What is Real Estate Fraud?
How many different ways can real estate fraud occur?As many ways as the imagination and greed will allow.This month, March 2010, I will submit blogs on Real Estate Fraud and include true stories as well as the things you can do to avoid being the victim of realtor fraud or fraud in a real estate transaction.
The Texas Business & Commerce Code, §27.01, defines fraud in a real estate transaction to be the following:
(a) Fraud in a transaction involving real estate ?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
(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.
So what are some examples of a ?false representation of a PAST or EXISTING fact:
·The house has only flooded once.It had flooded on multiple previous occasions.In reality, the house had flooded multiple times before and the homeowner pulled out a previous flood claim submitted and paid by an insurance carrier and when shown to the realtor, the realtor commented, ?It was too long ago??
·The house had been flooded once, but only with a ?foot? of water. In reality, the house had over 4 feet of water in it and the sellers were rescued from the home by boat!
·The house was not located in a flood zone.In reality, the home was and always had been in a flood zone and the real estate agents for the seller had convinced the buyer?s mortgage company that the home was not in a flood zone.
·The house had no problems with flooding.In reality, even thoug the house was not in a FEMA Flood Zone, the homebuilder knew that flood waters had flowed through the neighborhood on several previous occasions and withheld that information.
·The house had never been treated for termites.In reality, the builder knew that the house had been treated for termites between the initial purchase contract and closing because the builder paid for it.
Fraud can and does come in every manner possible.