We've got a consumer alert for anyone looking for a new home. If you're not careful, you could get sued.
Consumer expert Amy Davis is investigating a contract controversy that has already snared a handful of home buyers into pricey court battles.
Houston's real estate market is on fire. And inside the loop, real estate broker Urban Living is one of the biggest players on the real estate scene.
We sent a producer wearing a hidden camera into Urban Living's Washington Avenue office to get some information on buying a new home. He walked out with a buyer's representation agreement, a contract that was already filled out. If signed, the contract would legally bind our producer into working with Urban Living's agents exclusively for one year.
"That seems a little bit excessive to me," said Houston Association of Realtor chairman Danny Frank.
Frank says the contract is fairly standard in Texas real estate deals. The fact that it was already filled out is not.
"Every blank in that contract is negotiable between you and your realtor," Frank said.
"I think the way Urban Living is using the document is an intent to trick consumers," said consumer Chris Drummond.
Drummond claims Urban Living tricked him into signing the agreement back in 2011. He went into Urban Living to look at some homes. When a real estate agent gave him the agreement, he said he questioned her about what he was actually agreeing to. She went and got a manager to talk with Drummond.
"The manager tells me 'This protects Urban Living from going out and purchasing a property that we've shown you or that you will see with us. It stops you from going and buying the property through someone else on our hard work,'" Drummond recalled.
After Drummond signed the contract, the real estate agent assigned to him left Urban Living. When he said no one from Urban Living followed up, Drummond bought a home with another agent 3 months later and moved on. A year later, he got a phone call.
"It was a lawyer from Urban Living claiming that I owed them nearly $10,000 for a commission on a property that they never showed me," said Drummond.
"Is it common for realtors to sue clients over properties that they have never even shown the client?" Davis asked Frank.
"Very uncommon," he replied. "If I didn't show you the property that you bought, I really don't feel like I have a lot of personal benefit in suing you and making you an unsatisfied client down the path."
"They're the largest seller of townhomes inside the Loop," said Urban Living's attorney Chris Di Ferrante. "They didn't get there by taking advantage of consumers."
Di Ferrante maintains the real estate firm did nothing wrong. A Harris County jury disagreed, ruling that both sides breached the contract. Frank says there's a warning here for all consumers.
"Buyer beware, absolutely. Read everything before you sign it and understand what you're signing," he said.