Construction / 1 min read
Liability for real estate fraud extends beyond just the person who makes false representations. A little-known provision of this statute creates significant liability for third parties who benefit from fraudulent transactions. Specifically, Texas Business and Commerce Code Section 27.01(d) establishes that a person who has actual awareness of a false representation made by another to a defrauded party, (and) fails to disclose that falsity to the defrauded party and (subsequently) benefits from the transaction, can be held liable for real estate fraud and exemplary damages, even without making any misrepresentations themselves.
This third-party liability provision creates a powerful tool for plaintiffs in certain construction and real estate disputes. When pursuing claims against beneficiaries of fraudulent real estate transactions, plaintiffs need not prove the third party made any misrepresentations. Only that they knew of the falsity, failed to disclose it, and received benefits from the transaction. Additionally, successful plaintiffs can recover not just actual damages but also exemplary damages, attorneys' fees and other court costs.