Do I have a right to have my depositrefunded if the seller never disclosed the fact that the property is commercial?

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Do I have a right to have my depositrefunded if the seller never disclosed the fact that the property is commercial?

I was in the process of purchasing a REO single family residence. I placed a $1500 deposit on the property. After 30 days, I signed a extension form for an additional 15 days forfeiting my deposit. Then my lender said it would not finance the property because the single family house in a neighborhood of single family houses is in fact in a commercial zone and if the property were to burn the county would not allow me to rebuild.

Asked on December 22, 2011 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Yes, you should have the right a to the return of your deposit under these circumstances--a failure to disclose that the property is not zoned for a residence (the purpose it is being purchased for) would be a material misrepresentation; or if the seller him/herself did not know this (and so did not misrepresent, or lie), then the contract of sale was still based on a mutual mistake--the erroneous belief that it was a residential property. In either  event--misrepresentation or mutual mistake--you should be entitled to rescind the transaction and get your deposit back.


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