DM Residential Fund v. First Tennessee Bank
Facts: A mortgage holder forecloses on a property which lacks access to a utility and resells it at a foreclosure sale. The buyer discovers the undisclosed lack of utility access shortly after the purchase of the property. Over the next two years, the buyer encumbers the property with additional financing, improves it and lists it for sale.
Claim: The buyer seeks to rescind their purchase of the property, claiming the seller failed to disclose a material property defect since the property lacked access to a utility.
Counterclaim: The seller claims the buyer may not rescind their purchase since they waited too long from the discovery of the defect to exercise their right to rescind.
Holding: A California court of appeals holds the buyer is not entitled to rescind their purchase of the property since they affirmed the purchase by encumbering, improving and attempting to sell it, and waited too long after discovering the defect to attempt to rescind. [DM Residential Fund v. First Tennessee Bank (December 30, 2015) __F3d__]