Top 7 Claims against Real Estate Agents

Real estate agents and brokers are required to adhere to various codes of conduct and professional rules. Because of this, these types of professionals are commonly the subject of numerous different types of lawsuits and legal claims.

The top seven claims that are made against real estate agents include:

• Real estate fraud: Real estate fraud occurs when one individual involved in a real estate transaction makes a false representation of relevant information to another individual who is involved in the transaction. In the alternative, one individual may fail to disclose relevant information to the other, who then acts on that false information or omission to their financial detriment;
  • Fraud in real estate transactions can occur during any phase of the transaction, from the mortgage application or approval phase through to the closing of a sale or purchase of a piece of real property. It is important to note that prospective renters may also be victims of real estate fraud;
  • Real estate fraud cases can arise from any kind of transaction involving the buying, selling, renting, or renovation of real property;
• Breach of duties: A fiduciary is an individual who is entrusted with acting on behalf of another individual to make decisions that are in the best interest of the individual that they are representing;
  • Real estate agents owe a fiduciary duty to their clients, the most important aspect of which would be the need to operate honestly and in the best interest of the client;
  • In general, when a real estate agent decides to act for their own personal benefit to the detriment of their client, they have breached the fiduciary duty that they owe to their client;
• Contract violations: A real estate contract is a document that contains the terms and conditions of a real estate transaction, which are integral to a contract for the sale or purchase of real estate. According to real estate contract laws, a breach of a real estate contract occurs when one party to the contract fails to perform any number of the contract terms that they agreed to when they signed the contract;
  • Because these types of contracts involve the transfer of real property, they are required to be both in writing and signed in order to comply with the Statute of Frauds;
• Negligence: Negligence is associated with the failure to use reasonable care when conducting a transaction;
  • Reasonable care refers to what a reasonable or prudent person would do under the same circumstances;
    • In terms of real estate law and transactions, this would be what a reasonable real estate agent would have done under similar circumstances. A client may claim that their real estate agent knew or should have known a fact or issue but failed to take any action in order to prevent or address it;
• Damage to property: One example of this would be damage that occurs during an appraisal or when inspecting a home. In order to hold an individual liable for negligence resulting in property damage, it is generally necessary to prove that they owed a duty of care to the other party and that they disregarded that duty;
  • In addition, these acts must result in damage to the property that can be quantified;
• Misrepresenting property conditions, damage, or value: Although the seller or buyer is ultimately responsible for disclosing any property defects that are involved in a real estate sale, real estate agents also have a responsibility to disclose anything that materially affects the property;
  • This means that they must disclose relevant facts if the value or desirability of the property would be negatively impacted; and
• Disputes associated with escrow and down payments: Escrow is an arrangement that is made with a third party who is not involved with the buying and selling of the home. In other words, they are neither the buyer nor the seller;
  • In a real estate transaction, escrow holds all of the funds that are associated with the transfer of title and maintains all documents and contracts;
    • This helps ensure that finances are not exchanged between the buyer and seller themselves, so if one of the parties fails to perform on their obligation, the other party does not automatically receive the funds.

Who Can Be Held Liable for Such Violations?

In most cases, a real estate agent may be held directly liable for violations such as breach of contract or fraud. There are, however, other parties that may also be held liable for certain violations.

One example of this would be how a real estate agent often works on behalf of a broker of a brokerage company. Because of this, the broker or the entire company may be involved if the supervisor of the agent authorized the violating action or if the agent specifically acted according to instructions to engage in fraud.

One other example of how other parties may be held liable would be if there was an agency relationship. An agent is only allowed to act on behalf of a principal for certain issues.

The principal has the right to control the conduct of the agent as it relates to the duties that are given to the agent by the principal. In these cases, the existence of such a relationship would have to be proven to determine which party could be held liable. Liability may be split between multiple defendants.

Can You Sue a Real Estate Agent?

Yes, an individual can sue a real estate agent. One common legal claim against real estate agents is negligence in their fiduciary duties.

One of the most important fiduciary duties of a real estate agent is to be honest and make decisions based on the best interests of their client. Real estate agents spend most of the property purchasing process working independently of their clients by:

• Negotiating with other parties;
• Coordinating inspections;
• Reviewing contract documents.

Examples of breaches of fiduciary duty include:

• Obtaining covert fees or profits that are not revealed to the client;
• Failing to notify a seller that there are other offers made after an offer has been accepted;
• Declining or accepting an offer without the client’s consent.

It is important to note that real estate agents may also be sued for other issues, including those discussed above. If an individual has any questions about filing a claim against a real estate agent, they should consult with an attorney.

Are There Any Legal Consequences for Real Estate Agent Liability Claims?

The legal consequences for real estate claims typically result in a monetary damages award. The amount that will be awarded depends largely on the type of claim that is involved and the nature of the dispute.

For example, a breach of contract claim may involve remedies that are listed specifically in the contract. There are also claims that may involve statutory damage limitations.

Other consequences for real estate agent liability claims may include, but are not limited to:

• A suspension of agency operating privileges;
• Civil fines;
• Criminal consequences.

What Remedies Are Available if You Sue a Real Estate Agent for Professional Negligence?

In the majority of real estate claims, a plaintiff who was wronged based on professional negligence will receive a damages award. Monetary damages are the easiest remedy for a court to provide, as they are meant to compensate the plaintiff for their losses stemming from the real estate agent’s negligence.

Should I Hire a Lawyer?

You may be considering filing a claim against a real estate agent. If so, it is essential to consult with a real estate lawyer who can advise you of the possible causes of action against real estate agents you may have and the process to obtain compensation. Your attorney will advise you of your rights under the laws of your state and represent you in court during the process.

If you are a real estate agent who is being sued, it is also important for you to have legal representation, as your professional reputation and career are at stake. Your lawyer will help you present the best defense possible in court and protect your rights throughout the process.