Legal Question in Real Estate Law in Texas

Gross misrepresentation of property

In late March, my wife and I found a wonderful house and signed a contract. The house was advertised on MLS and realtor's web page as a 2100 sq ft home on 1/2 acre. After paying for home and termite inspection ($320), appraisal ($300), and option fee ($100) it was found in the appraisal that the actual square footage was only 1700 sq ft and the lot size only 1/3 of an acre. This changed what we thought we were paying from $80/sq ft (a good deal) to $100/sq ft (well above market value for area) so we terminated the contract. We are first time homebuyers and not wealthy (just starting out and in debt up to our ears from student loans) and thought the only way to get our earnest money back was to sign earnest money release form that also stated that all persons under contract are released from liability. We feel that we have a right to be reimbursed for our expense due to the gross misrepresentation of the property ($720, a lot of money to us). Is there anything we can do or did we shoot ourselves in the foot by signing the earnest money release? Is the misrepresentation outside of the contract or does the release of liability cover it and our expenses also?

Thanks for the advice


Asked on 4/17/07, 11:46 pm

1 Answer from Attorneys
Joseph A. McDermott, III Attorney at Law

Re: Gross misrepresentation of property

Not having seen the particular form, I cannot be sure, but typically those earnest money releases only release the parties from their CONTRACTUAL liabilities, i.e., the obligation to close the transaction. In a sense, whether you signed a binding release is beside the point, because under no circumtances would it make economic sense to file suit over $720. You, can, however write both the seller and the broker, politely but firmly asking for your money back. Say in the letter you will complain ot the Texas Real Estate Commission if you don't get your money back. The TREC website will tell you how to complain about the broker.

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Answered on 4/17/07, 11:56 pm


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