9 Real Estate Fraud | Burford Perry, LLP

Texas real estate investment has been extremely lucrative for many investors, businesses, and individuals. In Houston, Texas, the value of real estate has increased dramatically and the construction industry has been booming. Purchasing a home or a property for your business is exciting; however, your excitement can turn to despair if you discover serious conditions left undisclosed during the sales process.

Unfortunately, not everyone involved in these transactions is honest or fair. The Houston real estate fraud attorneys of Burford Perry have significant experience litigating intentional nondisclosure and fraud lawsuits arising from the sale, purchase, lease, and transfer of real property, both commercial and residential.

Sellers often fail to disclose items such as:

  • the existence of an undisclosed easement
  • prior structural problems or repairs
  • prior flooding
  • previous insurance claims
  • fires
  • title clouds
  • competing ownership claims
  • size/acreage discrepancies
  • falsified required property condition disclosure form
  • prior repairs to a foundation

Real Estate Fraud Causes of Action

Negligent Misrepresentation – Negligence By Failure to Disclose

If someone involved in a real estate transaction furnishes false information to others involved in the transaction, that person can be held liable for resulting losses caused by justifiable reliance on the information. Misrepresentations in the real estate context can either be oral or written. The most frequent claim against sellers is for negligent misrepresentation because the buyer does not have to prove intentional misconduct. To avoid liability, the person supplying the information must exercise reasonable care and competence. A negligent representation need only be false and cause monetary loss to the buyer to be actionable.

Statutory Fraud

The Texas Legislature adopted Chapter 27 of the Texas Business & Commerce Code to define real estate fraud. The statute applies to both false representations about existing and past facts and to false promises to do an act in the future.  Violations of the statute are referred to as acts of “statutory fraud,” and the plaintiff has a lesser burden of proof than with common law fraud. Additionally, a plaintiff can recover attorney’s fees when making a successful statutory fraud claim. The most common statutory fraud claim involves a seller misrepresenting a material fact about the property being sold, and the buyer claiming that the false representation induced him to buy the property. In Texas, when someone commits statutory fraud “with actual awareness” (which can be inferred), he or she can be liable for “exemplary damages.”

Intentional Misrepresentation – “Common Law” Fraud

Common law fraud claims consist of either a knowingly false representation of material fact, or the intentional failure to disclose a material fact where a duty of disclosure exists.

DTPA Claims

The Texas Deceptive Trade Practices Act (“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. To maintain a DTPA claim, a consumer must show the representation was false and that the false information caused the consumer’s damages, proving intent to deceive is not required.

The Importance of Involving a Real Estate Lawyer Early

It is very important to involve a Houston real estate lawyer as early as possible in your transactions to avoid real estate fraud, if possible. The lawyers at Burford Perry know what crucial elements to look for in purchase and sale agreements. There are many documents that your attorney should review prior to the closure of the transaction.

By involving a qualified real estate fraud lawyer when a transaction goes wrong, you are creating a better chance at protecting your property interests. You are also increasing the chances of recovering your monetary losses and/or to force the seller to repair or improve the property to conform to his promises or representations. We are flexible and able to work seamlessly with other professionals such as architects, contractors, engineers and CPAs to ensure your interests are protected as much as possible.

Houston Real Estate Fraud Lawyers

When a party relies upon what are ultimately the false misrepresentations of another, they become victims of fraud. Real estate fraud can have tremendous consequences because of the nature and importance of real property to Texans. Cases involving real estate fraud are always serious matters for the persons involved. For this reason, the selection of an experienced real estate attorney is of paramount importance.

Persons victimized by real estate fraud should contact an experienced real estate lawyer who understands the Texas real estate fraud statute and other potential claims. As seasoned real estate attorneys in Houston, we regularly handle claims arising from the sale, purchase, or lease of real property in Texas. We have achieved substantial recoveries for our clients, representing landowners and real estate investors throughout Houston.