Suing a Real Estate Agent for Misrepresentation
What is your legal recourse when you sue a real estate agent for negligence? According to statistics, legal remedies can be found that will make up for professional negligence, including a failure to disclose.
Under the law, real estate brokers must disclose specific information to both buyers and sellers. Full disclosure enables all parties to properly negotiate the real estate price and evaluate a property’s suitability. That means the agent should also identify all the hazards on a property. Typically, in real estate transactions, a seller must disclose property defects that can impact a buyer’s decision to make a deal on the real property.
Types of Defects and Hazards
Material defects or known hazards may include the following:
- Termite or pest problems
- Mold issues
- Structural defects, including the foundation or roof
- Plumbing and sewer issues
- Natural hazard risks, such as being located in a floodplain or in an earthquake zone
- The presence of sex offenders in a community
To make the distinction between misrepresentation and the failure to disclose, you need to define each type of breach of duty.
Misrepresentation is lying, or misstating the feature of a property. On the other hand, a failure to disclose means that the agent did not reveal an essential element or feature of a property. In either case, suing a real estate agent for negligence is often done because the agent did one of the following:
- Misrepresented the structural features or foundations, property boundaries, or termite or roof issues.
- Omitted disclosures, including easements, title problems, renovations that were made without a permit, and environmental issues.
Types of Misrepresentation in Real Estate
Misrepresentations are represented by three types of forms. These forms include the following:
- Negligent misrepresentations include a failure to disclose notable property defects out of sheer ignorance.
- Fraudulent misrepresentations include concealing a property defect or feature in order to sell a property.
- Innocent misrepresentations are made as the result of inexperience. They do not come about from an oversight or because the agent wishes to conceal something for his or her own gain.
Grounds for Suing a Realtor
In order to sue a realtor for misrepresentation, any property details that come from a third party must be attributed to that source. For example, if information reveals that the guttering system is four years old, it must be based on a material fact, not just an opinion. A material fact is a fact that a reasonable buyer would use to make a purchase decision.
Therefore, you may depend on any statements that the seller of real estate makes, unless, of course you have been given reason to doubt the seller. In California, you must not only disclose what you know, as a seller, but perform a visual inspection of the property and disclose the results.
How to Reduce the Incidence of Misrepresentation
In order to lessen misrepresentation in a real estate contract, you need to insist on the use of seller disclosure forms that are completed by the seller. Document the sources of information from the seller and encourage that the services of professionals be used during a transactions, such as those offered by inspectors and attorneys. Never make predictions as you can run into some disastrous misunderstandings.
Breaches of Fiduciary Duty
When it comes to breaches of fiduciary duty, usually a problem with the real estate transaction causes a buyer or seller to seek legal advice. These types of cases often involve claims of undisclosed dual agency. Some of the common law agency duties are so loosely outlined that some states have demanded duties be written into legislation. When the duties are legally defined, they permit a broker to know precisely what duties he or she owes, and what consumers should anticipate.