Yes, you can sue your real estate agent, broker or realtor to recover money as a result of negligence or misrepresentations
Hector Chavana Jr. is a real estate broker and licensed attorney, and he is licensed to practice all over Texas. The vast majority of real estate agents and Texas Realtors are honest and competent. However, when a real estate agent engages in misrepresentation (even unintentional misrepresentation), or professional negligence, his or her conduct can cost consumers tens or hundreds of thousands of dollars. If this happens to you, you may need the help of an attorney with the experience that can help you. Sometimes your agent has caused the problem. Sometimes the other agent has caused the problem. Sometimes they both cause the problem. You can call Monday to Friday 9-5 to set up an in-person or phone consultation 713-979-2941. Outside of Houston? See the last paragraph of this post.
Some of the suits that Attorney Chavana has handled against real estate agents involve the following:
- A suit against an agent and broker when the agent created a fictitious invoice to a company and directed the title company to use her client’s funds to pay it;
- A suit against the seller’s agent and the buyer’s agent, when they failed to disclose that the property the buyer was buying would have a lien on the property, and when that lien turned out to be fully due and payable when the buyer paid his down payment; the home was foreclosed on by the prior lien holder a few weeks later;
- A suit against an agent that represented some buyers at an auction and incorrectly told the buyer that title would be free and clear of liens; the buyer later found that the property had a pre-existing lien.
Claims against real estate agents and brokers usually come in two broad categories: negligence and misrepresentation.
Professional Negligence By Real Estate Agents (Malpractice)
Negligence by a real estate agent or broker in Texas consists of a legal duty that is breached that causes damages. Duties are determined by case law and statute. If a real estate agent is representing you, she has a fiduciary duty to you, so we can look to fiduciary law for some basic duties. A real estate agent has a duty to be reasonably prudent, to be competent, to represent your interests above his own, to be honest, to communicate relevant information to you and to separate her property from your property.
An agent also has duties created by statute. According to Tex. Occ. Code 1101.652 an agent may be disciplined when she:
(1) acts negligently or incompetently;
(2) engages in conduct that is dishonest or in bad faith or that demonstrates untrustworthiness;
(3) makes a material misrepresentation to a potential buyer concerning a significant defect, including a latent structural defect, known to the license holder that would be a significant factor to a reasonable and prudent buyer in making a decision to purchase real property;
(4) fails to disclose to a potential buyer a defect described by Subdivision (3) that is known to the license holder;
(5) makes a false promise that is likely to influence a person to enter into an agreement when the license holder is unable or does not intend to keep the promise;
(6) pursues a continued and flagrant course of misrepresentation or makes false promises through an agent or sales agent, through advertising, or otherwise;
(7) fails to make clear to all parties to a real estate transaction the party for whom the license holder is acting;
(8) receives compensation from more than one party to a real estate transaction without the full knowledge and consent of all parties to the transaction;
(9) fails within a reasonable time to properly account for or remit money that is received by the license holder and that belongs to another person;
(10) commingles money that belongs to another person with the license holder’s own money;
(11) pays a commission or a fee to or divides a commission or a fee with a person other than a license holder or a real estate broker or sales agent licensed in another state for compensation for services as a real estate agent…
The code goes on to list about twenty more standards of practices or duties. When a real estate agent breaches a duty, and that duty causes economic harm, that agent may have committed professional negligence. Even if the agent is not representing you, the agent must act truthfully, and has a duty of good faith and fair dealing.
Part 23 of Tex. Admin. Code also imputes several duties on agents, including rules on competency, being educated on the type of transaction being brokered, and the use of certain forms.
Misrepresentation
Consumers rely on the representations made by agents. This means that buyers rely on the things that agents say and communicate in writing. When something an agent says turns out not to be true, and their client relies on that information, the client may have a claim under the Texas Deceptive Trade Practices Act or under the Texas Statutory Fraud Act or both. Those laws do not require that a plaintiff prove that the agent intentionally misrepresented the facts. Additionally, those acts allow for the recovery of attorney fees. All of these characteristics of the law make for a very powerful way for a buyer to bring her case.
Sometimes an agent fails to provide information that he knows, and if a buyer can prove that the agent intentionally withheld that information with the intent that the buyer engage in the transaction, then a buyer may also have a claim under those two laws. The law even says that circumstantial evidence may suffice. Even if the agent is not representing you, the agent must act truthfully, and has a duty of good faith and fair dealing.
Was The Agent Really an Agent?
Under certain circumstances, agents will argue that they should not be sued, because they were not practicing brokerage. However Tex. Occ. Code 1101.004(a) says that a person is engaged in real estate brokerage when they engage in certain conduct even as PART of a transaction. A partial list of that conduct includes when an agent: offers to sell, exchange, purchase, or lease real estate; negotiates or attempts to negotiate the listing, sale, exchange, purchase, or lease of real estate; auctions or offers, attempts, or agrees to auction real estate; procures or assists in procuring a prospect to effect the sale, exchange, or lease of real estate.
Hiring A Lawyer
Agents are usually covered by insurance, and if they are not, Texas maintains a fund that will cover buyer damages up to a certain amount. In cases against real estate agents, Hector Chavana Jr. usually requires a reasonable amount of money down, and then seeks to collect the rest of his fees at the time you recover your money. The amount of down payment varies from case to case, and he will sometimes accept payment plans for the down payment. This is called a partial contingency. He is licensed to practice all over Texas. Call Monday to Friday 9-5 to set an appointment by phone or in person 713-979-2941.
