IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT.

Under these circumstances, there is ample justification for the forfeiture of Petz's deposit.(e) Significant risk – An identified and assessed risk of material misstatement that, in the auditor's judgment, requires special audit consideration. Meanwhile, the creditors of the estate remained unpaid and the physical condition of the property continued to deteriorate. Petz could have paid the balance of the purchase price and obtained the property without sacrificing his $100,000 deposit. Throughout this entire period, from the initial public sale on December 3, 1985, at which Petz was the high bidder, until October 6, 1986, the trustee stood willing to complete the sale. The public sale finally occurred on November 11, 1986, at which time a third party purchased the property. This court dissolved the stay against the public sale on October 6, 1986, after Petz failed to post a bond for the balance of the sale price. The district court affirmed this decision and again ordered Petz to complete the sale. The bankruptcy court determined that the trustee was able to convey marketable title, and ordered Petz to complete the sale or forfeit his deposit. Petz further argued that Oakwood Properties was now the rightful owner of the mobile home park by virtue of the recent recorded assignment from the original shareholders.

Petz argued that the trustee could not convey marketable title because the original corporate shareholder had not recorded the assignment of the vendee's interest in the land contract to the corporation. Petz then recorded these conveyances and moved the bankruptcy court to set aside the public sale. Petz identified Oakwood as his real estate agent. Pursuant to an indemnification clause in the stock agreement, Petz forced the shareholder and her husband to execute an assignment of their vendee's interest in the property and a quit-claim deed to Oakwood Properties, Inc. Lambertz and informed them that they were in violation of the stock agreement which had stated that the corporation owned a vendee's interest in the land contract for the mobile home park. After placing the deposit, Petz allegedly discovered that the assignment of the vendee's interest in the land contract to the corporation had not been recorded. Petz placed $100,000 in escrow as a deposit. Petz, however, was the highest bidder with a bid of $600,000. At the public sale, the trustee received an offer of $570,000 for the property.

Petz 5 asset not found