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Analyze the details of the following case and post a response to the question. In late 2013, Tony Fish visited several properties with his friend.
Analyze the details of the following case and post a response to the question.
In late 2013, Tony Fish visited several properties with his friend. At some point, they visited the property in Phoenix, Arizona which was comprised of four adjoining parcels: a primary residence at 123 E. House Street, a guest house at 124 E. House Street, one lot with an outbuilding at 125 E. House Street, and one unimproved lot (collectively, the "Property"), located in Phoenix, Arizona. Initially, Fish's friend was interested in purchasing 123 E. House. But, after visiting the Property, Fish's friend decided against the purchase and, Fish became interested in purchasing the Property. Mr. Fish called Paul A. Cream's telephone number on the "for sale" sign posted at the Property. Mr. Fish did not see either of the listings posted on the Arizona MLS website and did not have a realtor representing him.
On the same day that he spoke with Mr. Cream, he met Mr. Cream at the Property. The seller, Jerry Garcia, was not present at that meeting. Mr. Fish and Mr. Cream walked the Property together. And, Mr. Fish became seriously interested because the Property had an unfinished structure that he believed he could utilize as an office for his company, as well as guest house. Also, the Property had a studio on one parcel that had a bed in it, electricity, a toilet, wash basin, and a shower. Because Mr. Fish' business involves international trade and relationships, he thought the studio would be suitable (if upgraded) for some of his international staff and guests to stay at when they were in town.
During their meeting at the Property, Cream relayed and emphasized that he had a "special relationship" with the seller, Jerry Garcia. Cream indicated that he was involved with several deals with Garcia as a partner, realtor and investor and had been working with him for many years. He also represented to Fish that because Garcia was a well-known contractor in Maricopa County, Garcia used only the best construction materials at the Property because it was Garcia's residence. He stated that everything on the Property was in compliance with the County and local building codes and that Mr. Garcia would never risk his license. Cream indicated to Fish that the neighbors previously filed a complaint with Maricopa County because of the water flow from the Property, which caused mud and dirt to flow into the neighbor's pool. However, Cream explained that the neighbor's complaints had no merit, assuring Fish that if he left everything "as is" and did not alter the water flow on the Property, Maricopa County would have no issue.
Prior to entering into the Residential Real Estate Purchase Contract ("Purchase Contract"), the parties engaged in extensive negotiations via email, with Cream representing Garcia. At one point, Cream sent Fish a pool barrier disclosure. Fish questioned why Cream was providing so many disclosures and indicated that he was unfamiliar and intimidated by all the formalities. Cream spoke with Fish over the phone and assured him that he would be fair. He also responded to the email:
I am obligated by law to disclose that I am the agent for the seller. I have a longtime business relationship with this seller and when I asked you if you had an agent representing you, you told me you didn't need another agent because you were going to have your attorney review all the contract paperwork which I certainly encourage.
I still have a duty to deal fairly and honestly with you and make sure you receive all necessary disclosure even with me being the agent of the seller and you being the customer.
All our documents always point out to consult professionals as a standard procedure.
You certainly can consult another Realtor and I would never discourage you (would not be proper). Since the other Realtor was not the one bringing you to the property and as you mentioned the contract is already negotiated I would have no obligation to share any commission the seller pays to my company with that realtor.
Fish decided not to seek his own realtor because even though the contract was not executed, Cream refused to share the commission. Cream also assured Fish that he "had a duty to deal fairly and honestly with him and make sure he received all necessary disclosures although he was the agent of the Seller and Fish is the customer." Fish believed Cream's assertions that the Property was in compliance with County and municipal codes. Even though this was important to him, Fish didn't complete any independent investigation of the compliance issues.
In early 2014, Fish and Jerry Garcia entered into a Residential Real Estate Purchase Contract ("Purchase Contract") for Fish to purchase the Property. Fish performed an inspection that day because the transaction was set to close very quickly. A day or two later, after the inspection, Cream sent Fish a Seller Property Disclosure Statement ("SPDS"), which Garcia prepared. But, the SPDS was missing page 2. And, given that the inspection had already taken place, the inspector did not review the SPDS to investigate any issues with the Property. Cream finally provided Fish page 2 of the SPDS just one week before closing. Fish was out of town at the time.
In the SPDS, Garcia represented the Property had no building code violations (other than a minor issue with the pool fence) and that Maricopa County had issued all necessary permits, further confirming Cream's prior representations. The sale closed a few days later.
Fish met with Garcia for the first time after closing to discuss Garcia completing the construction on the Property, including finishing the office and updating the studio. During this meeting, Garcia did not disclose that he was not a licensed contractor. Garcia did not inform Fish that he would need permits for the proposed construction. Garcia did not tell Fish that the studio needed a permit and Maricopa County maintained an open violation case regarding the studio. Garcia agreed to act as the general contractor for the construction Fish requested.
