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Protecting Yourself from Real Estate Fraud: An Interview with Vahe Jordan of the Jordan Law Group

By Vahe Jordan

Tell us a little bit about your company and the services you offer.

The Jordan Law Group is a boutique real estate law firm servicing the greater Los Angeles area. The firm was founded by attorneys Vahe Jordan and Artin Gholian, both of whom are experienced trial litigators as well as licensed California real estate brokers. The Firm handles all matters involving real estate including fraud/nondisclosure issues, commercial leases, income property investment and management issues, HOA disputes and evictions.

What are some of the biggest regrets you've seen new Southern California home buyers have when it comes to nondisclosure issues?

We often find that a homebuyer's biggest regret in nondisclosure cases is insufficient investigation of the property and inquisition of the seller. That is not to say that a buyer has any fault when it comes to a nondisclosure case. In fact, the buyer in nondisclosure cases is often a victim of deceit and bears no blame.

California home buyers need to know that California law imposes an affirmative duty upon buyers to investigate the facts, conditions and circumstances of the property prior to purchase. Buyers need to ask a lot of questions of both the seller, the listing agent and their own agent. Many cities have online databases that can be used to quickly access permit applications and other information regarding a property. Take the time to read through your preliminary title report. The goal being to learn as much as you can about the property as possible prior to the close of escrow.

Can you briefly explain what the most common causes of fraud or concealment are?

In our experience, the most common cause of a seller or agent's failure to disclose a material fact about a property is the fear of losing the sale. Agents rely on commissions to make a living and in some cases even minor issues with a particular property may scare off a choosy buyer. Oftentimes sellers are hesitant or fearful to disclose any negative information about their property. We've found that the potential for losing a commission or a sale is the only logical explanation for why a real estate professional or a seller, both of whom are duty bound to disclose all material facts, would conceal a known negative fact from a buyer.

What are one or two key things that not every buyer may know about California law on residential real estate transactions in those cases?

California law puts an affirmative duty on buyers of real estate to investigate facts surrounding the property. This requirement to investigate is unique to California real estate transactions and is not a requirement in other types of fraud cases. There is a duty of inquiry placed upon the buyer and a heavily litigated issue is whether a buyer failed to investigate or inquire about conditions that may have been made known during escrow. Attorneys defending against nondisclosure claims are constantly probing buyers in an effort to flesh out this defense. Thus, a buyer should not simply sit back and expect a seller or an agent to tell them all they need to know about a particular home. A well-advised buyer should take affirmative steps to discover as much information regarding the home as possible.

How is an "As-Is" sale different when it comes to fraud or concealment?

When a property is bought "As-Is" buyer accepts the property in the condition that is visible or observable to the buyer. However, an As-Is provision does not relieve the seller or seller's agent from the affirmative duty to disclose all known material facts regarding the condition of the property that are unknown to the buyer and as such the "As-Is" provision will not relieve the seller or seller's agent from fraud liability arising from the nondisclosure.

The California Supreme Court has made it clear that a seller cannot contract his or her way out of a fraudulent transaction. However, it is important to know that the "As-Is" addendum will usually be an exhaustive document disclaiming any warranties and/or representations regarding virtually every aspect of the property, whether it be the physical defects or components of the property or its compliance with state or local laws. The "As-Is" addendum is not in conflict with a buyer's duty to investigate. Thus, a buyer purchasing a property "As-Is" should be extra diligent with his/her investigation and inquiry.

Keep in mind, except for a few exceptions, the Transfer Disclosure Statement, which requires the buyer to disclose all known defects of the property, must still be filled out by a seller regardless of the property being sold "As-Is."

What advice would you give people in Southern California to help avoid nondisclosure issues before buying a home?

The best advice we can give is don't allow anyone to rush you through a transaction without properly investigating the condition of the property. This is probably quite difficult for most home buyers, especially those who have been in the market searching for a home for an extended period of time.

Also, don't limit your investigation to just one basic home inspection. If there are structural concerns, spend the money on the professionals to conduct further inspections. Hire professionals to scope the sewers, check the plumbing, inspect the roof, etc. Spending a few hundred dollars more with professional inspectors is always cheaper than closing the transaction of a property with significant defects.

Buyers should always ask a lot of questions. Ask questions about additions, room conversions, improvements, neighbors, insurance claims and noise issues. Check with the city and investigate permit histories and other publicly available information regarding the property. Additionally, make sure you are aware of any additional compliance issues, such as obtaining a Certificate of Inspection the city that you are buying in may require prior to close.

What's the best way for people to contact you and your company?

We can be reached at (888) 693-5556 or you can email either partner at art@thejordanlawgroup.com or vahe@thejordanlawgroup.com.

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