search site
Realtors
Sellers
FORECLOSURE DEFENSE
1031 Exchange Fraud

NEW PHONE & FAX: Phone: 512 221 0121 Fax: 512 233 2559

 

 

 

REAL ESTATE FRAUD

 
Real Estate Fraud in Texas can be committed by the home seller, the realtors involved in the transaction or a builder.  Texas has a specific statute on Real Estate Fraud - Chapter 27 of the Texas Business & Commerce Code. 
 
What is Real Estate Fraud?  It can be many things, but for the most part, Real Estate Fraud is committed when someone like a seller of the home or the real estate agents conceal or fail to disclose facts about the house which if the buyer had known, the buyer would not have bought the house.  Real Estate Fraud is also committed if the seller, realtor or builder makes a false representation of material facts about the house that was intended to induce you into making the contract.  In other words, you were duped into agreeing to the deal because the seller or real estate agent made a false representation of an important fact. 
 
An example would be if a home builder builds a home in a known flood way where previous flood waters have been witnessed by the homebuilder, but there was no disclosure of that fact and the builder's agents denied there was any flooding on the lots. This actually happened in Weatherford, Texas.  The sellers and the real estate agents were actually aware of roughly half of a ten acre property being located in a flood zone that was used for drainage in the neighborhood.  The house was built in the middle of the platted flood zone but the realtors discouraged the buyers from California from getting a survey.
 
Another example taken from a real life case involved an elderly home seller who was being helped by his adult daughter.  As the homeowner and his daughter came to the section of the Seller's Disclosure Notice that asked about previous flooding, they asked the realtor if they should mention the previous flood in 1983.  The daughter then pulled out the claim forms and information about the previous flood and showed them to the realtor.  The real estate agent told them it was too long ago and did not matter so they did not mention it. 
 
 
 
The actual statute reads as follows:
 
§ 27.01. FRAUD IN REAL ESTATE AND STOCK TRANSACTIONS

(a) Fraud in a transaction involving real estate or stock in a corporation or joint stock company consists of a
    (1) false representation of a past or existing material fact, when the false representation is
         (A) made to a person for the purpose of inducing that person to enter into a contract; and
         (B) relied on by that person in entering into that contract; or 
   (2) false promise to do an act, when the false promise is
         (A) material;
         (B) made with the intention of not fulfilling it;
         (C) made to a person for the purpose of inducing that person to enter into a contract; and
         (D) relied on by that person in entering into that contract.

(b) A person who makes a false representation or false promise commits the fraud described in Subsection (a) of this section and is liable to the person defrauded for actual damages.

(c) A person who makes a false representation or false promise with actual awareness of the falsity thereof commits the fraud described in Subsection (a) of this section and is liable to the person defrauded for exemplary damages. Actual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness.

(d) A person who (1) has actual awareness of the falsity of a representation or promise made by another person and  (2) fails to disclose the falsity of the representation or promise to the person defrauded, and (3) benefits from the false representation or promise commits the fraud described in Subsection (a) of this section and is liable to the person defrauded for exemplary damages. Actual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness.

(e) Any person who violates the provisions of this section shall be liable to the person defrauded for reasonable and necessary attorney's fees, expert witness fees, costs for copies of depositions, and costs of court.
 
COMMON LAW FRAUD
 
Common law fraud has the same essential elements as above.  Common law fraud applies to fraud committed in any circumstance including real estate transactions.  Fraud in a Real Estate Transaction applies only to real estate transactions (and stock and securities).  One primary difference is that in common law fraud, there is no recovery of attorneys fees whereas in Fraud in a Real Estate Transaction, the attorneys fees are recoverable.  In addition, Real Estate Fraud under Chapter 27 of the Texas Business & Commerce Code provides for recovery of expert witness fees - something no other statute allows for. 
 
If you bought a house or property, you could sue under both the common law fraud as well as Real Estate Fraud under Chapter 27.   You simply get much more from statutory fraud than common law fraud.
 
 
NEW PHONE & FAX: Phone: 512 221 0121 Fax: 512 233 2559

 

Evin G. Dugas - Attorney at Law 512.261.0044 Evin@housedefects.com
2303 RR 620 South,   Suite 135 PMB 361,   Austin, Texas 78734
© Copyright 2017 Evin G. Dugas - Attorney at Law, All Rights Reserved SITE DESIGN AND HOSTING BY SITESTREET.COM