Garcia bid on various projects organized subcontractors, organized workers, supervised work, collected money from Fish, and paid the subcontractors. Eventually, Garcia and Fish began to disagree about several items on the Project, including delays from Garcia in completing the work. Fish terminated Garcia as General Contractor about six months after purchasing the Property.
A few months later, Fish received a letter from Maricopa County Code Enforcement indicating generally, that Garcia built the block wall on the Property "without zoning clearance/building permit/drainage clearance (block wall/culverts)," and another notice that Garcia built the building constructed on the 124 E. House lot "without zoning clearance/building permit/drainage clearance (expired permit)." In 2015, Fish received a letter from Maricopa County Environmental Services Department stating that Garcia installed the septic system on 125 E. House without the proper permitting.
Soon, Fish retained a civil engineer to determine the scope of the issues related to the Property regarding the septic, grading, and drainage, and permitting. Recently, the civil engineer relayed to Fish that with respect to the main house 123 E. House), Garcia obtained all approvals, permits and inspections, except with respect to a six-foot masonry wall along the east property line. Regarding the lot where Garcia constructed the guest house and an attached office, the civil engineer relayed Maricopa County never approved the office building for a permit because Garcia never applied for one. Fish must submit "As-Built" building plans to obtain sign-off from the County.
In addition, Fish will likely need to obtain a variance for the structure because it was constructed too close to the property line and violates the Maricopa County zoning ordinance. Like the other lot, however, the civil engineer relayed that Garcia never obtained permits for the south and east masonry walls.
Fish believed Cream's representations regarding the Property and purchased the Property because he trusted Cream. When Fish mentioned that he may hire a realtor, Cream's comments convinced Fish to remain unrepresented because Cream refused to split the real estate commission.
Additionally, Cream and Garcia waited until the last minute to provide the complete SPDS, including page 2 (which contained the questions regarding permits, zoning, and code compliance) until after Fish completed the inspection. Had Fish been provided the SPDS before the inspection, the inspector may have known to search Maricopa County records to identify the lack of permits and open violation cases on the Property.
On the SPDS, Garcia didn't disclose that (i) the Property had a history of permitting violations; (ii) he built the studio and added electricity and water to the studio without permits; and (iii) he never obtained permits for the perimeter walls. Following the closing of the transaction, Garcia didn't tell Fish that he was not a licensed contractor.
OUTLINE THE CAUSES OF ACTION FISH HAS AGAINST BOTH GARCIA AND CREAM. MAKE SURE TO INCLUDE IN THE ELEMENTS OF EACH CAUSE OF ACTION AND APPLY THEM TO THE FACTS.
In late 2013, Tony Fish visited several properties with his friend. At some point, they visited the property in Phoenix, Arizona which was comprised of four adjoining parcels: a primary residence at 123 E. House Street, a guest house at 124 E. House Street, one lot with an outbuilding at 125 E. House Street, and one unimproved lot (collectively, the "Property"), located in Phoenix, Arizona. Initially, Fish's friend was interested in purchasing 123 E. House. But, after visiting the Property, Fish's friend decided against the purchase and, Fish became interested in purchasing the Property. Mr. Fish called Paul A. Cream's telephone number on the "for sale" sign posted at the Property. Mr. Fish did not see either of the listings posted on the Arizona MLS website and did not have a realtor representing him.
On the same day that he spoke with Mr. Cream, he met Mr. Cream at the Property. The seller, Jerry Garcia, was not present at that meeting. Mr. Fish and Mr. Cream walked the Property together. And, Mr. Fish became seriously interested because the Property had an unfinished structure that he believed he could utilize as an office for his company, as well as guest house. Also, the Property had a studio on one parcel that had a bed in it, electricity, a toilet, wash basin, and a shower. Because Mr. Fish' business involves international trade and relationships, he thought the studio would be suitable (if upgraded) for some of his international staff and guests to stay at when they were in town.
During their meeting at the Property, Cream relayed and emphasized that he had a "special relationship" with the seller, Jerry Garcia. Cream indicated that he was involved with several deals with Garcia as a partner, realtor and investor and had been working with him for many years. He also represented to Fish that because Garcia was a well-known contractor in Maricopa County, Garcia used only the best construction materials at the Property because it was Garcia's residence. He stated that everything on the Property was in compliance with the County and local building codes and that Mr. Garcia would never risk his license. Cream indicated to Fish that the neighbors previously filed a complaint with Maricopa County because of the water flow from the Property, which caused mud and dirt to flow into the neighbor's pool. However, Cream explained that the neighbor's complaints had no merit, assuring Fish that if he left everything "as is" and did not alter the water flow on the Property, Maricopa County would have no issue.
Prior to entering into the Residential Real Estate Purchase Contract ("Purchase Contract"), the parties engaged in extensive negotiations via email, with Cream representing Garcia. At one point, Cream sent Fish a pool barrier disclosure. Fish questioned why Cream was providing so many disclosures and indicated that he was unfamiliar and intimidated by all the formalities. Cream spoke with Fish over the phone and assured him that he would be fair. He also responded to the email:
I am obligated by law to disclose that I am the agent for the seller. I have a longtime business relationship with this seller and when I asked you if you had an agent representing you, you told me you didn't need another agent because you were going to have your attorney review all the contract paperwork which I certainly encourage.
