Chapter 11
Reliance is an element of which of the following cause(s) of action?
The answer is all of these. A plaintiff is required to prove reliance to prove that an action was the producing cause of the consumer's injury. Reliance is also a necessary element in a cause of action for common-law fraud or statutory fraud.
Which of the following is an example of the kind of relief a consumer can get under the DTPA?
The answer is all of these. In a suit filed under the DTPA, a consumer who prevails may obtain an order enjoining such acts or failure to act, or orders necessary to restore to any party to the suit any money or property—real or personal—that may have been acquired in violation of the DTPA.
Under the Deceptive Trade Practices and Consumer Protection Act (DTPA),
The answer is proof that the defendant intended to deceive is not required in most cases. This is a powerful consumer protection law recognizing that the mere occurrence of a deceptive act or omission, even if done without the intent to deceive, can cause damage to the consumer.
Thomas is a commercial broker. He is representing the buyer in the purchase of an apartment complex in Dallas. Thomas also represents the seller. Both have authorized intermediary. The seller's attorney discloses to Thomas via email that the property has a serious foundation issue. Thomas forgets to pass the information on to the buyer, and the buyer ends up purchasing the property, unaware of the foundation problems. Will Thomas likely be liable to the buyer for negligence?
The answer is yes, Thomas owes the buyer a duty of disclosure of material fact.
Are all licensed home inspectors subject to the professional services exemption under the DTPA?
The answer is yes, home inspectors are subject to the professional services exemption under the DTPA.
Karen is a broker who represented a seller, Cory, under a listing agreement wherein Cory sold some property to a buyer, Frank. Frank is extremely unhappy with the outcome of the transaction because he discovers major defects in the property and suspects that Karen and Cory conspired to defraud him. After discovering several defects, Frank immediately files a lawsuit against Cory and Karen alleging, among other things, violations of the DTPA. What was Frank required to do before filing suit against them under the DTPA?
The answer is Frank must send a demand letter to Karen and Cory advising them of the complaint and the amount of damages he has suffered.
Sandra is a broker who has a listing agreement with Tally. The buyer, Sam, has a buyer representation agreement with VJ. Tally needs to sell her home, which is listed for $750,000. Sam wants to purchase a residential property in the range of $650,000 to 750,000. Sandra did a CMA for Tally that indicates the house should be priced at $690,000, but Tally lists it at $750,000 because she's put a lot of money into remodeling and landscaping. Sam knows about the CMA and asks Sandra for a copy. Sandra tells him than she cannot provide him the CMA because she did it for Tally. Sam makes an offer on the house for $700,000, and Tally rejects the offer. Tally ends up selling to someone else, and Sam is so upset, he hires a lawyer and sues Sandra and Tally. Which of the following is the BEST defense for Sandra?
The answer is Sandra did not engage in a false, misleading, or deceptive act.
TJ is a broker, but he is not a member of the Texas Association of REALTORS®. In representing clients, he is routinely asked to provide information about property, or a seller tells him something about the property that he is worried about passing on to potential buyers because he has no idea whether what he has been told is true or not. What can TJ do to make sure that if someone sues him under the DTPA, he has some protection for any information he provides?
The answer is TJ should have his attorney create a form for him that complies with the DTPA that he can use to pass on the information.
Misrepresentation cases against license holders are governed by the Texas Deceptive Trade Practices Act (DTPA) and
The answer is The Real Estate License Act. DTPA can assign remedies for the plaintiff and TRELA can take enforcement actions.
Which of the following transactions is not subject to the DTPA?
The answer is a $600,000 ring.
Which of the following is a reasonable defense brokers may use against DTPA lawsuits?
The answer is a broker supplied a timely written notice that he is relying on written information supplied by someone else.
Who has standing to sue under the DTPA?
The answer is a consumer.
Not more than three times economic damages are the maximum amount collectible by a consumer for what kind of action?
The answer is a false, misleading, or deceptive act done knowingly.
Which of the following is an exemption for license holders providing broker services under the DTPA?
The answer is a sales agent advising a client, as long as the advice is not an express misrepresentation of material fact.
Which of the following is FALSE regarding a defendant's response to a demand letter?
The answer is a verbal request to inspect the goods that are the subject of the claim must be honored.
An example of breach of warranty under DTPA might be
The answer is all are examples of breach of warranty.
Under the DTPA, the defendant can be held liable for which of the following damages?
The answer is all of these. A judge or jury can enhance basic economic damages if there are findings that acts were committed knowingly or intentionally. Without proof of knowing or intentional culpability, a judge or jury can find in favor of a consumer for economic damages, attorney fees, and court costs.
