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Posted by: Legal Reach on 02/23/2017

Claims And Lawsuits Against Real Estate Agents

Claims And Lawsuits Against Real Estate Agents

Real estate agents are in a position of trust, often handling their clients’ largest monetary transactions. It’s necessary for these professionals to abide by rules and codes of conduct, but real estate agents still tend to be subject to lawsuits and legal claims.

What are the top claims and lawsuits made against real estate agents?


These are the most common legal claims against real estate professionals:

  • Real estate fraud. This occurs when the agent deceives the client by misrepresenting or concealing facts. Usual examples include incorrectly listing the square footage of a home or not telling the client about existing damage to the property.
  • Breach of contract. This occurs when the real estate agent violates the contract between him/her and the client.
  • Breach of duties. A real estate agent has the duty to represent the client’s best interests. If there is proof that the agent has violated this, it may be a basis for a legal claim.
  • Negligence. This is the failure to exercise reasonable care during transactions. A negligence case may look similar to fraud, but negligence lacks the element of intent – that is, there is no proof that the real estate agent intended the harm.
  • Disputes over down payments and escrow. 

Who else is liable for real estate violations?

It’s not just the real estate agent that may have to face the liability for a violation. The agent is, of course, the first defendant that a client may directly identify. But other parties – such as the real estate broker or brokerage company – may share the liability, depending on the case.


What are the consequences for a liable real estate agent?

If a real estate agent has been found to have committed a violation, the legal consequences may include:

  • Monetary compensation (damages) to the client – This is a common consequence, and the amount varies depending on the type of claim and the nature of the dispute.
  • Consequences specified in the contract
  • Suspension
  • Civil fines
  • Criminal consequences
Will insurance cover real estate violations?

Intentional violations like fraud cannot be covered by insurance. However, for certain real estate errors, some insurance companies offer coverage similar to malpractice insurance. This type of coverage is called “Errors and Omissions”. Examples of what it can cover include contract errors, unintentional mistakes in the property value, errors in the escrow process, and mistakes related to the title of the property.

Real estate transactions are significant and intricate. It is always wise to consult a real estate lawyer for any legal questions and concerns regarding property.