[RPPTL LandTen] Management Company's Fraud & Breach of Contract

[Jariel Bortnick]

Interesting scenario has arisen that I thought I'd share with the group.

Landlord owns an apartment complex that is managed by a 3rd party property
management company. Property management company consistently tells landlord
the complex is 90%+ leased with minimal rent delinquency and supplies
Landlord with rent rolls and other financial statements showing same. The
property management company knows that the Landlord is planning to
refinance the apartment complex in the very near future.

Within a few months, Landlord begins the refinancing process and shares the
rent rolls/financial statements (provided by the management company) to
potential lenders. During this process, Landlord notices major
discrepancies and confronts the management company. It turns out that the
complex is less than 40% leased and an employee at the management company
(not an employee of the Landlord's) was forging leases, creating fake rent
rolls and delinquency reports and also creating fake bank deposits. This
employee's supervisors failed to notice any of this until confronted with
evidence by the Landlord.

Landlord was close to locking in financing terms with a potential lender
before the fraud emerged and now will have to wait at least 8-12 months to
stabilize the complex. Of course, interest rates have already gone up
significantly.

Along with standard claims (breach of contract, civil theft, fraud, etc.),
would it be possible to recover for the lost refinancing opportunity? Is
there any case law that would support such a claim?

Would greatly appreciate any insight from the group. Thanks in advance.

Jariel

-- 
Jariel Bortnick
561.703.1155
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