Top 5 Reasons Real Estate Industry Experts are Sued

Trust is the cornerstone of any realtor-client relationship. Buyers and sellers look to their realtors for dependable guidance and discretion. A mistake on your part, whether accidental or intentional, breaks that trust and may lead to costly litigation. In some cases, the other party finds fault with your conduct or with your client’s conduct, leading to a lawsuit. Real estate insurance protects your finances, but there are many steps realtors can take to prevent litigation in the first place.

5 Reasons Realtors Are Sued

A few issues lead to most realtor-client disputes. Prevent costly and damaging conflicts with buyers and sellers by avoiding these mistakes.

  1. Breach of Duty

Breach of duty is the most common complaint filed against realtors. Clients take this action when they believe the realtor has lied to them, disclosed their confidential information, or failed to act in their best interest. Buyers and sellers also sue for breach of duty if they feel the realtor was negligent in their obligation to perform to the best of their professional abilities.

  1. Breach of Contract

Many realtors use boilerplate contracts when drawing up sales. Be very careful with these contracts, as they may not contain all the terms your client needs or may include terms irrelevant to your sale. If your client finds something wrong with the contract, that may be grounds for a lawsuit. Read each agreement carefully before presenting for signatures.

  1. Boundary Disputes

Buyers, in particular, may sue over incorrect property boundaries, especially if they feel the seller’s realtor mislead them. Incorrect boundary registration or careless property usage often leads to these misunderstandings. Registration errors are not the realtor’s fault, but you may still face liability for failing to recognize them. Ensure that you and your clients know the legal boundaries of the property before proceeding.

  1. Failure to Disclose Defects

Realtors must disclose all known defects on a property, regardless of the potential impacts on sales or commissions. If the buyer discovers an expensive problem later on and proves that you or the property owner knew of the issue, you are liable for damages. Thoroughly document all inspection findings and openly discuss them with buyers and sellers.

  1. Specific Performance Failure

Specific performance lawsuits are similar to breach of contract suits and relate to a particular contract clause. If a party feels you or your client are not adhering to a contract condition, they may pursue legal action. Work with your clients to ensure they comply with all contract terms.

Realtors can avoid many legal complaints by being diligent and truthful and by openly communicating with their clients. If you face a legal challenge or have questions about preventing liability, ask your real estate insurance provider for guidance.

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