See a lawyer about breaking contract

MAILBAG

Deposit may be retrieved if the builder has, indeed, been `dishonest'

May 30, 1999

Dear Mr. Azrael:

I went into a contract with a builder in December to build a new house.

In March, I gave them 5 percent of the total price (over $15,000). Now I want to get out of the contract because the lot I initially selected is too small for the model I want. I picked out a lot that was a quarter of an acre, but it actually was .19 of an acre.

At this time I do not want to deal with them anymore because they have been dishonest with me. I just want to get out of the contract.

Harrison Molen Towson

Dear Mr. McNeil:

You need to see a lawyer right away. The attorney will analyze your contract with the builder and discuss exactly why you believe the builder has been "dishonest" with you.

Fraud or dishonest statements or conduct on the part of the builder may justify your rescinding the contract and requiring the builder to refund your deposit.

Whether misstatements constitute "fraud" depends on the facts and circumstances of your particular case.

For example, if the builder told you the lot size was a quarter acre when he knew it was .19 acres, and you relied on the builder's misstatement in entering into the contract, you may be able to rescind it.

However, if before the contract, the builder supplied or made available plats, plans or other documents which showed the correct lot size, your burden of proving legal "fraud" could be much more difficult.

The contract document also will have an important bearing on your right to cancel the contract or to recover damages for its breach.

Don't wait to consult an attorney, as you may be found to have waived your legal rights if you let the builder complete the house before you complain about dishonest conduct and demand to cancel the contract.

On another matter, in responding to a reader's question about ground rents several weeks ago, I stated that a ground rent could be legally "wiped out" through a court proceeding instituted by a purchaser who bought the property at a tax sale.

My advice on this point was wrong.

A statute enacted in 1994 provides that when a property -- subject to a ground rent -- is sold at a tax sale, only the leasehold interest with the improvements is sold. The ground rent is not "wiped out."

The tax sale purchaser who obtains a judgment foreclosing the leasehold owner's rights becomes liable for ground rent accruing after the date of the judgment. The ground rent owner continues to have a personal claim against the previous owner for rent unpaid or accruing prior to the judgment date. Thanks to an old friend, William S. Braverman, for reminding me about the 1994 law.

Questions

Real estate questions are answered by Jonathan A. Azrael of Azrael, Gann and Franz of Towson.

Questions -- including name, address and daytime telephone number -- may be sent in the following ways:

Mailing address: Real Estate Mailbag, Fifth Floor, 501 N. Calvert St., Baltimore, MD 21278-0001. Fax: 410-783-2517. E-mail: real.estate@baltsun.com

Call our Sundial audio-response number, 410-783-1800. Enter code 6170 after the greeting.

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