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1031 Exchange Fraud


  ( also known as the LISTING AGENT)

To hold the Sellers’ Agent liable for DTPA or Fraud, you have to show that they had actual knowledge of the actual defect or condition complained of. In Pfeiffer v. Ebby Halliday Real Estate, 747 S.W.2d 887, 890 (Tex.App---Dallas 1988, no writ), the court concluded that the listing agent's knowledge that the house's foundation had been repaired, that soil conditions in the area often created foundation damage, that the house's foundation problems were common knowledge among real estate agents in the area, and that the owner of house was a friend of the listing agent were insufficient to support jury's finding that listing agent had knowledge of house's foundation problems. While it is clear that the evidence was not enough to establish that the Listing Realtor had actual knowledge of the condition complained of, the Realtor would be responsible if the facts are shown that they had actual knowledge of the defect or condition. See also Sherman v. Elkowitz, 130 S.W.3d 316 (Tex. App. – Houston [14th Dist.] 2004, no writ.).

So how do you prove that the Listing Realtor had actual knowledge of the defect? You have to get the Seller to throw the Realtor under the bus. Absent that, it can be difficult to hold the Listing Broker liable.


But it's possible.   

You have to gather external evidence.  Something from an email, a text, a note, a fax.  Do these things exist?  Yes, but they are not going to be produced by the realtor.  One place to look is the previous showings about the house.  Realtors almost always keep track of who or what other realtors showed a house.  They want that information to follow up with, so there is almost always a record of who the other realtor was and usually they leave comments.  Most of the comments are inoccuous.  However, they occasionally bite.  One realtor stated, "If you don't tell the next buyer about the drainage problem, you are going to get sued."  So, buried in the showings list can be a revelation about the house.

Look for emails between these other realtors and the one you are focused on.  Of course, emails betwen the realtor and the seller are very informative as well as with your own realtor.  Track down all the possibilities with the inspectors, appraisers, mortgage brokers, sureyors or anyone else involved in the transaction. 

There are other possibilities including when a request for a repair is asked for and the Sellers’ Realtor misrepresents the repairs or subsequent condition.



The buyers' agent is far less likely to commit actual fraud.  For one, they probably have no more information than the buyer and unless the buyers' agent actually becomes privy or discovers facts about the house and conceals them, they are not going to be guilty of fraud.  They may commit negligence or even a violation of the Deceptive Trade Practices Act, but fraud requires actual knowledge of a condition and the direct misrepresentation of same or concealment of facts.

Evin G. Dugas - Attorney at Law 512.261.0044
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