Buying or selling property represents one of the biggest financial decisions most people make in their lifetime. When you’ve entered into a real estate contract only to discover that something isn’t quite right—that the other party didn’t tell the whole truth—it can feel like the ground is shifting beneath your feet. If you’re trying to back out of a deal because you believe there was misrepresentation, you need to understand your options.
At Cavell Law Firm, we’ve seen countless clients facing this challenging situation. The good news? In many cases, you may have legal grounds to walk away.
What Counts as Misrepresentation in Real Estate?
Misrepresentation is a statement that’s factually incorrect, made by one party to a contract that convinces another party to enter into the agreement. In real estate transactions, misrepresentation can take several forms:
Types of Misrepresentation That Can Make a Contract Voidable
- Fraudulent Misrepresentation: When a seller or buyer knowingly provides false information with the intent to mislead. For example, a seller claiming a roof is new when they know it’s 20 years old and leaking.
- Negligent Misrepresentation: When one party makes incorrect statements without reasonable grounds for believing them to be true. This might happen when a real estate agent states a property is zoned for commercial use without actually checking.
- Innocent Misrepresentation: Even when there’s no intent to defraud, if a material fact is incorrectly stated and you rely on that information, the contract may still be voidable.
The law recognizes that transactions should be based on accurate information. When that foundation is crumbling because of misrepresentation, the law provides remedies.
What Makes a Misrepresentation “Material”?
Not every incorrect statement allows you to cancel the contract. For misrepresentation to be actionable, it must be “material” – meaning it significantly impacted your decision to enter into the contract.
Material facts in real estate typically include:
- Property boundaries
- Structural integrity issues
- Water damage or mold problems
- Known defects in major systems (electrical, plumbing, HVAC)
- Zoning restrictions
- Property encumbrances or easements
- History of hazardous materials
A misrepresented fact is likely material if, had you known the truth, you wouldn’t have signed the contract or would have negotiated different terms.
Your Legal Options After Discovering Misrepresentation
When you discover you’ve been misled in a real estate transaction, the remedies available depend largely on the nature of the misrepresentation and how far along you are in the process.
Rescission: Canceling the Contract
Rescission is the legal term for unwinding or canceling a contract—essentially returning both parties to their positions before the agreement. If successful, you can:
- Get your earnest money back
- Walk away from the transaction without further obligation
- Potentially recover certain expenses incurred due to entering the contract
Rescinding a contract is generally available for all types of misrepresentation—fraudulent, negligent, or innocent—as long as the misrepresentation was material.
Monetary Damages
In cases of fraudulent or negligent misrepresentation, you may have grounds for legal action seeking compensation beyond just walking away. Damages might include:
- Difference between the property’s represented value and actual value
- Costs of repairs for undisclosed defects
- Expenses related to temporary housing if needed
- Legal fees and other transaction costs
For particularly egregious cases of fraudulent misrepresentation, punitive damages may be awarded to punish the party committing fraud and deter similar behavior.
Common Scenarios in Real Estate Misrepresentation Cases
In Ohio real estate transactions, several common scenarios can constitute misrepresentation:
- Sellers concealing known structural defects by cosmetic repairs (like painting over water damage)
- Misstatements about property boundaries or easements that affect property use
- Failure to disclose environmental issues like radon or previous flooding
- Incorrect information about zoning that impacts how the property can be used
- Non-disclosure of material defects in critical systems like electrical, plumbing or HVAC
Ohio law specifically requires sellers to complete a residential property disclosure form for most residential properties. Under Ohio Revised Code Section 5302.30, sellers must disclose known material defects. Failure to accurately complete this form can provide grounds for legal remedies when material facts are misrepresented.
Important Clauses That Can Affect Your Rights
Before you assume you can easily walk away from a contract, it’s important to carefully review the agreement itself. Many real estate contracts include:
“As-Is” Clauses
These clauses state that the buyer accepts the property in its current condition. However, Ohio law provides that even “as-is” provisions don’t protect sellers from liability for fraudulent misrepresentation or failing to disclose known defects.
Integration Clauses
These declare that the written contract contains the entire agreement between parties. Such clauses can sometimes make it more difficult (though not impossible) to claim reliance on statements made outside the contract itself.
Inspection Contingencies
These give buyers the right to have the property professionally inspected and potentially negotiate repairs or back out based on findings. If you waived inspection contingencies, your options may be more limited—but misrepresentation claims may still be viable.
Time Limits for Taking Action
If you believe you’ve been misled in a real estate transaction, don’t delay. In Ohio, the statute of limitations for breach of contract is generally eight years, while fraud claims typically must be brought within four years of discovery.
However, practical considerations often dictate acting much sooner:
- Your ability to rescind becomes more complicated the longer you’ve owned the property
- Evidence may become harder to gather over time
- You might be continuing to incur losses while you delay
Steps to Take If You Suspect Misrepresentation
- Document everything: Take photos, save emails, and keep a detailed timeline of events.
- Review your contract: Look for contingencies or clauses that might affect your rights.
- Consider an expert opinion: If the misrepresentation involves a technical issue (like structural problems), get a professional assessment in writing.
- Avoid hasty communication: Don’t make accusations or admissions to the other party before consulting with an attorney.
- Speak with an experienced real estate attorney: Professional legal guidance is essential before taking formal action.
Conducting Due Diligence: Prevention Is Better Than Cure
While legal remedies exist for misrepresentation, litigation can be expensive and time-consuming. The best protection is thorough due diligence before executing a contract:
- Work with a reputable real estate agent who understands local market conditions
- Get comprehensive inspections from qualified professionals
- Research property records and history
- Ask detailed questions about any concerns
- Get important seller statements in writing
- Review all disclosure documents carefully
Remember, the goal is making informed decisions from the start, rather than trying to undo a problematic transaction later.
When to Contact a Real Estate Attorney
If you believe you’ve been misled in a real estate transaction, it’s advisable to consult with a qualified attorney as soon as possible. At Cavell Law Firm, we’ve guided numerous clients through these challenging situations, helping them understand their rights and options when faced with potential misrepresentation.
Our approach focuses on practical solutions—whether that means negotiating with the other party, pursuing rescission, or when necessary, preparing for litigation. We understand that real estate transactions represent significant investments, both financially and emotionally, and we’re committed to protecting our clients’ interests.
If you’re dealing with misrepresentation in a real estate contract and need guidance on your next steps, we’re here to help. Contact us today to discuss your situation and explore the legal pathways available to resolve your real estate dispute.
