Real Estate Broker Misrepresents Building During Sale

Case Overview

This case involves fraud and breach of contract relating to the sale of a large apartment building. During price negotiations, the client was led to believe that occupancy of the complex was higher than it was in reality. After the deal was completed, the rent rolls indicated that a number of leases were set to expire, however it was discovered that many of those tenants had already vacated the building. Were accurate representations made, the complex would have been classified as “distressed,” and the selling price would have been significantly less than the amount paid.

Questions to the Business expert and their responses

Are you a licensed real estate broker with experience selling multi-family residential complexes?

I am a licensed real estate broker and broker of record and own/operate my own full-service real estate brokerage firm. I have experience selling multifamily properties.

Are you able to describe the impact of occupancy rates in the valuation process?

I am able to discuss the correlation of occupancy to value.

Do you have an understanding of the industry standard for disclosure of occupancy rate information before/during/post-closing?

I am familiar with what is typically requested and provided during the due diligence period.

About the expert

This expert received his Bachelor of Science in Business Management prior to completing coursework and receiving certificates from Temple University's Real Estate Institute. In both 2011 and 2012 he was recognized by the Wall Street Journal and RealTrends, Inc. as one of the top 250 agents in the country in terms of closed units. A former Realtor & Associate Broker with Keller Williams Realty, he won the Top Producer Award for Leasing Specialty. Currently, this expert owns and runs his own real estate firm.