Today’s complex and unpredictable financial and real estate markets create opportunities for novice investors to be defrauded or to enter into a purchase of a property that may be detrimental to their investments. For the same reasons, lenders seek to protect their investments and are quick to foreclose on properties, irrespective of whether the foreclosure was correct. In fact, lenders may take advantage of their negotiation power and intentionally foreclose on a property in which they do not have legal basis. In this current market condition, real estate litigations are ripe and investors and property owners alike must seek advice from real estate attorneys and experience real estate litigation lawyers to safeguard their interests and properties. The Houston Real Estate Litigation Attorneys and the Houston Commercial Real Estate Litigation Lawyers have assisted numerous clients to avoid these fraudulent schemes, as well as to litigate complex real estate causes of action, and helped our clients to avoid potential investment disasters. Please contact our Houston Commercial Real Estate Litigation Lawyers and our Houston Real Estate Litigation Attorneys at The Law Offices of Steven Tuan Pham for immediate assistance.

Real Estate Litigation And Statutory Fraud

In Texas, real estate fraud and fraud in the sales of purchase of stocks, or joint stock companies are jointly called “statutory fraud.” Civil prosecutions under statutory fraud are permitted under the Texas Business & Commerce Code. Section 27.01 of the Texas Business & Commerce Code authorizes the prosecution of transactions involving real estate or stock in a corporation or joint stock company. Statutory fraud has the same elements as common-law fraud with the exception of one thing. Under Section 27.01 of the Texas Business & Commerce Code, a plaintiff need not prove that the defendant’s knowledge or recklessness. To prove that a party committed statutory fraud, the plaintiff must prove that:

  • Plaintiff and defendant entered into a business transaction involving real estate or stocks;

  • In the course of the transaction, the defendant(s) either (a) made a false representation of the fact, (b) made a false promise, or (c) that the defendant benefitted from the transaction by not disclosing certain information or false promises;

  • The false representation or false promise was made to induce the plaintiff to enter into the contract;

  • The plaintiff relied on the false representation or promise; and

  • Such reliance caused plaintiff the injury.

Under the common law, buyers beware ("caveat emptor"). That is, the buyer has the responsibility to inspect the property thoroughly during the inspection period (usually 30 days for residential property but may be less in a commercial property). As such, buyers, with the assistance of other professionals such as an inspector, surveyor, appraiser, and accountant, must make proper inspections of the property within the feasibility period before the closing date. Obviously, the seller should not make any deceptive or false representation of the quality and conditions of the property; but in addition, the seller should not hide latent (hidden) defects that affect the value of the property, such as previously known foundation problems or mold. A seller who made false representation or false promise in the sale of a real property or business is subject to both common law fraud and statutory fraud. See the Business & Commercial Fraud section for information regarding common law fraud.

If plaintiff prevailed at trial, plaintiff can recover the actual damages and interests from defendant. If monetary damages are inadequate, plaintiff may elect an equitable remedy, such as specific performance based on the contract. In addition, plaintiff can also recover exemplary damages above and beyond the actual damages. Depending on the case, exemplary damages may be substantially higher than the actual damage. Lastly, the prevailing party may recover costs for attorney’s fees and court costs. If you think that you may have been a victim of a fraud in a real estate (real property) transaction or through a contract to purchase and sale a business entity, please contact the Houston Real Estate Litigation Attorneys and the Southwest Houston Commercial Real Estate Litigation Lawyers at the LAW OFFICES OF STEVEN TUAN PHAM. for assistance. Time may be of essence.

The Pit-Fall of Purchasing Foreclosure Properties

Novice investors may be victimized by predatory “agents” or “finders” when investing in foreclosure properties, especially in a depressed real estate market. Prudent investors need to know the pit-fall of foreclosure properties, analyze the risk verses the reward, and make educated decisions about the type of foreclosure he or she seek to purchase. For example, investors need to understand that a bank foreclosure property may have additional liens attached to the property, such as HOA fees and costs, as well as ad valorem tax, interest, and penalties associated with the property. An HOA foreclosure sale may have ad valorem tax, interest, and penalties; and additionally, the purchaser may be bidding on a property that has the first and second mortgage lien on the property. Lastly, an investor who purchases the property at an ad valorem tax sale is purchasing the property as a “quit claim” deed; and as such, the property may be subject to litigation based out of a fraudulent transaction or if the sale was improper. Before investing in foreclosure properties, you must speak to a Houston Real Estate Litigation Attorney or a Houston Business Litigation lawyer at the LAW OFFICES OF STEVEN TUAN PHAM. for a personal consultation, as well as researching a property in which you want to purchase.

Special Agency by Real Estate Brokers (Agents)

In Texas, a special agency is usually created between a buyer/seller and an agent (broker). A special agency may be created for the specific purpose in representing the client for a one time purchase or sale of a property, including but not exclusive the listing the property, showing the property, negotiating on one’s behalf, and finding the property. As such, the agent’s special agency is only in representing the client for that specific purpose, limiting the scope of representation and liability. Unlike many other states who bound the seller to misrepresentations in which an agent makes during the sale of the property, Texas has not adopted this theory. However, that may be changing. Some Texas courts are now holding the seller partially jointly and severally liable with the broker based on misrepresentations in the sale of the property if the seller benefits from such sale. Century 21 Page One Realty v. Naghad, 760 S.W.2d 305 &Tex. App. – Texarkana 1988).

Texas real estate law does not authorize any person other than an agent (broker) to represent refer a buyer to a seller or to assist a buyer in locating a property with an expectation of compensation of valuable consideration. “Valuable consideration” is anything more than $50 in value even if it is a “gift.” As such, Texas does not recognize a “finder’s fee” for assisting buyers to locate properties. There are a few exceptions in which a real estate license (brokerage license) is not required. There are a few exceptions to this requirement, such as an attorney, a person acting under court order, an auctioneer, or a person that is selling his own property, an on-site property manager of an apartment complex, or the sale or lease of mineral interest, motels, or hotels. If you have been a victim of improper conduct by a real estate broker, or a “finder,” please contact the Houston Real Estate Litigation Lawyers and the Southwest Houston Real Estate Litigation Attorneys at the LAW OFFICES OF STEVEN TUAN PHAM.


Each real estate litigation suit is unique depending on the fact and the contract, if any, in which the parties agreed.  The requirements and the level of proof may vary from one type of real estate litigation cause of action to another. You should not rely on the information on of this web site in replacing a personal consultation with an experienced Houston real estate litigation lawyers and the West Houston commercial real estate litigation Attorneys at the LAW OFFICES OF STEVEN TUAN PHAM.  There may be legal issues with respect to your real estate litigation cause of action that need personal attention. Please feel free to contact our Houston real estate litigation attorneys and our southwest Houston real estate litigation lawyers at the LAW OFFICES OF STEVEN TUAN PHAM. today at 713-517-6645 or complete our Contact Form.

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