I still have a duty to deal fairly and honestly with you and make sure you receive all necessary disclosure even with me being the agent of the seller and you being the customer.
All our documents always point out to consult professionals as a standard procedure.
You certainly can consult another Realtor and I would never discourage you (would not be proper). Since the other Realtor was not the one bringing you to the property and as you mentioned the contract is already negotiated I would have no obligation to share any commission the seller pays to my company with that realtor.
Fish decided not to seek his own realtor because even though the contract was not executed, Cream refused to share the commission. Cream also assured Fish that he "had a duty to deal fairly and honestly with him and make sure he received all necessary disclosures although he was the agent of the Seller and Fish is the customer." Fish believed Cream's assertions that the Property was in compliance with County and municipal codes. Even though this was important to him, Fish didn't complete any independent investigation of the compliance issues.
In early 2014, Fish and Jerry Garcia entered into a Residential Real Estate Purchase Contract ("Purchase Contract") for Fish to purchase the Property. Fish performed an inspection that day because the transaction was set to close very quickly. A day or two later, after the inspection, Cream sent Fish a Seller Property Disclosure Statement ("SPDS"), which Garcia prepared. But, the SPDS was missing page 2. And, given that the inspection had already taken place, the inspector did not review the SPDS to investigate any issues with the Property. Cream finally provided Fish page 2 of the SPDS just one week before closing. Fish was out of town at the time.
In the SPDS, Garcia represented the Property had no building code violations (other than a minor issue with the pool fence) and that Maricopa County had issued all necessary permits, further confirming Cream's prior representations. The sale closed a few days later.
Fish met with Garcia for the first time after closing to discuss Garcia completing the construction on the Property, including finishing the office and updating the studio. During this meeting, Garcia did not disclose that he was not a licensed contractor. Garcia did not inform Fish that he would need permits for the proposed construction. Garcia did not tell Fish that the studio needed a permit and Maricopa County maintained an open violation case regarding the studio. Garcia agreed to act as the general contractor for the construction Fish requested.
Garcia bid on various projects organized subcontractors, organized workers, supervised work, collected money from Fish, and paid the subcontractors. Eventually, Garcia and Fish began to disagree about several items on the Project, including delays from Garcia in completing the work. Fish terminated Garcia as General Contractor about six months after purchasing the Property.
A few months later, Fish received a letter from Maricopa County Code Enforcement indicating generally, that Garcia built the block wall on the Property "without zoning clearance/building permit/drainage clearance (block wall/culverts)," and another notice that Garcia built the building constructed on the 124 E. House lot "without zoning clearance/building permit/drainage clearance (expired permit)." In 2015, Fish received a letter from Maricopa County Environmental Services Department stating that Garcia installed the septic system on 125 E. House without the proper permitting.
Soon, Fish retained a civil engineer to determine the scope of the issues related to the Property regarding the septic, grading, and drainage, and permitting. Recently, the civil engineer relayed to Fish that with respect to the main house 123 E. House), Garcia obtained all approvals, permits and inspections, except with respect to a six-foot masonry wall along the east property line. Regarding the lot where Garcia constructed the guest house and an attached office, the civil engineer relayed Maricopa County never approved the office building for a permit because Garcia never applied for one. Fish must submit "As-Built" building plans to obtain sign-off from the County.
In addition, Fish will likely need to obtain a variance for the structure because it was constructed too close to the property line and violates the Maricopa County zoning ordinance. Like the other lot, however, the civil engineer relayed that Garcia never obtained permits for the south and east masonry walls.
Fish believed Cream's representations regarding the Property and purchased the Property because he trusted Cream. When Fish mentioned that he may hire a realtor, Cream's comments convinced Fish to remain unrepresented because Cream refused to split the real estate commission.
Additionally, Cream and Garcia waited until the last minute to provide the complete SPDS, including page 2 (which contained the questions regarding permits, zoning, and code compliance) until after Fish completed the inspection. Had Fish been provided the SPDS before the inspection, the inspector may have known to search Maricopa County records to identify the lack of permits and open violation cases on the Property.
On the SPDS, Garcia didn't disclose that (i) the Property had a history of permitting violations; (ii) he built the studio and added electricity and water to the studio without permits; and (iii) he never obtained permits for the perimeter walls. Following the closing of the transaction, Garcia didn't tell Fish that he was not a licensed contractor.
OUTLINE THE CAUSES OF ACTION FISH HAS AGAINST BOTH GARCIA AND CREAM. MAKE SURE TO INCLUDE IN THE ELEMENTS OF EACH CAUSE OF ACTION AND APPLY THEM TO THE FACTS.
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