Unit 11 Flashcards
Learning Objective: As a prerequisite to the discussion of the DTPA, describe the 2011 exemption to the DTPA as it applies to real estate license holders and differentiate between fraud and misrepresentation.
Answer: The 2011 exemption to the DTPA exempts real estate brokers and sales agents from liability for advice or opinions provided in their professional capacity, unless the advice includes an express misrepresentation of material fact, a failure to disclose, or an unconscionable action. Fraud involves intentional deception for unfair advantage, while misrepresentation can include negligent or unintentional provision of false information.
Learning Objective: Describe the Deceptive Trade Practices—Consumer Protection Act and its implications for real estate license holders.
Answer: The DTPA is a Texas law designed to protect consumers from false, misleading, and deceptive business practices, breaches of warranty, and unconscionable actions. For real estate license holders, it introduces liability for misrepresentation, failure to disclose, and unconscionable acts unless exempted under the 2011 real estate services amendment.
Learning Objective: Identify the economic damages and damages for mental anguish provided for under the DTPA and how it differs if an act is committed knowingly, intentionally, or both.
Answer: Under the DTPA, a consumer may recover economic damages, attorney fees, and court costs. If the act is committed knowingly, damages for mental anguish and up to three times the economic damages may be awarded. If committed intentionally, triple the amount of both economic damages and mental anguish damages may be awarded.
Learning Objective: Describe how a license holder can limit liability for deceptive or misleading acts or practices.
Answer: A license holder can limit liability by providing timely written notice to consumers regarding the source of information they relied upon, ensuring the information was obtained from reliable sources, and explicitly stating their reliance in a written disclosure. Avoiding express misrepresentations, ensuring full disclosure, and utilizing third-party information can also reduce liability.
Key Point Question: Does the DTPA require proof of intent to deceive?
Answer: Under the DTPA, a consumer may not have to provide proof of intent to deceive or mislead, only that the action or inaction resulted in deception or misleading outcomes.
Key Point Question: What is the primary purpose of the DTPA?
Answer: The purpose of the DTPA is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.
Key Point Question: What are the damages recoverable under the DTPA if the act was committed knowingly or intentionally?
Answer: The consumer may recover economic damages, attorney fees, and court costs, and if the act was done knowingly or intentionally, they could receive up to three times the amount of economic damages.
Key Point Question: What is one effective defense against a DTPA case for real estate license holders?
Answer: The best defense is to encourage the use of information from reliable sources other than the broker, such as appraisers, engineers, property inspectors, and government sources.
Key Point Question: How did the 2011 Texas Legislature address liability for real estate license holders under the DTPA?
Answer: In 2011, the Texas Legislature created a specific exemption for real estate brokers and sales agents from liability under the DTPA for advice or opinions, provided they do not fail to disclose, make an express misrepresentation, or engage in an unconscionable action.
The DTPA prohibits all of the following EXCEPT:
A. False acts
B. Misleading acts
C. Deceptive acts
D. Moral acts
Answer: D. Moral acts
Reasoning for the answer: The DTPA focuses on prohibiting false, misleading, and deceptive acts in consumer transactions but does not address or prohibit moral acts, as morality is not covered under the act’s provisions.
Which statement is NOT true with respect to the Texas DTPA?
A. A license holder can safely rely on a written and signed waiver.
B. There is no requirement that the offending party intended to deceive.
C. To prevail, the injured party must be a consumer as defined in the act.
D. A written offer of settlement is some defense.
Answer: A. A license holder can safely rely on a written and signed waiver.
Reasoning for the answer: The DTPA limits the enforceability of waivers and imposes strict guidelines on their validity, ensuring that waivers are not easily used to evade liability.
Which is NOT an example of damages available under the Texas DTPA?
A. Economic damages
B. Mandatory four times the actual damages
C. Court costs and attorney fees
D. Three times the economic damages
Answer: B. Mandatory four times the actual damages
Reasoning for the answer: The DTPA allows for economic damages, court costs, attorney fees, and potentially three times the damages for intentional acts, but there is no provision for quadruple damages.
In defending against a DTPA case, license holders using the timely written notice defense must include all of the following EXCEPT:
A. That they must have given written notice to the consumer prior to consummation of the sale that the broker was relying on this written notice.
B. That they must have received the information in writing.
C. That they must establish that they did not and could not know that the information was false or inaccurate.
D. That they must produce evidence that three independent sources were consulted before the written notice was submitted to the consumer.
Answer: D. That they must produce evidence that three independent sources were consulted before the written notice was submitted to the consumer.
Reasoning for the answer: While the DTPA requires timely written notice and reasonable reliance on written information, consulting three independent sources is not a specific requirement under the act.
Which of the following is provided by the Texas Deceptive Trade Practices—Consumer Protection Act?
A. A reasonable offer of settlement made within specified time limits is some defense.
B. Transmittal of written information prepared by others, along with a written statement of reliance on such information, is a defense.
C. Recovery of court costs and attorney fees is possible if the lawsuit is frivolous or harassing.
D. All of these.
Answer: D. All of these.
Reasoning for the answer: The DTPA provides multiple defenses and remedies, including settlement offers, reliance on third-party information, and compensation for defendants in frivolous lawsuits.
All of the following are included in the DTPA definition of the term consumer EXCEPT:
A. Individuals
B. Partnerships and corporations
C. Business consumers with assets of $25 million or more
D. The State of Texas
Answer: C. Business consumers with assets of $25 million or more
Reasoning for the answer: The DTPA explicitly excludes business consumers with assets exceeding $25 million from its definition of “consumer.”
