Construction Defect; Fraudulent Failure to Disclose Conditions of Real Property; Title Insurance Company Claim
The recent buyer of a Santa Ana Heights hillside multi-level view home retained Robert McMahon for representation related to his purchase of the property. The home was built by construction contractors as a "spec house." Entry to the home was gained from the top level and retaining walls had been constructed with soil compacted against the walls of the lower structure. The home leaked. Mr. McMahon sourced a geologist and contractors to rehabilitate the new home, cure the leaking and improve the drainage. The sellers/contractors were sued and a significant judgment obtained against the sellers/contractors.
This was not the end of the buyer's legal headaches. A significant time after the new buyer closed escrow, the holder of a mortgage recorded after the issuance of a preliminary title report, but before close of escrow, sought payment of a large note secured by a trust deed just prior to new buyer's close of escrow. The holder of the mortgage was a hard money lender to the sellers/contractors; it was demanded that the mortgage be paid to avoid foreclosure. Robert McMahon asserted a title claim under his client's title insurance policy. The mortgage was ultimately paid after initial resistance by the title insurance company.