How and Why Realtors Get Sued

Real estate agents and realtors play important roles in the closing process. But, as the saying goes, with power comes responsibility. And sometimes, real estate agents either don’t use that power correctly, or else, upset buyers or sellers will point the finger at real estate agents, leading to lawsuits.

Why do real estate agents get sued? There is no one comprehensive list, but here are some common reasons that real estate agents get sued.

Breaches of Fiduciary Duty

The reason why breach of fiduciary duty is common, is because many people, realtors included, may not understand their fiduciary duties that are owed to their clients. Their duty is to put their clients’ interests first, and to protect their clients at all costs.

Many times, realtors will do things, or fail to do things, that breach their fiduciary duties. They may be so lax, negligent or careless, that they breach their duties, or they may take affirmative action, like actively defrauding, stealing or diverting a good opportunity away from their clients.

Negligent Contract Drafting

Yes, many real estate contracts are standardized, and vetted, and real estate agents are generally safe when using these kinds of standard pre-written contracts. Where real estate agents get in trouble is when they take it upon themselves to draft non-traditional agreements.

For example, a real estate agent may be called on to draft agreements to sell a home furnished, or draft a post occupancy agreement, or draft specific language for something the buyer and seller individually worked out. Now the agent is bordering on practicing law, drafting a contractual agreement for and on behalf of the realtor’s client.

When these contracts are incomplete, or ineffective, the realtor can find him or herself in serious legal trouble.

Failure to Disclose

Realtors have a conflict.

On the one hand, they want to consummate and close the sale; they make money when a real estate transaction is complete and closed. But that desire can conflict with the realtor’s fiduciary duties, and can influence a realtor to misrepresent facts and details about property, or to leave out information their client needs to know, that would tend to prevent a sale from closing.

Self Dealing

Real estate agents see and are exposed to a lot of properties. Some may be very good deals.

It does happen that a realtor sees a property and wants that property for him or herself. The realtor could be tempted to dissuade a client from purchasing property, so that the realtor can seize on the opportunity himself. This kind of self dealing is illegal, and can lead to breach of fiduciary duty claims.

Time to Sue

Remember that time limits to sue realtors can be short (which can be a benefit or a negative, depending on whether you’re the realtor). Any client on a written agreement has a 4 year statute of limitations. Fraud is shortened to 3 years, and claims for negligence are only 2 years.

Call the West Plam Beach and Boynton Beach real estate lawyers at The Law Offices of Larry E. Bray today for help if you need to sue a realtor, or if you are a realtor facing legal problems.

Sources:

hanover.com/resources/tips-individuals-and-businesses/prepare-now-learn-how/top-10-tips-real-estate-agents

atgtitle.com/7-reasons-real-estate-agents-get-sued-how-to-avoid-it/