Developer Changed Subdivision Plans
Question: When we purchased our Buckeye home we were in Phase one of the subdivision. The developer’s sales agent said that Phase two and Phase three of the subdivision would have larger homes on larger lots. The sales agent said that, therefore, our lower-priced home would have strong appreciation in value. The homes in Phase two and Phase three have recently been completed, and these homes in Phase two and Phase three are smaller homes on smaller lots. The sales agent no longer works for the developer. Do we have a claim against the developer for damages because of the sales agent’s false representations?
Answer: If you can prove that the sales agent knew at the time that the representations were false, then you should have a claim against the developer for the fraudulent representations of its sales agent. If at the time of the representations the sales agent honestly believed that Phase two and Phase three would have larger homes on larger lots, and that due to an unforeseen change in circumstances, e.g., financial difficulties of the developer, or the developer was required to decrease the home size and lot size in Phase two and Phase three, you probably would not have a claim against the developer for damages.
Note: A purchaser of a home in a subdivision should always read carefully the subdivision public report required by the Arizona Department of Real Estate because the developer is required to disclose in the subdivision public report all material facts about the subdivision.