Jasmina: We have two agents who have suggested, without much evidence, a dark and sinister plot on the part of an agent whom you say told you the structure was convertible into a multifamily dwelling. I wouldn't bet a nickel on their advice!

In the first place, neither they nor anyone else knows what was said or how and when it was said. In point of fact, the agent may have said more than he or she should have but it is a long way from mistake to fraud. I'm not trying to defend the agent, just letting you know that getting up in arms at this point is not what I'd recommend. The agent could have spoken generally, as in: "Yes you can, I saw one just like this converted a couple of months ago." The structure looked good to him or her but the zoning is different or the zoning is ok for it but this property does not meet the detailed requirements, or the situation would be ok if there was not a moratorium on conversions.

All this "clarification " will not solve your problem. You either want the property, knowing now what you can do with it or you don't. If the SELLER has not held out in the contract, IN WRITING, that the property is suitable for your purposes or in an advertisement that led you into a contract, you are going to spend a lot of time trying to get blood from a stone.

My advice was and is, negotiate your way out of this mess at minimum additional cost. If need be, consult a lawyer, not other Realtors who can not practice law, interpret the contract nor act in judgment about details upon which they have no knowledge.

Hello, Jasmina!
You have a strong case against your realtor, and a very strong reason to breach contract, based on misrepresentation by a realtor. Unfortunately, you have spent money already. You should check with city hall if 2 family conversion is possible and make an offer after that.
I am not an attorney, so I cannot give you any legal advice. I just gave you my opinion.
Now a lot will depend on how your attorney will be holding the situation.

Yelena

Jasmina: It sounds as if you have gotten yourself into a financially costly deal that you now do not wish to complete. The best and now too late advice is do as much of your investigation upfront as you can, before you sign ANYTHING.

Now, we have, in the New York Times just today, a fellow preaching on the "sanctity of a contract," as if they came down from heaven. They don't. There is an old saying, "Contracts are made to be broken." In the standard NJ real estate contract, there are several escape clauses. The first step is to review where you are and what you can do within the terms of the contract to void it. Unfortunately, relying on an agent's VERBAL assurances is not one of them. What you were promised is in writing. In the standard contract there is a "fill in the blank" for the number of units that the property can contain. If you used the standard contract and the blank was filled in with the number of units you were looking for, you have a decent case, if the actuality is different. If not, well yet again, do your diligence up front, not after the fact.

If you find that you have no way to break the contract within its clauses (and an attorney might be very helpful, especially if you don't understand what you signed.) Indeed, you may have had an attorney look at the deal before you got this far. If so, it’s time for a trip to his or her office. If you didn't it is probably a good time to start a trek to some attorney's office.)

Now, contracts are civil law. There are no criminal penalties for ignoring terms of a contract. In fact, there are some contracts that contain a clause that says that if one party fails to enforce one portion of the contract, the remaining portions still hold. It would seem that at least some people see that not all contracts are observed to the letter.

What can happen if you don't fulfill the terms of a contract? As far as I know, three things:

First, Suit for damages. (You’ll pay cash for what the other party lost.)

Second suit for specific performance. (This basically means that you can force the seller to give up the deed, even if he has changed his mind. He's got to do what he promised.)

Third, the parties can just walk away from the deal with no legal action taken. This will probably, at this point, leave some deposit money in escrow. Legally, it must stay there until the two parties agree to its distribution or a court orders it to be distributed in a certain way. (Note: Court equals attorneys and attorney's fees for the litigants and one of them is you.)

While I have no idea what your contract says and if I did, I could not give you legal advice, I think that in most cases, the seller realizes that a deal that is falling apart is one that it's best to abandon. He wants to sell, not argue. Buyers are usually able to avoid closing long past the point where the seller wants to see cash flow.

I'd say that either on your own or better still, with proper legal advice, you approach the seller and tell him the deal is done, if that's all you want. You may be pleasantly surprised to find that the seller is just as anxious to get rid of you as you are to get rid of the deal.

Best of luck.

It is really based on what stage you are in your contract. Ask your attorney. You may be in breach if you have fully executed your contract, received your mortgage committment, and have done your home inspection and have approved the home in as-is condition. Although you may want to key on the agent who said the home could be converted. Fraud is a very big word with banks and agents.
Good luck. If you want please call me. 201-317-7527
Jeff Halpern