purchase of a real property with unclean title

My mother bought a house and lot from a friend for a contract price of 2M payable in 5 years, with option to pay immediately. The propery was immediately occupied by my mom.

On the third year, when my mom opted to pay the remaining balance, a problem occured. The subject property's title is not clean. The property is mortgaged to a local bank. This was not declared to us upon purchase and the deed of sale said that the property is free from encumbrances.

Can i rescind the sale and refund the payments made? Do i have a good case?

What about the 2 year stay in the house? can the seller charge us for rent for staying there 2 years?

was it mortagaged before or after you bought the property?

It was mortgage prior to the sale. But was not disclosed. Please advise..

if it was mortgaged prior to the sale, then it would have been annotated on the title. did your mother not verify the title first?

anyway, yes, you can rescind the contract. if the court believes that the seller acted in bad faith, then it may be that a full refund with charge for use will be awarded.

But his mother needs the proof of it or else court won't believe it..it's some what critical situation..