Suing a Real Estate Agent for Misrepresentation in Texas

Where You Need a Lawyer:

(This may not be the same place you live)

At No Cost! 
Legally Reviewed
Fact-Checked

 What Is a Real Estate Agent Responsible For?

In Texas, a real estate agent operates under the supervision of licensed brokers and must follow regulations set by the Texas Real Estate Commission (“TREC”). Their primary responsibilities include guiding buyers and sellers through property transactions, determining their clients’ needs and financial capabilities, and performing market analyses to estimate property values.

Agents spend most of their working time marketing properties, conducting showings, negotiating deals, and preparing real estate documents, such as assisting in real estate contracts. In doing so, they must maintain accurate records, protect client confidentiality, and disclose all material facts about properties of which they are an agent.

It is important to note that they also have legal obligations as a licensed agent. Their legal obligations include avoiding discrimination, maintaining proper licensing, completing continuing education requirements, and adhering to state board ethical standards and fiduciary responsibilities.

What Are Real Estate Agents Not Authorized To Do in Texas?

Under Texas law, specifically Chapter 1101 of the Texas Occupations Code, which is known as The Real Estate License Act, real estate agents face several important restrictions on what they are authorized to do.

First, real estate agents cannot practice law by drafting legal documents such as deeds, contracts, or lease agreements beyond filling in standard forms approved by the Texas Real Estate Commission. In other words, they can utilize standard forms and assist an attorney by providing them with the necessary information for the contract, but they cannot draft contracts themselves.

Agents are also prohibited from giving any legal advice, misrepresenting property conditions, operating without having a proper license, or working independently without broker supervision. They can also not guarantee investment returns, discriminate against protected classes (age, gender, disability, etc), or receive compensation from multiple parties without full disclosure.

Furthermore, agents can also not perform any professional services outside their scope of expertise, such as conducting property inspections, providing property valuations as appraisals, or making repairs to properties they’re selling.

The law also prohibits agents from sharing commissions with unlicensed individuals or engaging in deceptive practices, such as “net listings.” Net listings are an arrangement where a seller sets a minimum price they’ll accept for their property, and the real estate agent keeps any amount above that price as their commission.

For instance, if a seller agrees to receive $200,000 net from their home sale, and the agent sells it for $250,000, the agent would keep the $50,000 difference as commission. In doing so, they are violating their fiduciary duty and can be held liable by the seller.

What Are Misrepresentations and Failures To Disclose?

Misrepresentations and failures to disclose in real estate transactions are governed by both the Texas Real Estate License Act and common law principles. Those laws state that real estate agents must disclose any known material defects, adverse conditions, or circumstances that could reasonably affect a buyer’s decision to purchase.

A misrepresentation occurs when an agent makes false statements about property conditions. A fraudulent misrepresentation in real estate in Texas occurs when someone makes a false representation of a past or existing material fact to induce another person into entering a contract, and that person relies on the false information when entering the agreement.

It can also occur when someone makes a false promise about future actions with no intention of fulfilling their promise, provided the promise is material and was relied upon by the other party in entering the contract. Texas law holds the person making fraudulent misrepresentations liable for actual damages, and if they had “actual awareness” of the falsity, they may also be responsible for exemplary damages, attorney’s fees, expert witness fees, and court costs.

On the other hand, a failure to disclose occurs when an agent knowingly conceals material facts about the property. Material facts can include structural issues, water damage, foundation problems, flooding history, environmental hazards, and legal issues that affect the property.

Agents can face serious legal consequences, including suspension or revocation of their professional license, for engaging in dishonest conduct or failing to disclose known significant defects. As can be seen, Texas law requires agents to act with integrity and place their clients’ interests above their own, being sure to uphold their fiduciary duty of obedience, loyalty, disclosure, confidentiality, accountability, and exercising reasonable care.

What Are Specific Examples of Real Estate Agent Misrepresentation in Texas?

