CanI hold a real estate agent liable for misrepresenting renovation costs of a house that I purchased?

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CanI hold a real estate agent liable for misrepresenting renovation costs of a house that I purchased?

I recently purchased a house that was not complete. The sellers agent told me that it would take $60,000 to complete the house. This figure along with the purchase price lead me to go ahead a purchase the house. This kept me in my budget of $100,000. The agent told me he had a friend who was a contractor who told him that the house could be finished for that amount. He had the the contractor meet me and I bought the house based on the agents statement. Now the home is only complete on the outside and I have almost reached my budget amount for improvements. Can the agent be held liable ?

Asked on August 6, 2010 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The answer is "maybe." If the agent knowingly committed misrepresenations to induce you to purchase the home--that is, the agent, intentially lied--then you may have grounds to either (1) rescind the contract (i.e. cancel it) or (2) sue for damages (i.e. money).

The potentially problems are three-fold:

1) Even assuming the agent did lie, if you don't have anything in writing, it may be difficult to prove.

2) If there were sufficient caveats or exeptions to what was said, it may not be a misrepresentation. For example, a comment by a contractor that "you should be able to fix it up for around $60,000," or "based on what you tell me, I'd guess around $60,000," especially if the contractor didn't do a thorough inspection or provide a formal estimate. The issue is, for something to be fraud, it must be reasonable that the recipient of the statement rely on it--and for causual utterances, or comments made without accountabilty (like a formal estimate) or without sufficient knowledge (i.e. w/out a real inspection) may not be reasonable to rely on.

3) Depending on who made which comments--and whether you can show that acted in concert--you may not be able to show any one person defrauded you.

So in answer, in theory you can hold the seller's agent liable for misrepresentations, but in practice, in many situations they are not actually actionable misrepresentations. You should consult with an attorney with whom you can share all the facts and who can evaluate the case for  you. Good luck.


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