It is fundamental that sellers are motivated to get the highest price whenever a sale takes place. This is true for almost everything, including real estate. Conversely, buyers want to purchase for the lowest price. Everyone engaged in a real estate purchase wants to buy low and sell high. This fact of human nature sometimes causes people who are generally law abiding citizens to engage in conduct that is intended to deceive, especially sellers who need to sell their home.
Real Estate Fraud
Indiana has attempted to do away with this problem by requiring every seller to fill out and sign under oath a disclosure form stating the status of various components of the real estate. This form is called the Indiana Seller’s Disclosure Form and it is intended to eliminate fraud from the residential real estate sales market. All licensed real estate brokers in the State of Indiana as well as sellers who sell their own real estate (For Sale by Owners) are required to make that form available to any prospective buyer who expresses and interest in purchasing residential real estate. That form must be updated at the time of closing to demonstrate any changes to the original information and to confirm everything on the original disclosure remains unchanged.
Despite the requirement for the form, some sellers put false information on the form and buyers who rely on that form often become the victims. Where deceptive acts are intentional, such actions are fraudulent. They may also be fraudulent where they are merely accidental, as might be the case when someone declares something with careless disregard for the truth. In either case the victims of fraud now have a written sworn statement by the home seller, which they can use as compelling objective evidence to help prove the seller committed fraud. For the victim, this often times proves to be very helpful, especially when they end up in court seeking damages from the seller.
Unlike a simple breach of contract claim, real estate fraud gives way to punitive damages, which can total up to three times the actual damages suffered by the victim and also allows the Judge to award attorney fees. This makes the would-be advantages of committing a fraud much less attractive. Another remedy a victim may seek is rescission of contract. A rescission is a return of the home to the seller and a return of the money to the buyer. This may be more complicated where the buyer relies on mortgage financing and a bank or other financial party are involved.
Buyers should take great care to submit purchase offers that make the sale subject to inspection. They should also take care to secure the services of a reputable home inspector. Since most home inspectors limit their liability by contract, it is crucial to employ a home inspector who will conduct an extremely thorough inspection of the whole house. If problems are discovered and the parties reach agreement through the inspection response phase, buyers should have the home re-inspected to insure the problems the seller agreed to fix were completed satisfactorily. Realtors should bring this to their client’s attention and either insist that they do so or have their client sign a waiver releasing the realtor from liability for the buyer’s failure to have follow up inspections completed.
Real estate fraud is rampant in the real estate world and even law abiding citizens sometimes engage in deceptive practices to achieve their goals. Whether you are purchasing from a complete stranger or your best friend, be sure to review the Seller’s Disclosure form and hire a reputable home inspector. Following these tips will help insure you buy a problem free home. You can find more information on real estate and our attorneys that can help you in your unique case.
