#1 Way Real Estate Agents Get Sued

Real Estate Agents are required to take continuing education classes to keep their licenses active. 

At the Greater Capital Area Association of Realtors otherwise known as GCAAR, we have an ethics instructor who is a lawyer. He's acted as general legal counsel for the Maryland Association of Realtors since 1984. 

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 Photo by Tyler Nix on Unsplash

 

The stories he shares come from real life experiences and they are scary! 

  • The #1 way real estate agents get into trouble is failing to disclose material facts. If the seller chooses to disclaim instead of disclose, they still need to disclose a latent defect.  (that's a fault with the property that couldn't be discovered by a thorough inspection prior to the sale.) 

  • Listing agents and buyer agents need to be careful how they describe a property. Is the house really in excellent condition? Is the roof/HVAC new? Has the kitchen been updated? These vague descriptions have been the subject of lawsuits filed against real estate agents. Provide dates instead of saying something is "new or updated". And don't say "excellent condition" in a description unless it's 100% true. Here's an example: A house listed as "in excellent condition" was purchased by a buyer. The buyer had a home inspection and several items, one major, were discovered by the inspector. The buyer said, "How can this home be excellent with all these repair items?" So the buyer asked the listing agent to reimburse him for the cost of the home inspection. The listing agent said no. Many months and thousands of dollars later, the buyer won a lawsuit! All because the listing agent wrote "excellent condition" as a description of the property. 

  • Your real estate agent will never say which neighborhood is right for you. Certain details of a neighborhood could violate the Fair Housing Act which was enacted in 1968 to eliminate housing discrimination. A real estate agent can and will provide a home buyer with tools and resources so they can make an informed decision regarding neighborhoods. 

  • Real estate agents should be careful to present a true (honest) picture when advertising. Apparently, this is another common issue when agents get into trouble. All advertisements should disclose the Broker's name and/or company name with the office telephone number. In other words, it should take no longer than 15 seconds for someone to know an agents Brokerage. This includes all correspondence, anything that's mailed, business cards and newsletters. 

 

Continuing education classes give us the opportunity to check ourselves. Are we acting ethically every day with every client? Are we staying in the scope of our expertise? Are we acting solely in the best interest of our client/principal?