Do your homework before buying a rental

Rent it Right

Q: We bought a single-family home to use as investment property. The sellers told us that the neighborhood, near a major university, is very popular with students because the rents are reasonable. We went ahead and closed the deal. Now we’ve discovered that in fact very few students live here (apparently the rents are prohibitive). This has made it very hard to find qualified tenants. Do we have any recourse against the sellers? –Stephen and Catherine

A: When your seller answered your questions about student renters and their ability to afford neighborhood rents, he was making a "representation," in legal lingo. A representation is a statement that is offered as the truth, sometimes couched in "to the best of my knowledge …" When a party to a contract makes a representation, it’s a big deal — if it’s false or misleading, about a material (important) aspect of the deal, and the other side reasonably relies on it to their detriment, the "representer" is in for some legal trouble.