Real estate agents can be held liable under several legal theories, reflecting the complex nature of their professional responsibilities.
Negligence is one of the most common grounds for lawsuits against real estate agents. This occurs when an agent fails to exercise reasonable care in performing their duties. Examples of negligence include:
Failing to disclose known property defects
Not verifying important information about a property
Mishandling client data or breaching privacy
Breach of Fiduciary Duty. Real estate agents owe fiduciary duties to their clients, including:
Loyalty
Confidentiality
Full disclosure
Reasonable care and diligence
Accounting
Obedience to lawful instructions
Failing to uphold these duties can lead to a lawsuit for breach of fiduciary duty.
Misrepresentation/Fraud. Agents can be sued for misrepresentation if they provide false or misleading information about a property, whether intentionally (fraud) or unintentionally. Examples include:
Incorrect statements about property features
Failing to disclose material facts
Exaggerating property attributes in marketing materials
Breach of Contract. If an agent fails to fulfill the terms of their agreement with a client, they may be sued for breach of contract.
Unauthorized Practice of Law. Real estate agents can face legal action if they offer legal advice beyond their professional scope.
Unfair/Deceptive Business Practices. Federal and state consumer protection laws may provide legal recourse against real estate agents for:
Providing false or misleading information about a property’s features, condition, or history.
Advertising a property at an attractive price, only to promote a different, more expensive property upon inquiry.
Misrepresenting the value or condition of a property to inflate its price for quick resale.
Representing both the buyer and the seller without disclosing the potential conflicts of interest.