Attorney Fees
In addition to your damages, you can generally recover attorney fees. As a result, Attorney Chavana is sometimes willing to take some cases against real estate agents on partial contingency-meaning that you pay a capped amount until the funds are recovered from the other side. It is important to note that if you lose your case, a few cases say that the real estate agent can recover his attorney fees from you, under the earnest money contract, because many contracts say that the agent can recover if he or she is a prevailing party in a case related to the contract. It is very much dependent on the language of the contract, as you will see in the Arlington Home Case. Because of the complexity of such cases and because of the difference in earnest money contracts, you need an experienced attorney to assess the possibility of attorney fees being awarded against you:
Appellees argue that the non-contractual claims are “related to” the real-estate contract here, as paragraph 17 requires.We agree with appellees. The phrase “legal proceeding related to this contract” in paragraph 17 provides a recognized basis for an award of attorney’s fees although appellant’s alleged claims do not include breach of contract. Our Goldman opinion addressed a case involving the sale of a house and a TREC “One to Four Family Residential Contract.” Goldman, 414 S.W.3d at 352. That contract contained an attorney’s fee provision identical to that in the contract here. Id. at 366. Two third-party defendants successfully defended against claims of negligence, breach of fiduciary duty, violations of the DTPA, fraud in a real estate transaction, fraud, and negligent misrepresentation. Id.
Branch v. McCaskill, No. 05-21-00758-CV, 2022 WL 17974677, at *4 (Tex. App.—Dallas Dec. 28, 2022, no pet.).
After the sale closed, Schroeder Ventures sued Fitzgerald, Pratt, and Panzarella for fraud, fraudulent misrepresentation, negligence, gross negligence, and negligent misrepresentation in the sales transaction. The suit alleged Fitzgerald, Pratt, and Panzarella failed to disclose the existence of a sinkhole adjacent to the real property. Fitzgerald, Pratt, and Panzarella filed pleadings seeking to recover attorney’s fees based on the parties’ earnest money contract, but sought no other affirmative relief.
Fitzgerald v. Schroeder Ventures II, LLC, 345 S.W.3d 624, 626 (Tex. App.—San Antonio 2011, no pet.). In this case, the trial court opined that the conduct of the real estate agent, was not “related to” the contract and refused to award the agent attorney fees, but the appellate court disagreed. It’s important to note that it works both ways, however. In the following case, the consumer won his case against an agent for negligence, which generally will not yield an award of attorney fees. However, the court said that the earnest money contract authorized the award of attorney fees, and granted the consumer attorney fees for his negligence claim:
Polk and Billings contend that the trial court had no basis on which to award attorney’s fees to St. Angelo. They argue that attorney’s fees could not be awarded because: (1) negligent misrepresentation and negligence are common law torts; (2) St. Angelo did not prevail on her DTPA claim; and (3) neither Polk nor Billings was a party to the contract. We agree with the first two contentions. Attorney’s fees are not generally available for tort recovery. Travelers Indem. Co. of Conn. v. Mayfield, 923 S.W.2d 590, 593 (Tex.1996) (holding that attorney’s fees for tort actions must be provided for by statute or by contract). St. Angelo did not prevail on her DTPA claim and cannot claim statutory attorney’s fees under the DTPA. See Tex. Bus. & Com.Code Ann. § 17.50(d) (West Supp.2002) (awarding attorney’s fees and costs to each consumer who prevails on DTPA claim)…Although the contract does not define “parties” to include brokers, paragraph 16 specifically references the brokers. Polk, as an employee of Billings, signed the contract. While Polk and Billings are not parties to the underlying reciprocal obligations between buyer and seller, they are still responsible for any liability specifically imposed on them by the terms of the contract.
Polk v. St. Angelo, No. 03-01-00356-CV, 2002 WL 1070550, at *2 (Tex. App.—Austin May 31, 2002, pet. denied); See also Lawson v. Keene, No. 03-13-00498-CV, 2016 WL 767772, at *4 (Tex. App.—Austin Feb. 23, 2016, pet. denied).
However, when a contract specifically defined the parties to a contract, the agent was unable to use the contract to recover attorney fees:
Coldwell Banker asserts that it is entitled to attorney’s fees under the earnest money contract between Arlington and the seller of the home. In its brief, Coldwell Banker discusses the various iterations of the Texas Real Estate Commission’s *783 form contracts.
Prior to the particular iteration of the contract at issue here, the earnest money contract stated: “If Buyer, Seller, Listing Broker, Other Broker or Escrow Agent is a prevailing party in any legal proceeding brought under or with relation to this contract, such party shall be entitled to recover from the non-prevailing party all costs of such proceeding and reasonable attorney’s fees.”
The Texas Real Estate Commission form earnest money contract was subsequently changed to provide as follows: “The prevailing party in any legal proceeding brought under or with respect to the transaction described in this contract is entitled to recover from the non-prevailing party all costs of such proceeding and reasonable attorney’s fees.” This is the language covering attorney’s fees in the operative contract. “Party,” in turn, is defined by the contract as the buyer and the seller. Coldwell Banker was not listed as a party to the contract and did not sign the contract as a party.
Outside of Houston?
Hector Chavana Jr. has can identify and work with attorneys in your home town like Dallas, San Antonio, Austin, McAllen and any city of Texas. Attorney Chavana will typically work the details of the case and appear for trial, while local attorneys may argue typical pre-trial motions in court. His out of town work varies per his availability, and, when you call, you should ask first whether he is accepting work out of town at the moment.