A Texas appellate court has evaluated whether a buyer’s representative was liable to his clients for inaccurate square footage information.
Bowen Zhu and Jian Yu (collectively, “Buyers”) purchased a home. The Buyers had retained real estate licensee Kai Lam (“Buyer’s Representative”) of The Household Realty, Inc. (“Brokerage”) to represent them in the transaction.
During the course of the transaction, the listing broker, the local government appraisal district, and the Buyer’s Representative had all represented that the size of the property’s living area as 2,722 square feet. While viewing the property, the Buyers had remarked that the property seemed smaller than their 2600 square feet residence, but the Buyer’s Representative had responded that this was because the property had an open floor plan.
Following the purchase, the Buyers were unable to fit their furniture into the property. They had the property re-measured, and discovered that the actual size of the property was 1,967 square feet, or 757 square feet smaller than had been advertised. The Buyers filed a lawsuit against the Buyer’s Representative and the Brokerage, alleging violations of the state’s consumer fraud and deceptive trade practices law, misrepresentation, and breach of fiduciary duty. The trial court entered judgment in favor of the Buyer’s Representative and the Brokerage, and the Buyer appealed that ruling.
The Court of Appeals of Texas (Houston) affirmed the trial court’s ruling. The court first looked at whether the Buyers had suffered any harm from their purchase of a home with a smaller square footage than advertised. The Buyers could only demonstrate harm if the value of the property was not as valuable as represented to them. The Buyers had failed to produce any evidence showing that the property had a lesser value than the purchase price, and so had failed to allege a cause of action for violations of the consumer fraud statute or misrepresentation. Therefore, the court affirmed the trial court.
Next, the court examined the breach of fiduciary duty allegations. The Buyers alleged that the Buyer’s Representative had breached his fiduciary duty by failing to discover the true square footage for the property. The Buyer’s Representative argued that there was no evidence that he knew the property’s true square footage or had a duty to measure the property. The court found that there was no evidence that the Buyer’s Representative had any knowledge that the stated was square footage for the property was inaccurate, and so ruled in favor of the Buyer’s Representative. The court affirmed the judgment in favor of the Buyer’s Representative.
Zhu v. Lam, 426 S.W.3d 333 (Tex. App. 2014)