September 21, 2018
In today’s fast-paced world of interconnectivity and easy access to information no industry is immune from legal issues arising. Lawsuits are filed every day against real estate professionals from claims related to projects they’re in the middle of or finished in the past. There are no guarantees that a claim will never be brought against you as a real estate agent or broker, so being diligent about not only your services, but possible legal issues that can come up is important.
In every lawsuit, a plaintiff, or the person bringing a claim against you, must make it clear that you and/or your firm are the defendant and tie certain allegations to violations of laws or rules. When legal matters are brought up, the accused can and should wisely have a real estate insurance policy in place to safeguard against the monetary fallout from a legal dispute.
Let’s go over some of the basic elements related to real estate claims as well as some of the more common claims made against real estate professionals.
Elements of a Real Estate Claim
Proof of Wrongdoing
Violations that need to be proven could be based on a particular statute or section of law or common law. If the person bringing the claim against a real estate professional can’t prove that you or your firm committed an actionable wrong–essentially, they weren’t able to prove without any doubt–the lawsuit will be dismissed. This is due to failure of proof or because the allegations of proof don’t really add up to punishment being brought down on a defendant.
Proof of Service
A plaintiff has to prove that they were at some point your client and they used your real estate services. A plaintiff has to prove without a doubt that the real estate professional they hired, be it a broker or agent, failed to provide and execute the agreed upon services written into a contract. What’s more, someone may feel that the real estate agent or broker lacked the skill needed to get the job done, thus leading to setbacks, small mistakes that added up, delays, etc.
Someone bringing a case against you should also be able to prove that they could have and should have gotten better service and better results. If something ended up costing them money that was not planned for, like more contracting fees, they can use this as damages claims.
There are a number of claims that can be brought against a real estate professional by an unsatisfied client. Something small or overlooked can in fact be a big deal legally speaking. Consumers, through access to information, are more empowered in today’s economy to gain some basic wisdom and find that they have a case to make against a broker or agent. News of real estate fraud issues are becoming more common and professionals are having to fine-tune not only their practices, but get more familiar with legal issues.
Fraud, as noted above, is the most common type of claim made against those in the real estate industry. In general, fraud contains an element of intent, meaning the client believes the accused intentionally deceived them during the process. A plaintiff has to convince the judge or jury that the real estate agent or broker meant to harm them in some way, mostly financially.
Breach of Duty
Real estate agents have a duty to act in the best interest(s) of their client. If they fail to meet those needs and standards it could result in a claim alleging breach of fiduciary duty. This is an obligation that involves a special trust, confidence and reliance on the fiduciary to exercise his discretion or knowledge in acting for the client.
The client is entitled to the best efforts and results from the agent and/or broker, so anything short of those expectations can result in a legal claim. Some examples of breach of duty include failing to disclose the propensity of the road in front of a subject property to flood.
Whatever the claim is, real estate agents and brokers need to be aware of the leverage clients have in a court of law. By staying current on local laws and everyday functions to keep malpractice claims at bay, real estate agents can keep their reputation and services up and running.
About Associations Liability Insurance Agency (ALIA)
The ALIA Team (part of the Riverton Insurance Agency Corporation), specializes in helping real estate professionals find the affordable and comprehensive coverage they need, without the hassle. ALIA dates its roots to 1991 with the founding of FREA, Foundation of Real Estate Associates. In 2013, ALIA was created to work with multiple insurance companies thereby broadening the portfolio of products to customers. In 2017, ALIA was purchased by Riverton Insurance Agency Corp.