Seller's omission has caused me harm--

[Stephanie Phillips]

I purchased a 4-unit building gut rehab in Chicago, with a 203k loan.The contract had an “as is” addendum.

My contractor applied for building permits with the City of Chicago building department.They were advised that the property has multiple injunctions against it, and was, in fact, in demolition court.This obstructed receipt of my permits, rehabbing my property, moving into it and receiving rents, as was my plan.

Neither the seller, nor his real estate agent disclosed this information to me.If they had, I would not have purchased the building.

The signed contract states under “General Provisions” Section “H” Code Violations:

“Seller warrants that no notice from any city, village, or other governmental authority of a dwelling code violation that currently exists on the Property has been issued and received by Seller or Seller’s agent (“Code Violation Notice”) If a Code Violation Notice is received after the Acceptance Date an or before Closing, Seller shall promptly notify Buyer of the Notice.

The Seller and his Agent both knew about these violations as the list of violations clearly correlates with his ownership of the building, but did not disclose this information to me.

The “as is” addendum does not exempt the seller or his agent from notifying me of this material fact.

This withholding of vital information violates the terms of our contract.Had I known this, I would not have purchased this building.The seller and his agent were both aware of this.

Are there any legal remedies for me? Can I make a claim against the agent's E&O?

[Diana Rdzanek]

Hi Stephanie,

As to the non-disclosure of the code violations, from the information you provided it does seem worth exploring whether you have a claim for breach of contract against the seller. Combing through the contract, addendum, and facts of the case will shed light onto this. Depending on the damages you are seeking, it may or may not be worth the time and expense of pursuing your claim against the seller or making a claim against E&O. My firm practices in the areas of real estate transactions and litigation and may be able to assist. I will PM you with further information.

As a general contribution to this discussion, here is some information about City of Chicago Code violations where a property is purchased while there is an active housing court case:

Code violations run with the property, not with the owner. That means that when a buyer purchases property, it is "subject to" any city code violations. The buyer steps into the shoes of the previous owner and becomes liable for repairs and damages assessed by the housing court.

As for any judgments or fines that have already been issued against the property, the city is usually amenable to working with new owners on a time table for bringing the property up to code. You or your attorney can negotiate with the city attorneys to reduce or vacate any judgments or fees that were levied against the prior owner.

Good luck with your property!