From the moment he arrived, there was a connection between them. That is how he sat across from me and told it. They traveled to look at building plots, ate together in restaurants, spent the evenings drinking in local bars and had heart-to-heart talks. He felt he had gained a new friend. After 4 days he returned to Israel without having found land that suited his needs and wishes. A week later he got a phone call from the broker/marketer, who told him about an amazing presale deal that he was offering only to ‘Friends & Family’. He asked for details, which arrived by email without delay.
The next morning they continued to discuss the offer in WhatsApp messages and phone calls. The local guy suggested to the buyer that they sign a loan agreement between them, so that he could transfer the money to him and save on taxes. He explained that it was merely a 10% deposit toward the apartment he would buy, and that he had nothing to fear, because the moment the apartment was sold to a third party they would split the profit - after all, the expected profit was enormous.
Another email arrived with prices of apartments in other projects in the area and with the text of a loan agreement. He was mainly taken by the profit potential, and recalled stories he had heard the previous week about clients who had more than doubled their investment by following the broker/marketer's recommendation.
Now the loan repayment date had arrived. For several weeks he tried to reach the broker/marketer with no answer. Last week he boarded a flight and showed up at his office. After a while the picture began to become clear to him. The broker/marketer had taken all the funds he had raised and signed preliminary agreements with the developer to purchase 30 apartments in the project. Six months had passed and he had not managed to sell more than 10 apartments, and now the developer wants to forfeit the deposits that were paid and move on to sell the unsold apartments to third parties.
After a brief review of the document I understood that the real problem lay in the loan agreement he had signed. The agreement, which was drafted by the broker/marketer, sets a repayment date for the loan, but it also contains a clause under which, if no buyer is found for the apartment and the developer forfeits the deposit, the loan will not be repaid.
“What do I do?” he asked in despair. “I trusted him. I thought we were friends.”
“You have the option of buying the apartment from the developer at the price set in the preliminary agreement (assuming the broker/marketer agrees, since he is the one who signed with the developer), or alternatively losing the deposit that was paid, and perhaps afterwards trying to sue the broker/marketer for the money.”
What would you have done?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית