Full Disclosure: How to force fraudulent sellers to pay punitive damages

Written by Columnist:

Samuel Doncaster

When non-disclosure cases go to trial, the buyer is often entitled to more than simply being made whole.  He’s entitled to punitive damages, if he can prove the Seller acted with malice.  One of the trial techniques I’ve used to obtain punitive damages has been to focus on the seller’s motive

I show that the seller had motive to lie and received a substantial benefit from doing so. Highlighting the seller’s motive to lie demonstrates he made his own choice, for his own reasons, and he’s responsible. Some of the common examples of motive include:

Profit on Sale—In the current market, almost every seller has substantial profit on sale. Even modest properties can generate six figure profits. That’s a huge motive to lie. In trials, I typically walk the seller through purchase price, sale price, and obtain an admission on how much profit the sale generated. One final jab: often the profit on that sale is greater than the Defendant’s annual income. Sometimes it’s several times greater. That profit level shows that the seller had his own reason to make his own decision. 

Job Change—Some sellers are moving out of state to take a new job. They generally need to move by a specific date. This time pressure to sell gives a seller unusual motive to sell, and it also gives him additional motive to lie.

New Home Purchase—Many sellers will have a new home under contract before they close the sale of their old. In fact, it’s common to purchase new property with a contingency clause that lets the buyer cancel if he doesn’t complete another sale. These arrangements are a tell-tale sign of someone who can’t buy the house he wants unless he sells the house he has. Many unscrupulous sellers become more willing to justify disclosure statement fraud when it helps them move into a new luxury home. 

Separation from Family—Sellers who need to move out of state (for example, to take a new job) often become temporarily separated from their families. The primary breadwinner may need to move to start the job. But if the old house isn’t sold, the family can’t afford a new house. Often, the primary breadwinner goes out alone and lives in a studio or one-bedroom apartment. The family only sees each other every other weekend. And they become willing to lie to end that situation. 

On the Market Too Long—Sellers often feel an elevated urgency to sell if the home has been on the market for a long period of time. They may wonder whether it will sell at all, whether they’ll have to cut the price significantly, or whether the rest of their life will be on hold while they deal with a real estate problem. 

Real estate transactions are always significant decisions for sellers. They always involve significant investments of time and energy. These are high dollar decisions that sellers make deliberately, and for particular reasons. For the unscrupulous, the same factors that motivate a sale also motivate a lie. Juries understand that. So, digging into motive helps hold the dishonest accountable. 

Samuel Doncaster is a trial lawyer who’s very active in real estate fraud cases. He routinely helps people get their money back when they’ve been cheated in real estate deals. If you have a client who needs help with a disclosure issue, you can help them set an appointment by calling 480-666-4054 for a strategy session. That strategy session comes with a risk-free, 100% money-back guarantee.