Examples of common real estate agent misrepresentations in Texas include falsely claiming a home is in a flood free zone, misstating the condition of a roof, plumbing, or foundation, concealing known defects, and exaggerating property value based on false appraisals.

Other examples where the agent may become more liable for their actions include misrepresenting property boundaries, incorrectly stating that certain improvements like fences or sheds are legally placed, and failing to disclose known structural defects or code violations.

All of the above misrepresentations can lead to serious legal consequences, such as suing a realtor for misrepresentation, revoking their license, and even potential damages under the Texas Deceptive Trade Practices Act.

What Are the Most Common Lawsuits Against Real Estate Agents?

As mentioned briefly above, the most common lawsuits against real estate agents include failure to disclose material defects or property conditions, misrepresentation of property features or values, and breach of fiduciary duty.

Other frequent claims brought against agents involve negligence in handling transactions, improper handling of earnest money, discrimination in real estate transactions, and fraudulent misrepresentation.

Additionally, agents may also face liability for unauthorized practice of law when they go beyond filling out standard forms, engage in dishonest conduct, or fail to properly segregate and handle their client’s trust money. Generally speaking, lawsuits often stem from agents either failing to perform their due diligence or exceeding their authorized scope of practice.

How To Sue a Real Estate Agent for Misrepresentation in Texas

In order to sue a real estate agent for misrepresentation, you must first gather evidence of all of the false statements or undisclosed facts that you believe warrant a lawsuit. You should also document the damages you suffered.

Next, you will need to draft your claim and then file your claim within the statute of limitations, which is typically four years for fraud or two years for negligence. Your lawsuit must then prove that the agent knew about, or should have known about, the misrepresentation, that you relied on their statements when making your decision, and that you suffered quantifiable financial harm as a result.

If you are planning to sue a real estate agent, it is recommended to set up a legal consultation with a Texas lawyer experienced in real estate litigation. They can help you establish professional negligence or intentional misrepresentation and assist you in pursuing claims under both Texas real estate law, the Deceptive Trade Practices Act, or the Fair Housing Act.

What Remedies Are Available if You Sue a Real Estate Agent?

Remedies for successful claims against real estate agents can include your actual damages (i.e., the monetary losses you suffered), exemplary damages in cases of intentional fraud or gross negligence, and recovery of your attorney’s fees and court costs.

The court may also order rescission of the contract (i.e., canceling the transaction) or specific performance (i.e., forcing completion of contract terms). For licensed agents that violate professional standards, the Texas Real Estate Commission can also impose additional penalties, including license suspension, revocation, and monetary fines. Finally, in cases involving deceptive trade practices, plaintiffs may be entitled to triple damages if the conduct was knowing or intentional.

Do I Need an Attorney To Sue a Real Estate Agent in Texas?

If you are having issues related to the actions or inactions of a real estate agent in Texas, and you have suffered measurable harm, then it is recommended to consult with an experienced Texas real estate lawyer near you.

LegalMatch can assist you in locating Texas lawyers near you who practice real estate law and assist you in setting up an initial consultation. An experienced real estate litigation attorney will be able to properly evaluate your case, ensure compliance with legal procedures, gather necessary evidence, and navigate both civil court requirements and Texas Real Estate Commission regulations.

Although you can technically represent yourself, the technical nature of real estate law, strict procedural requirements, and the likelihood that the agent will have legal representation themselves make it highly advisable to have professional legal counsel to protect your interests and maximize your chances of success. They can assist you in negotiating a fair settlement for the harm you suffered or file a civil lawsuit on your behalf against the agent. Finally, they can also represent you in court, as needed.

Save Time and Money - Speak With a Lawyer Right Away

  • Buy one 30-minute consultation call or subscribe for unlimited calls
  • Subscription includes access to unlimited consultation calls at a reduced price
  • Receive quick expert feedback or review your DIY legal documents
  • Have peace of mind without a long wait or industry standard retainer
  • Get the right guidance - Schedule a call with a lawyer today!

Law Library Disclaimer

star-badge.png

16 people have successfully posted their cases

Find a Lawyer