Real Estate Law:
Agent & Broker Representation
Agent & Broker Representation
If a buyer or seller gets damaged in a transaction they will likely consult with their attorney and work on identify who to sue for their misfortune. It is very likely you as the real estate agent or you as the broker will be a target.
Eighteen months ago a ranch-style home was listed for $1,000,000. The property was described as being on one acre with a regulation tennis court, hardwood floors throughout, slate entryway, floor safe and electric garage door opener. After the buyer took possession it was determined that the lot was only eight-tenths of an acre, the tennis court was 4 feet too narrow, there were no hardwood floors in the dining room, the slate turned out to be Arizona flagstone, nobody had a combination to the floor safe and the garage door opener did not work. The buyer sued the broker for misrepresentation, charging that the defects reduced the property’s value.
A buyer is suing his broker, suggesting that the broker was involved in a cover-up when a lien on the property was not ”discovered” during a title search.
Another buyer is suing the real estate agent for failure to disclose a water leak, suggesting the broker knew about it all along.
WHAT ARE THE MOST COMMON LAWSUITS AGAINST REAL ESTATE AGENTS OR BROKERS?
Real estate professionals may be subject to numerous legal claims, given the nature of their work. The most common legal claim occurs when the agent is negligent in their fiduciary duties . A fiduciary is an individual who is entrusted with acting on behalf of another individual and making decisions in their best interest.
Fiduciaries are entrusted with legal duties or obligations to their client because of their experience and specialized training. A real estate professional most important aspect of fiduciary duty is the requirement to be honest and make decisions based on the best interest of their client.
The professional will be spending most of the property buying process working independently of the client, whether negotiating with other parties, coordinating inspections, and reviewing contract documents. As such, they are required to act as a proxy for their client by making decisions for the client, and reporting information in an open and honest manner. Some common breaches of fiduciary duty include:
- Receiving secret profits or fees that are not disclosed to the client(s);
- Failing to inform a seller of other offers on the table, after an offer has been accepted; or
- Declining or accepting an offer without the client’s approval.
Some other common lawsuits filed against real estate professionals include:
- Failing to Disclose a Property Defect: The seller or buyer is ultimately responsible for disclosing any property defects involved in a real estate sale. However, agents also have a responsibility to disclose anything that materially affects the property, which means they must disclose facts when the value or desirability of the property is negatively impacted. These defects can include construction issues, improvements without permits, covenants, leaks, cracks, termites, noise, or nuisances. Even if the agent did not know about the defect, they may still be sued if they represent a party that did know about the defect.
- Negligence: Agents may also be sued for negligence if they fail to exercise due care towards others. Due care is essentially what a reasonable or prudent person would do under the same circumstances. In this case, it would be what a fellow real estate agent would have done. A client may claim that their real estate agent knew or should have known something, but failed to take any action to prevent or address it.
- Failing to Keep a Person’s Personal Data Safe: Agents have access to a lot of personal information, especially from their clients. Should they fail to keep that data safe, such as protecting it from hackers by installing security software, they may find themselves subject to a legal claim for any damages resulting from the misuse of a client’s data.
In addition to the lawsuits listed above, you may also be able to sue a real estate agent for lying. However, suing for a lie or misrepresentation is not as simple as it sounds. The nature of the lie will have a huge impact on the legality of such a suit. If the lie was overt, such as the agent claiming that the house has never been remodeled when it actually was, you could have a case.
However, if the lie was something that the buyer should have been aware of, there may not be a case. An example of something that the buyer should be aware of would be if the agent claimed that the house was one block from a school, but there are no schools within one block of that property.
To know your rights or If you require representation do not hesitate to call David Chico Law Group today.