It all began in 2012 when a hotel owner needed an investor to sign on as a guarantor to a loan. The investor alleged the property owner transferred 50.5% of the property to the plaintiff in exchange for their support with the loan. The hotel owner then used the $6.5 million loan to purchase and fund renovations to the property.

The venture faced financial problems over the next few years. In an effort to get out of the agreement, the investor states the hotel owner attempted to cancel their partnership through fraudulent means. One example, the investor states the hotel owner added an amendment to their agreement stating the investor would transfer the ownership back to the hotel owner without any exchange of consideration. The hotel owner then allegedly fraudulently signed the investor’s name to the agreement.

The relationship ended when the hotel owner sold the property to a third-party for $13.4 million. The investor alleges the hotel owner did not include the partnership and attempted to “muscle the investor out” of the deal. Ultimately, the investor sued. The case went to court and the jury found in favor of the investor, awarding $3.5 million in damages.

The case provides two lessons. First, it shows the importance of carefully reading real estate documents before signing the agreement. The defendant attempted to push the partner out with amended provisions. Had the plaintiff signed any of these documents they may have lost their position as a partner.

Second, the case provides an example of the types of issues that can muddy a title. The third party that bought the land in question had to fight to ensure the title to the property was fully conveyed into their possession.