Even If You Do Everything Right, You Can Still Lose

June 25, 2013

Purchasing real estate is a difficult process. Finding a place that you like, which fits your needs and is within your budget is not always easy. There is a lot of work to do to find the perfect piece of real estate, but it is important to remember that the work doesn’t end when the property is chosen. Before purchasing property, it is the buyer’s responsibility to make sure the property is acceptable for his or her uses, is generally safe and sound and overall a good purchase. Sometimes sellers are genuinely unaware of issue with the property or title, and in those situations the buyer is stuck with any problems he or she could have found, but did not. But what about those instances when the seller does something intentionally wrong? That depends on the situation. If you can prove the seller did something wrong intentionally, often the buyer will be allowed to cancel the contract or can adjust the selling price. In some cases, however, that is not enough.

Take for example, the California case of Utley v. Smith. In this case, Charles Utley (“Utley”) is suing for specific performance to force the sale of a piece of property, which Utley believes he rightly owns. In this case, Jewell Smith (“Smith”) owned a piece of property, which he offered sell to two buyers. Smith offered Utley the option to purchase the property and promised to keep the option open for a few weeks with a down payment. During the period of time that Utley had the option to purchase the property, Smith sold it to Lewis and Desch, who are also a part of this case. The option agreement was entered into before the purchase agreement occurred, however, Smith ended up executing the documents for both agreements on the same day. This is important because, when purchasing a property, it is the buyer, or his or her agent’s, responsibility to check the physical property as well as the title in many jurisdictions. While Utley had a valid option agreement with Smith, both agreements were written up on the same day, therefore regardless of whether or not Lewis and Desch did their research there was no evidence that someone else had a claim to the property.

When multiple buyers claim to have a right to one property, the order in which agreements occur becomes very important. Generally in these situations, it is not enough to be the first person to sign the paper work. If the information is readily available and you could have found that someone else has a claim to the property, such as an option contract, then you cannot legally purchase the property. In this case, the agreements occurred on the same day and the option contract was not record and filed for a week. Therefore there was no way for Lewis and Desch to find out about the option before purchasing the property. There was also no evidence that they were told and had any knowledge before signing the agreement of the option agreement. Therefore the court found that Lewis Desch were the rightful owners of the property.

At the end of the day, In Utley v. Smith, Smith behaved poorly when making a deal with two people for the same property without informing them of each other. While there is no way to guarantee that someone treats you fairly, an attorney can be helpful when making agreements. An attorney can review your agreements to help you decide if terms are i your best interest and can help you ask important questions that you may not think of on your own. If you are in the Sacramento area and need a real estate attorney, please contact our office.

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