It is inevitable. Real Estate taxes go up and stay up. So what happens if prospective buyers think (as it turns out incorrectly) that the real estate taxes on their dream house were reduced several thousand dollars from a previous level, when if fact the taxes remained unchanged?
What if the sellers were under the same mistaken notion as were the buyers?
One would think that since both buyer and seller were mistaken as to the same issue, that the buyers could cancel the contract when they learned that the real estate taxes had not been reduced.
One would be wrong, as the unhappy buyers learned in a recent case arising out of a $600,000 home purchase, which presents yet another example of why any person thinking about buying real estate needs an experienced lawyer and experienced realtor.
We have handled real estate litigation for many years and can safely say that the contract is the key to the litigation.
In Soto v Vernick, the contract of sale did not have any clause referring to the amount of real estate taxes and the Court found that there was nothing in the contract that would make a mistake about these taxes go to the “foundation of the contract”. The appellate court had little sympathy for the buyers. Why?
Well, as any good realtor will tell you, there are easy ways to determine the precise amount of real estate taxes for a property, which could have been discovered before the contract was signed. If this was really going to be a deal breaker, it was on the buyers, their lawyer and the realtor to make sure to find out on their own and not rely on the sellers. Somebody on the buyers’ side dropped the ball here and the Court was not about to bail them from this error.
Unfortunately for the buyers, they lost their down payment as a result of breaching the contract. On a $600,000 purchase price, this loss was substantial even before factoring in the sums spent for attorney’s fees at the trial and appellate court levels. This was an expensive lesson learned about why it is so critical to have the right team of attorney and realtor in place when buying or selling a home.