Tuesday, November 08, 2016

Virginia Supreme Court Nixes Real Estate Investor's Attempt To Recover $23,500 From Unwitting Property Owner For Costs Expended By Renovating Mistakenly-Identified Property He Thought He Purchased At Tax Foreclosure Sale

From a recent Justia US Law Opinion Summary:
  • Ravi Prasad purchased a lot at a tax sale. Shorty thereafter, [he] mistakenly began renovating a house on a nearby lot owned by William and Elnora Washington, spending more than $23,500 on the renovations.

    When the Washingtons refused to pay [Prasad] for the work he procured for their house, Prasad filed a complaint asking the circuit court to impose a constructive trust on the Washingtons’ lot. Specifically, Prasad alleged that the Washingtons had been unjustly enriched as a result of fraud perpetrated by them through misrepresenting the address of the house.

    The circuit court entered a decision in favor of Prasad and imposed a constructive trust on the Washingtons’ lot in favor of Prasad with a money judgment in the amount he expended on the house.

    The Supreme Court reversed and entered final judgment for the Washingtons, holding that under long-standing common law principles regarding notice imputed to purchasers of real property, because it was Prasad’s failure to exercise due diligence in his purchase of his lot that resulted in his misidentification of the Washingtons’ parcel as the property he was purchasing, Prasad was not entitled to recover compensation for the permanent improvements he made on the premises.
Source: Justia Opinion Summary - Washington v. Prasad.

For the ruling, see Washington v. Prasad, No. 151783 (Va. October 27, 2016).

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