Its not a legal Condo Project ? (said the listing Agent) Am I liable for damages for not knowing what I am selling ?

Costs to resolve: $50,000-$60,000. "Darn". Said my very polite friend who purchased a small condominium project in the past 6 months.

He thought he was good to go when he closed escrow and that he only needed a separate assessors parcel number (APN#) for each Unit.

Not sure what the Seller told him. The only thing I am sure of is my friend failed the President Ronald Reagan first rule of diplomacy: "Trust, but verify."

The Project looked good on paper. There was a recorded Condominium Plan, a recorded Declaration of Restrictions, and an incorporated Homeowners Association (The HOA was dissolved after the DRE Public Report expired). Red Flag #1.

Did the listing real estate agent advise the Buyer that this was a "legal" condominium project under California law ? Did the title insurance company make any representations to the Buyer ? What did the Seller know and when did he know it ? Did the DRE know the project was not a "legal" condominium when they issued a Public Report ? (Yes, I obtained a copy of the Public Report from the DRE).

Is all of this a material misrepresentation of the status of the property ?

What I noticed when I reviewed a title report for the property from 2014 was that the original legal description from "1906" was unchanged. Red Flag #2.

This legal description was included in both the recorded Condominium Plan and the recorded Declaration of Restrictions. Since I served as the VA attorney from 1974 to 1990 who approved Condominium Projects in Southern California, I know the attorney who prepared the documentation. Did he/she advise his/her client about the requirements of the Subdivision Map Act in the Government Code ? Did his/her client not want to bother with complying with the law ?

Most Buyers of a Condominium Project (normally a conversion) do not want to hire an attorney to review the documentation prior to close of escrow. I would charge my friend $1,600.00 for a due diligence documentation review prior to close of escrow. My fee is a lot less than $50,000-$60,000 to fix and twelve (12) months of dealing with a City.

Sounds like a good basis for a price reduction in the initial sales price.

If you are a real estate broker who handles these types of transactions, it would probably be smart to give me a call at (619) 531-8858 before you close escrow with a Buyer and are later sued for fraud or misrepresentation. Ignorance of what you are selling is usually not a good defense.

There is no charge for the call.