultimately built a cabin on the property and enjoyed it for many years. Approximately 30 years ago, they sold the little cabin. The contract provided that the cabin was being sold on an ” as is” basis for $14,000. Everything went fine.

The buyers from our clients resold the property. The new buyers contended that a fireplace was done without a permit and that the cabin was possibly built on the wrong part of the lot and encroached on the neighbors property line.

The current buyers filed a lawsuit against the resellers claiming all kinds of fraud and misrepresentations. They also, of course, sued the real estate brokers involved in this recent transaction.

Low and behold, the people who bought from our clients in 1969 filed a cross–complaint against them alleging they were responsible for all damages alleged by the new buyers. They also sued them for fraud, asked for full and complete indemnity from the new buyer’s claims and asked that our clients pay all their attorney fees.

The people who filed a cross–complaint had no basis to make these claims, because our clients had absolutely no knowledge of anything wrong the property when they sold it 30 years ago.

You are probably wondering if there is a time limit for such lawsuits. Yes, there is. They’re called statutes of limitation.

That was a real problem for the people who filed cross-complaint. However, there are ways to get around it. Typically, a claim for fraud must be filed within three years of the fraudulent activity. However, if the fraud was not “discoverable,” the time limits do not start to run until discovery did or should have been, apparent. To get around the time limitation, the people who sued our clients argued that the problem could not be discovered until the new buyers bought property.

An indemnity claim usually does not accrue until the person has been damaged. As a way to get around any time limitations for their indemnity claim, the buyers who bought from our clients argued they were not damaged until they were sued by the new buyers, and had to pay them money.

How far back can you go in the chain of title to sue previous owners? Case law says a former owner can be liable for misrepresentations or non-disclosures regarding significant problems with the home when they have reason to believe or expect such representations will be repeated to subsequent buyers.

Our clients had no idea there was anything wrong, so we had no reason to expect their statements would be passed on to future buyers. When a seller makes a representation regarding the home, it is reasonable to assume it will be passed on to subsequent buyers, especially within a short time. But 30 years?

Our society is complicated enough. Can you imagine suddenly And 30 years ago and being sued today? Of course, now, the attorney fees will be more than the amount of the sale price in 1969.

It is unfortunate that in this litigious society, cases like this are filed

What happened?

We were able to prove our clients had no knowledge of any problems with the property when they sold it and that their buyers discover the problem within the first two years of ownership when they added on to the property and failed to disclose this information to the new buyers. Fortunately, we establish this fairly early litigation and got our clients out of the case before it went to trial. Then we sued the first buyers for malicious prosecution (for wrongfully bringing the lawsuit) and were able to get a quick settlement. Our clients were fully compensated for their attorney’s fees they were forced to incur.

Everyone likes happy endings, in this case had one.

San Jose Mercury News, Saturday, April 4, 1996

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