What are the legal ramifications for providing false information on a real estate disclosure form?

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What are the legal ramifications for providing false information on a real estate disclosure form?

My wife and I bought a house just a few weeks ago. Just yesterday we received a notice from our mortgage company that our house is in a Special Hazard Flood Zone and we are required to purchase flood insurance. I did some research, and it turns out that the city knew about this upcoming “re-zoning” from FEMA back in 09/10 – 1 month before the previous owner purchased the house, so he should have known about this and disclosed it. Are there any legal ramifications if he lied on the disclosure form (i.e. can we sue him for the initial cost of the insurance, etc.)?

Asked on May 3, 2011 under Real Estate Law, Ohio

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You could sue the seller for fraud.  Fraud is the misrepresentation of a material fact made with knowledge of its falsity with the intent to induce your reliance on which you justifiably relied to your detriment.

Fraud is also the nondisclosure of a material fact by the seller which the buyer could not have reasonably discovered.

Your damages (monetary compensation you are seeking in your lawsuit) would be either the benefit-of-the- bargain or out-of -pocket loss.

Benefit-of-the-bargain means that a defrauded purchaser may recover the difference between the real and the represented value of the property purchased regardless of the fact that your actual loss may have been less.  Benefit-of-the- bargain is the difference between what you paid and what you should have paid had you known about the Special Hazard Flood Zone.

Out-of-pocket-loss for fraudulent misrepresentation permits recovery of the difference between the price paid and the actual value of the property acquired.

Your damages should include the flood insurance.


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