REAL ESTATE FRAUD & DISCLOSURE DEFICIENCIES

ATTORNEY FOR REAL ESTATE FRAUD

As a Real Estate Attorney in San Antonio, Texas I have significant experience in litigating intentional nondisclosure and fraud lawsuits arising from the sale, purchase, lease and transfer of real property.

Fraud in a real estate transaction can occur when:

  • there is a material misrepresentation (a false statement of fact) related to real property. Sometimes, it is not even necessary to show that the person knew his statement was false at the time it was made;
  • concealment or nondisclosure (misrepresentation by non-disclosure) of material facts related to real property; and/or
  • a breach of fiduciary duty by a real estate agent, real estate broker, title company, escrow officer or attorney involved in a real estate transaction.

For almost 20 years, I have filed and defended claims and lawsuits involving fraud or concealment in transactions related to real estate. These cases frequently arise from a Seller’s non-disclosure of facts (the existence of an undisclosed easement, prior problems or repairs, prior flooding, previous insurance claims, fires, title clouds, competing ownership claims, size/acreage discrepancies, etc.). As an experienced real estate lawyer in San Antonio, I can help vindicate a victim’s rights or limit a Defendant’s exposure, and bring resolution to a dispute arising from real estate fraud.

Negligent Misrepresentation – Negligence By Failure to Disclose

If, in the course of his business, profession or employment, or in any transaction in which he has a financial interest, a person (including a Seller and their Real Estate Agent) supplies false information for the guidance of others, that person can be subject to liability for loss caused by justifiable reliance upon the information.

Misrepresentations can be based on oral or written statements or information. In the real estate context, negligent misrepresentations are most frequently committed by Sellers, and may be found in Seller’s Disclosure Notices, MLS or other property listings, brochures, and internet postings advertising a property. Common examples of negligent misrepresentation are misstatements of the size or age of a property, prior repairs to a foundation, and the existence of easements or access to a property.

To avoid making misrepresentations through negligence, a supplier of the information (including a real estate agent) must exercise reasonable care and competence to ascertain the truth of the facts on which the information is based.  To prove an action for negligent misrepresentation, a Buyer must establish that the Seller and/or his Agent did not use reasonable care in obtaining or communicating information. A party may maintain a negligent misrepresentation claim or lawsuit by showing that she is within a class of persons whom the person making the representation knew (or should have known) would receive the information.

Significantly, intent is not a required showing in a negligent misrepresentation case. That is, honesty or good faith is not a defense to a claim of negligent misrepresentation, and a Seller’s negligent representation need only be false by accident to be actionable.

As a seasoned real estate attorney in San Antonio, I provide superior representation in negligent misrepresentation claims arising from the sale, purchase or lease of real property in Texas. Over the years, I have achieved substantial recoveries for my clients who have been victimized by untrue or incomplete disclosures of a property’s condition.

Statutory Fraud

Fraud in real estate transactions is so common in Texas that the Texas Legislature adopted a statute dedicated to defining this type of fraud, and providing specific remedies to victims. That statute (Fraud in a Real Estate or Stock Transaction) is hidden away in Chapter 27 of the Texas Business & Commerce Code, and is frequently overlooked by less-seasoned lawyers or attorneys whose practices do not emphasize real estate disputes.

Section 27.01 was originally adopted in 1967, but amended to provide more “teeth” in the 1980’s. Violations of the statute are referred to as acts of “statutory fraud,” in contrast to “traditional” false representations, which are characterized as “common law fraud.”  A victim of real estate  fraud may pursue claims under both theories simultaneously.

The statutory fraud statute is implicated where a falsehood is material, made for the purpose of inducing entry into a contract involving real estate (such as a lease or purchase/sale agreement), and actually results in entry into such a contract. In cases of statutory fraud, the person who committed fraud is liable to the person defrauded for actual damages. However, when a person commits fraud “with actual awareness” (which can be inferred), he can be liable for “exemplary damages.”

The statute also has a “derivative liability element,” whereunder actionable fraud can be committed by knowing complicity with another person’s fraudulent conduct. A victim’s recovery under a claim for statutory fraud can include:

  • reasonable and necessary attorney’s fees
  • expert witness fees
  • costs for copies of depositions, and
  • costs of court.

Persons victimized by real estate fraud that have entered into a contract for the purchase, sale or exchange of real estate, should contact an experienced real estate lawyer who understands the Texas real estate fraud statute.

Intentional Misrepresentation – “Common Law” Fraud

As a real estate attorney in San Antonio, my law practice frequently involves handling suits involving fraud by a party to a real estate transaction. These cases range from simple falsehoods to elaborate cover-ups – all of which are designed to mislead the other party to the business deal. When a party relies upon the false misrepresentations of the other, they become victims of fraud. Real estate fraud can have tremendous consequences because of the very nature and importance of real property.

Common law fraud consists of either a knowingly false representation of material fact, or the intentional failure to disclose a material fact where a duty of disclosure exists. In the real estate context, common law fraud generally arises when either:

  • a Seller or his real estate agent knowingly makes a false statement about a property with an intent that the Buyer relies on such false statement; or
  • a Seller or his real estate agent fails to disclose a material fact about a property, including known defects and title issues, with an intent to effect the Buyer’s decision concerning whether to purchase the property, and at what price. This second type of fraud is referred to a Fraud by Non-Disclosure or “fraudulent concealment.” Notably, a failure to disclose information does not constitute fraud unless there is a duty to disclose the information. Thus, silence may be equivalent to a false representation only when the circumstances of a transaction impose a duty on a party to speak and she deliberately remains silent.

Cases involving real estate fraud are among the most serious presented to a real estate lawyer. For this reason, selection of an experienced real estate attorney is of paramount importance.

DTPA Claims

As a San Antonio real estate lawyer, I am well-versed in the nuances, and strengths of the Texas Deceptive Trade Practices Act (“DTPA”) as a weapon to be wielded in a real estate dispute. The DTPA is particularly powerful because any false misrepresentation can support a claim, and misrepresentations that may not be fraudulent may still be actionable under the DTPA.

The Texas Supreme Court has held that “[a] DTPA claim does not require that the consumer prove the [defendant] acted knowingly or intentionally. The DTPA requires that the consumer show that the misrepresentation was false and that the false misrepresentation was the producing cause of the consumer’s damages. A consumer is not required to prove intent to make a misrepresentation to recover under the DTPA.” Miller v. Keyser, 90 S.W.3d 712, 716 (Tex. 2002).  Thus, even statements that the speaker did not know were false may support a DTPA lawsuit.

In the real estate context, DTPA claims are frequently asserted in connection with allegations of failure to disclose (concealment/misrepresentation by non-disclosure). These allegations are typically made by a Buyer against a Seller and/or such Seller’s real estate agent.  Statements made (or omitted) in a property’s marketing materials, on the Multiple Listing Service or in Seller’s Disclosures usually form the evidentiary basis for DTPA claims related to real estate.

DTPA claims are frequently nebulous; and, thus, challenging to defend.  For the Plaintiff they can be difficult to prosecute because of strict procedural requirements.  A real estate lawyer who is experienced in handling DTPA claims can be a party’s best asset in any real estate dispute.