Facts

In 2005 and 2006, Prometheus Real Estate Group sold condominiums to 24 buyers at Waterford Place, a 324-unit condominium conversion project in Folsom. Lavendar Lee bought her condo in 2006 for $155,000, and subsequently learned of water damage to her unit. Other buyers moved out within months of escrow closing and would not rent out their units for fear of potential liability over the conditions, with several ultimately losing their property to foreclosure. The buyers and Prometheus entered into arbitration.

CLAIMANTS' CONTENTIONS:
The buyers contended that Prometheus negligently failed to disclose and fraudulently concealed information regarding previous water damage problems. They further alleged Prometheus had painted over the damage, preventing reasonable visual inspection to keep buyers from knowing the condition of their units.

RESPONDENT'S CONTENTIONS:
Prometheus contended it as not liable for fraud because it did not know the conditions affecting the previous apartments were not cured by the renovation in the condos.

Result

The arbitrator ruled in favor of the buyers, ordering Prometheus to repay $1.7 million for mortgage payments made since 2006 as well as take over $3 million in payments still owed.