This post has been fact checked by Lisa Rogers at time of publishing by Principal Attorney at ArkLaws.
Even the most diligent real estate agents can get sued, and it happens all the time. But that doesn’t mean you have to panic if you get served. Most lawsuits against real estate agents can be prevented if you are proactive and take steps to protect yourself to avoid the courtroom.
If you’re an agent and find yourself getting sued, contact us today and we’ll be happy to talk to you and point you in the right direction.
The seven most common reasons real estate agents get sued are:
Breach of duty means that you fail to do something that is your responsibility to do, and it is one of the most common reasons real estate agents are sued. Because of your expertise and experience, your clients trust you to act in their best interests with honesty and transparency.
Breach of duty claims can be filed for any number of reasons including:
How to Protect Yourself From A Breach of Duty Claim
A breach of contract means that your client feels that the terms of your contract (listing agreement/buyer’s agent agreement) were not followed. If you find yourself being sued for breach of contract read through what you agreed to do and what the client agreed to.
This includes failing to pay, collect, or return any money related to the sale like security deposits, earnest money, escrow, and commissions. And can also include fraud, breach of duty, and negligence.
What To Do If You’re Being Sued For Breach Of Contract
Bonus-tip: Include all appropriate disclosure forms like the Residential Real Property Disclosure Report and Natural Hazard Disclosure Statement.
Fraud is when a person(s) intentionally deceives, withholds information, or purposely gives bad advice for their own gain.
Fraud in real estate can include:
Bonus tip: Damages for fraud can include both actual damages and punitive damages which may not be insurable. Call your insurance provider to find out if you’re covered to protect yourself.
How to Protect Yourself From A Fraud Claims
Negligence is different from fraud, because it lacks intent and is usually a result of not doing proper due diligence. Even if you act in good faith, if your client feels that carelessness, failure to act, taking a wrong action, or a simple error in judgment occurred, they may file a claim of negligence.
Common reasons for a negligence claims are:
How to Protect Yourself From A Negligence Claim
While the seller is ultimately responsible for disclosing property defects, real estate agents have a responsibility to disclose anything that negatively impacts the value or desirability of the property.
Defects you should disclose include:
Bonus tip: If a buyer sues for failing to disclose a property defect, they have to prove that you knew (or should have known) about the defect and failed to disclose it.
How to Protect Yourself From A Failing To Disclose A Property Defect Claim
While most real estate agents know a lot about real estate law, many are not licensed attorneys. This becomes an issue when the agent gives legal advice, and the client relies on this advice instead of asking their lawyer. The client is now using the agents opinion vs. actual legal advice.
The best way to protect yourself is to not answer any questions regarding real estate law and advise your client to talk to a licensed real estate attorney.
Because you have access to your client’s financial and personal data, you need to safeguard it. If your client’s information ends up in the wrong hands, you can be sued for the failure to protect that information.
How to Protect Yourself From A Not Protecting Client Data Claim
Real estate agents can do everything right and still be sued. The good news is that you can protect yourself and reduce the risk you’ll end up in court by taking a few of these proactive steps. If your questions or situation is not answered above, contact us through this page and we’ll direct you to one of our licensed real estate attorneys who can help.
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