Bill is a sales agent and represents Cindy under a listing agreement. The house was treated for termites five years ago, and Cindy painted the deck to cover any evidence of termite damage, which is quite extensive. Billy is aware of the work and the termites, but tells a potential buyer that the deck is in great shape and was recently repainted and inspected for wood rot and termites. The buyer purchases the home and later finds evidence of the termite damage. Which of the following is this an example of?
The answer is all of these. Billy clearly intended to deceive, which is a requirement for common law fraud and statutory fraud. His failure to disclose the truth was intentional, and the buyer purchased the home apparently relying on the misrepresentation. Thus, this is an example of all three.
The DTPA prohibits which of the following?
The answer is all of these. The DTPA prohibits not only misrepresentations, but also omissions (failing to disclose) and misleading statements, as well as statements that lead the consumer in the wrong direction or create a misconception of the facts.
An email from a broker offering a rebate in a case where the broker did not, in fact, pay the rebate after closing is which of the following?
The answer is an express misrepresentation of material fact.
How does a consumer prove that a person's false or misleading act was the producing cause of his harm?
The answer is by showing that the consumer relied on the misrepresentation to the consumer's disadvantage.
Intent is an essential element of which of the following causes of action?
The answer is common-law fraud and statutory fraud.
To avoid claims of misrepresentation, brokers must watch what they say because they are
The answer is considered real estate experts.
In order to prove allegations of statutory real estate fraud in a court of law, prosecutors must demonstrate all of the following EXCEPT
The answer is economic gain by the accused.
Which of the following practices is a violation of the Deceptive Trade Practices Consumer Protection Act (DPTA)?
The answer is failing to tell the seller that a broker is receiving commission from the buyer.
One reason for the passage of SB 1353 by the Texas Legislature, which amended the Deceptive Trade Practices and Consumer Protection Act (DTPA) to exempt from the DTPA advice and opinions of license holders while acting in a real estate brokerage capacity, was that many brokers and sales agents
The answer is found themselves faced with lawsuits concerning circumstances over which they had no control or knowledge.
Which of the following actions must a consumer take before filing a lawsuit under DPTA?
The answer is give the would-be defendant a 60-day notice.
Which of the following is a required element of fraud?
The answer is intention to deceive. Fraud is a deceptive act practiced deliberately by one person in an attempt to gain an unfair advantage over another.
Which of the following statements regarding a consumer's waiver of DTPA protection is FALSE?
The answer is it must be in writing and acknowledged by the defendant.
The Texas Supreme Court has ruled that for an "as is" agreement to be enforceable, it must pass several tests, one of which is
The answer is known defects must be disclosed by the seller.
In a cause of action under the DTPA, consumers are required to prove that the
The answer is misleading or deceptive act was a substantial factor to their injury.
Sandra is a broker who has a listing agreement with Tally and a buyer representation agreement with Sam. Both have consented to intermediary should the situation present itself. Tally needs to sell her home, which is listed for $750,000. Sam wants to buy some investment property for his company's (ICOR, LLC) portfolio. He wants to purchase a residential property in the range of $650,000 to 750,000. Sandra did a CMA for Tally that indicates the house should be priced at $690,000, but Tally lists it at $750,000 because she's put a lot of money into remodeling and landscaping. Sam knows about the CMA and asks Sandra for a copy. Sandra wants to get this listing sold quickly, and if it closes as an in-house sale, Sandra reaps more than if it sold to a buyer represented by another broker, although she knows that Tally needs to net as much as possible from the sale. Sandra provides the CMA to Sam without telling Tally. Sam makes an offer on the house for $700,000, and Sandra tells Tally she should accept because it is the CMA price, and the house has been on the market for a whole week with no offers. The sale closes and funds, and Tally sues Sandra and Sam when she finds out about the CMA. Does Sandra have a defense, and if so, what is the BEST reason why or why not?
The answer is no, although she was providing advice as a broker, she had an ulterior motive for Tally to accept the lowball offer.
Shelby is an associate broker with Ace Realty, and she is representing a buyer by oral agreement in the buyer's purchase of raw land. Shelby has advised the broker on several transactions in the past, so the buyer trusts her to provide him with good advice. Shelby tells the buyer that she thinks the purchase is a good investment for commercial development because she has analyzed recent raw land purchases in the area that are going for much more because a tollway will be going up near the location of the land. In fact, once the purchase has closed and funded, the buyer learns that the property will be condemned by the state because it needs the property for the tollway right of way, so the buyer sells the property to the state for a loss. If the buyer sues Shelby, is Shelby likely liable under the DTPA?
The answer is no, not if Shelby's statement is considered advice or opinion and not an express misrepresentation or unconscionable action.
