The Most Common Claims Against Real Estate Agents

July 27, 2018

For real estate agents, even the slightest error could end up being detrimental to their job security and finances. Reputation could be tarnished and clients could flee if you’re known for making even a single mistake.

Fortunately there are steps that can be taken to avoid mistakes and protect your real estate career. One way to do this is to invest in liability insurance for real estate agents, which safeguards when mistakes happen, and they will. But even with insurance in place there are still things to look out for in general.

Here are some things to be privy to and avoid:

Failing to Disclose a Property Defect

Defects can occur after a client signs papers in a real estate deal and real estate agents are quick to be blamed. Damages and defects should be made known and thoroughly documented such as construction issues, leaks, cracking, noise or nuisances.

Clients may take this up legally by calling out agents who fail to disclose these defects. Clients will have to prove the agent knew about the defects in question. Agents should be thorough in their inspection of a property and have their clients sign a statement that documents their knowledge of any known issues.

Breach of Duty

Another common lawsuit against real estate agents comes in the form of breach of duty. Agents know firsthand that they must always act in the best interest for the potential property buyer. Agents are held to a high standard of integrity, honesty and full disclosure.

From negligence to intentional action, there are many ways an agent can be sued for breach of duty. Agents should document everything down to the fine details.

Giving Legal Advice

Agents want to help their clients with whatever issues they have and put their best foot forward to help however they can. However, attempting to provide legal advice when it comes to real estate dealings has to be avoided at all costs.

Most states consider it illegal for a real estate agent to give legal advice or tax advice. Give the wrong advice and the client could end up blaming you for any consequences that occur from incorrect legal or tax advice.

Breach of Contract

Clients may seek legal action when it comes to claiming a real estate agent did not perform under the terms of a contract. One main reason behind breach of contract is failing to comply with time frames listed in a contract.

It’s important for agents to examine every aspect of contracts with a legal professional to make sure all information is accounted for and accurate. Real estate agents should also make sure to take time with each client to advise them on the terms of a contract properly. Agents should take all measures to avoid legal matters when it comes to breach of contract or duty.

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.