Key Takeaways
- The Texas Deceptive Trade Practices Act (DTPA) protects consumers from false, misleading, or deceptive business practices
- Real estate transactions are covered by the DTPA—agents can be sued for misrepresentation and failure to disclose
- Damages under DTPA can be up to three times actual damages (treble damages) for knowing violations
- The DTPA has a shorter statute of limitations than common law fraud—2 years from discovery
- Agents can limit DTPA liability by ensuring clients are "represented by counsel" who separately signs the waiver
Texas Deceptive Trade Practices Act
The Texas Deceptive Trade Practices-Consumer Protection Act (DTPA) is a powerful consumer protection law that applies to real estate transactions.
What the DTPA Covers
The DTPA prohibits:
| Violation Type | Examples in Real Estate |
|---|---|
| False or misleading statements | Misrepresenting property condition |
| Failure to disclose | Not revealing known defects |
| Unconscionable conduct | Taking advantage of consumer's lack of knowledge |
| Breach of warranty | Failing to deliver as promised |
Who is a "Consumer"?
To sue under the DTPA, a person must be a consumer:
| Consumer Requirement | Application |
|---|---|
| Seeks or acquires goods/services | Buying or selling real estate |
| Transaction amount | No minimum |
| Business transactions | May be excluded if over $500,000 |
DTPA Damages
Actual Damages
The consumer can recover:
- Cost of repair
- Diminished value
- Out-of-pocket losses
- Mental anguish (if knowing violation)
Additional Damages
| Violation Type | Damages Available |
|---|---|
| Unknowing | Actual damages only |
| Knowing | Up to 3x actual damages (treble) |
| Intentional | Up to 3x actual damages + mental anguish |
Attorney's Fees
Prevailing consumers can recover reasonable attorney's fees.
Key Point: The threat of treble damages and attorney's fees makes the DTPA a powerful tool for consumers.
Common DTPA Claims in Real Estate
| Claim | Example |
|---|---|
| Misrepresentation | "The foundation has never had problems" (false) |
| Failure to disclose | Knowing about termite damage but not telling |
| Bait and switch | Advertising one property, showing another |
| False advertising | "Newly renovated" when repairs were cosmetic |
Defenses and Limitations
Statute of Limitations
| Deadline | Description |
|---|---|
| 2 years | From date of discovery of violation |
| 4 years | Absolute maximum from date of transaction |
DTPA Waiver
The DTPA can be waived if:
| Requirement | Details |
|---|---|
| Written waiver | Specific language required |
| Represented by counsel | Consumer's own attorney |
| Attorney signs | Separate signature of consumer's attorney |
| Not unconscionable | Transaction is fair |
Exam Tip: A DTPA waiver is only effective if the consumer is represented by their own attorney who separately signs the waiver.
Good Faith Defense
Agents may have a defense if they:
- Acted in good faith
- Reasonably relied on information from others
- Had no knowledge of the violation
Relationship to TREC Violations
A DTPA violation may also be a TREC violation:
| DTPA Violation | TREC Consequence |
|---|---|
| Misrepresentation | License suspension/revocation |
| Failure to disclose | Administrative penalties |
| Fraud | License revocation + criminal referral |
Under the Texas DTPA, what damages are available for a knowing violation?
When is a DTPA waiver valid in a Texas real estate transaction?