Real Estate Disputes–Texas Breach of Fiduciary Duty Law

July 8, 2014 / By Robert Wood

A recent real estate dispute sheds light on what is required to prove a breach of fiduciary duty claim in Texas. In this case, potential homebuyers contracted to buy a home for $180,000. The seller, the listing agent, the appraisal district, and the real estate agent all indicated that the home’s living area was 2722 square feet.

However, the prospective buyers told the real estate agent that the home looked smaller than 2722 square feet. The agent responded that the home looked smaller because it had an “open floor plan.”

The day before the closing was to occur, the prospective buyers told the agent that they wanted out of the transaction. The agent responded, “You can’t back out or you will get sued.” Thus, the buyers completed the transaction.

After doing so, the buyers had the local appraisal district remeasure the home. It turned out that the buyers’ suspicions were correct: the home was only 1967 square feet in size.

The buyers then sued the real estate agent. Several claims were asserted, including breach of fiduciary duty.

The district court granted summary judgment for the real estate agent, and the appellate court affirmed. The court held that there was no evidence that the real estate agent knew or should have known that the home was smaller. The agent reasonably relied upon all of the other representations, including those made by the appraisal district.

This case is a good reminder that not all “wrongs” can be fixed via the legal process. In this case, the buyers arguably should have done more to test the accuracy of their suspicions before they closed on the purchase. After buying the home, their options were much more limited, and, as the court held, they had no good legal claim against the real estate agent.

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About the Author

Robert Wood has been a Texas trial lawyer since 1993. During that time, he has represented small, mid-sized, and Fortune 100 companies in business and employment litigation matters all over Texas and the United States. He has also advised and represented hundreds of individuals in employment litigation matters. Read more about Robert Wood