The Most Common (and Costly) Claims Against Real Estate Agents

common real estate agent claims

One of the most significant purchases someone can make is their investment in real estate. It may even be their most expensive purchase they make in their lifetime. That’s why the law can potentially play a major role in any and every real estate deal. Whether it’s a residential property or commercial property, real estate agents and brokers who handle the transaction are put under the microscope with every detail looked at closely by the potential buyer.

That being said, having knowledge of what real estate agents are up against legally can help to limit exposure and risks, such as fraud or negligence. Regardless of the claim, it’s important that agents keep their business safe through comprehensive specialized coverage including real estate insurance programs.

Top Real Estate Claims

Here are some of the most common and costly claims that people make against real estate agents on a regular basis.

Fraud

Claims of fraud are the most common cause of legal action from claimants and plaintiffs. In general, fraud includes some element of intent. If a claimant wants to prove a fraud claim, they need to convince the jury that there was an intentional act of the defendant, or the real estate agent/broker, that was meant to cause them harm. These claims can vary, but some popular fraud claims are related to closing costs, physical and emotional distress, loss of consortium, defects, and replacement costs.

Negligence

In general, negligence is a cause of action that alleges the failure to exercise due care toward others who enter a property. The claimant must show proof that the agent had a duty to them or that an action by the agent caused harm in some way.

Acts of negligence are separated from intentional torts, like fraud, since negligence claims don’t usually come with the element of intent. For instance, a plaintiff making the claim against an agent doesn’t have to legally prove that the agent purposefully concealed a property defect, but rather the agent knew or should have known about the defect and failed to disclose it.

Breach of Duty

A real estate agent has the duty to act in the best interests of their clients. Failure to accomplish this may result in a claim of breach of fiduciary duty, which includes a special trust and reliance on the fiduciary to exercise their discretion in acting for the client. When this exists, the law forbids the fiduciary from acting in a way that is contrary to the interests of the client. The client is entitled to the best efforts of their agent.

Some examples of this claim include failing to verify the property that was contracted to purchase or purposefully not disclosing the seller’s dispute with the adjoining property owner of things like water rights.

Breach of Contract

Another breach that agents can be on the hook for legally is that of the contract. This occurs when the claimant asserts a breach against the agent based on allegations that one or more parties failed to perform under the terms of an agreed upon contract. If a court finds a breach has occurred, it will award damages in an event.

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