Real estate clients and investors can become edgy when large sums of money are involved and let’s face it, for most clients, buying a house is often the single most expensive asset they currently or will own. As a result, real estate agents are particularly vulnerable to being sued.

Be proactive in protecting yourself and your real estate business by attending to these ten most common ways agents are sued.

  1. Not disclosing property defects and/or damages.
    1. Every property defect/damage should be fully documented. Defects/damages can include improvements made without permits, cracks, leaks, noise, construction issues.
    2. A client who sues an agent has to prove the agent knew or should have know about the defect(s) and should have disclosed any/all of them.
    3. Protect yourself by thoroughly inspecting the property and having the client sign a statement that documents their awareness of any property defects and/or damages.
  2. Any breach of duty is subject to a lawsuit.
    1. Document EVERYTHING.
    2. Most lawsuits center around property defects, dual agency, misrepresenting zoning/permit regulations, and breaching fiduciary duties such as accepting secondary offers while a counter offer is still pending.
  3. Representing clients in areas that are unfamiliar to you.
    1. Do the research…know the laws/requirements particular to specific areas.
  4. Offering legal advice.
    1. Giving tax/legal advice to clients is considered illegal in many states.
    2. Direct any tax/legal questions to a tax professional and/or an attorney.
  5. Exaggerating or misleading clients about home conditions/features/amenities.
  6. Breach of contract or non-compliance with contract terms and/or time frames.
    1. Identify ANY unclear clauses/terms in a contract.
    2. Get legal advice from YOUR attorney to ensure that all information is accurate and suggest that your client get legal advice from THEIR attorney.
  7. Not keeping your clients’ data safe.
    1. Hackers are everywhere and when they’re “successful,” you as the agent are liable.
    2. Install security software, keep all your paperwork secure, change your passwords frequently and have your data encrypted.
  8. Not recommending inspections.
    1. This is a no-brainer. At the minimum, recommend a general home inspection from a professional.
    2. Also recommend additional inspections for pools, septic systems, roofs, chimneys, septic tanks and mold.
  9. Negligence
    1. Negligence and fraud are not the same. Fraud involves intent; negligence does not.
    2. Get insurance coverage…you never know what a client thinks you ought to have known.
  10. Physical injury
    1. Any “accident” during a viewing may translate into your having to reimburse costs/damages due to that accident.
    2. Clean up and out any debris on the property, shovel the snow, melt the ice, etc.
    3. Injury can sometimes involve undisclosed mold problems.
    4. Get insurance coverage for unforeseen accidents.

 

Thanks to Ryan Ellis, an Errors and Omissions Specialist, writing for Inman News for source data.

Also read: https://timandjulieharris.com/2019/09/22/challenges-of-being-a-self-employed-real-estate-professional.html, https://timandjulieharris.com/2019/09/13/special-edition-podcast-jd-mcclintock-palm-beach-real-estate-top-producer-2.html, https://timandjulieharris.com/2019/10/03/nars-q2-2019-commercial-real-estate-trends-and-outlook.html