Real Estate E&O - Kelly vs Freddy

The following is a made up example, with names borrowed from my cats.

Kelly Resort Developments, a residential lot developer in a new, high-end resort, has filed a claim against its real estate agency, Freddy Property Brokers, alleging misrepresentation and non-disclosure of crucial sales and construction information.

According to the developer, Freddy Property Brokers falsely represented the number of lots already sold within the resort. The agency reportedly told the developer that 75% of the lots had been sold when, in fact, only 45% had been sold at that time. This misrepresentation led to a significant shortfall in anticipated revenue for Kelly Resort Developments, resulting in financial strain.

The developer alleges that Freddy Property Brokers failed to disclose information about delays in the construction of common areas within the resort. These areas include a gym, pond, and a bar, which were key selling points for potential lot buyers and significant contributors to the overall value of the property.

Due to the alleged misconduct of Freddy Property Brokers, Kelly Resort Developments has not been able to complete the construction of these amenities. As a result, the appeal and value of the lots have significantly decreased, making it even more challenging to sell the remaining properties.

Claim Amount:

Kelly Resort Developments is seeking compensation for the financial losses they've incurred due to the slower-than-expected lot sales and the cost to complete the common area amenities. Additionally, they are seeking compensation for the loss in property value of the unsold lots.

This is an example of why an Real Estate Errors & Omissions is vital for Real Estate Brokerages.