Can I break the contract since there was misrepresentation?

Hi,
I was attracted to a home due to the hardwood floor mentioned in the flyer and
MLS posting. We are in escrow with deposit now but there was a disclosure by
the seller that it is laminate instead of hardwood. Can we get out of the contract?

Asked on April 2, 2016 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

IF there had been no mention of laminate in the inspection report and IF the floors could not be detected by you, when you walked through or viewed the home, as laminate, then this misrepresentation would likely qualify as "fraud" and so allow you to get out of the contract without penalty. However, fraud is only fraud when your reliance on the misrepresentation is "reasonable"--that is, you had no knowledge or reason to know that the representation was false. But if you could see for youself that the floors were laminate, and/or you had notice from an inspection report prior to entering into the contract, then the reliance was not reasonable and this would not be fraud.
So the issue is what did you or should have known, when: if you had no reason to doubt the representation prior to contracting, you would seem to have a good basis for getting out of the contract, but not if you did or should have known before contracting.


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