A consumer has sent a demand letter to a broker notifying the broker that the consumer has filed a lawsuit against the broker for violations of the DTPA. The demand letter indicates how the broker has caused harm to the consumer and indicates that the consumer will be asking for a trial by jury in order to have a jury tell him how much damage he has suffered based on the broker's actions. Does the demand letter comply with the DTPA?
The answer is no, the demand letter must be sent at least 60 days before a lawsuit has been filed.
Clarice was a buyer in a transaction where Hannibal served as her broker. There was no written broker representation agreement. Clarice was not happy with the services Hannibal provided, although Hannibal did his best under difficult circumstances. Clarice did not listen to any of his advice and made uninformed decisions. She clearly did not like him, but Hannibal was not sure why. After the sale closed, Clarice filed a lawsuit against Hannibal, but she did notify him of her intent to sue with a phone call 30 days before she filed suit. Hannibal did not answer the call, so she left a message telling him she was going to sue, that she wanted $3 million in damages, and that she would see him in court. Hannibal hasn't received any notice from Clarice about the lawsuit. Has Clarice complied with the DTPA?
The answer is no, the phone call is not the equivalent of a written demand letter.
A person notifies a broker that a lawsuit has been filed against the broker for violations of the DTPA. The notice goes on to say that someone will be in touch with the broker soon, and the broker should be ready to provide the person $10,000. The broker has no idea who the person is or why a demand letter was sent. The broker tries to get in touch with the person, but it is difficult because there is no return address, although there is an email address. What should the broker do?
The answer is nothing, the broker has not been notified of a lawsuit, and if he cannot get in touch with the person who sent the letter, he cannot request to inspect anything.
Which of the following is NOT a relief for damage under the DTPA?
The answer is revocation of the broker's license. Only TREC can revoke a license holder's license. The remaining items can be awarded to a consumer under the DTPA.
To make a misrepresentation claim against a broker, the buyer must have
The answer is suffered damages. A misrepresentation claim cannot be made unless the plaintiff has been damaged.
Which of the following acts by a broker would fall under the list of deceptive practices as defined by the Deceptive Trade Practices Consumer Protection Act?
The answer is telling the buyer that the tiles in the foyer were American made, when they were imports.
The DTPA provides that a consumer can sue if the consumer has suffered economic damages produced by unconscionable action by another. "Unconscionable" means
The answer is that a person has taken advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree.
Under the Deceptive Trade Practices Act, which of the following must a consumer prove about a misleading, deceptive, or fraudulent act?
The answer is that it was a producing cause of the loss.
What is required for a real estate agent to be subject to the DTPA?
The answer is that the agent made an express misrepresentation that is not advice or opinion.
What must a consumer prove to collect damages?
The answer is that the defendant's misrepresentation was the producing cause of the consumer's damages.
Which contract used in the real estate business contains an "as-is" provision?
The answer is the TREC-promulgated contract.
Which of the following is an example of a defense against a DTPA lawsuit that was unsuccessfully claimed by a defendant?
The answer is the consumer waives a DTPA claim by a consumer accepting a defective home. The defendant tried to make this argument and won. The other items would be successful claims, not unsuccessful claims. by a defendant.
What right does a potential defendant have under the DTPA if he receives a demand letter from a consumer?
The answer is the defendant has the right to request to inspect the goods that are the subject of the consumer's action.
Under what condition can a defendant be held liable for failing to disclose a material defect?
The answer is the defendant must have actual knowledge of the defect.
A sales agent represents a seller under a listing agreement. If the seller tells her sales agent that the house was recently treated for termites, what should the agent do with the information to limit her liability under the DTPA?
The answer is the sales agent should get a copy of the treatment report and attach it to a notice that states the agent was relying on the report.
A consumer can get up to what amount of damages under the DTPA if an action is conducted intentionally?
The answer is three times the amount of economic damages and three times the amount for mental anguish damages.
If the consumer can prove that the act was done knowingly, the consumer may recover not only economic damages, attorney fees and court costs but also damages for mental anguish up to
The answer is three times the economic damages.
Groundless lawsuits
The answer is waste time, energy, and money. When courts determine that a lawsuit is groundless, an action brought in bad faith, or one that is only for the purpose of harassment, the defendant will often be compensated for reasonable attorney fees and court costs.
When is a waiver enforceable under the DTPA?
The answer is written waiver signed by the consumer, represented by an attorney, and consumer has bargaining power.
Does the DTPA prohibit innocent misrepresentations?
The answer is yes, it prohibits both innocent and fraudulent misrepresentations.
Is a real estate broker in Texas allowed to accept a listing that will be sold "as is?"
The answer is yes, the TREC-promulgated contract contains an "as is" clause