One of the disadvantages of seeking a career as a real estate broker is that your chances of getting sued are quite high, due to the various forms of legal liability to which you will be exposed. Among these are:
(1) Contract Liability
The listing agreement between a real estate broker and a seller of real estate typically requires the broker to exercise her "best efforts" to find a "ready, willing and able" buyer for the seller. However, the term "best efforts" is notoriously ambiguous, and if the seller believes that a busy broker has not actually exercised her "best efforts" to locate a suitable buyer, she may be looking at a lawsuit seeking damages for the delay in selling the real estate that is attributable to her failure to exercise her best efforts. Even if she wins the lawsuit she may end up having to pay legal fees, and the time and worry investment alone could distract her from using her "best efforts" on deals with other clients.
(2) Licensing Regulations
As is the case with attorneys, real estate brokers are subject to certain professional standards of conduct, breach of which could subject the broker to liability. Many of these standards are imposed by statute (instead of rules made by, say, a real estate broker's association) and thus have the force of law. The critical difference between an association rule and a public statute is that if you violate a private rule you are often liable only to have your licensed revoked, while if you violate a statute you can be sued for damages suffered by a seller. Of course most of these standards are common sense obligations such as honesty, fair dealing, etc.
(3) Tort Liability: Negligence and Fraud
Anyone can be held liable for negligence in just about anything they do that involves a risk - for example, if you drive carelessly and cause an accident you could be sued for committing a "tort". But the critical difference in tort liability between laypersons and professionals is the "standard of care". As an ordinary driver you will be held to an ordinary (not perfect) standard of care, breach of which will subject you to liability for any damages caused by your carelessness. But real estate brokers are held to a particularly high standard of care (ordinary care is not enough) when it comes to their professional activities, and can be sued for malpractice if they fail to meet this standard.
Real estate agents can also be held liable under agency principles, but that is beyond the scope of this article.
DISCLAIMER: The foregoing is intended for reference purposes only and not as legal advice.
Related Articles
Sell your Home Fast - Helping a Buyer Buy your Home
By: Cashhomebuyers.com | 22/12/2006 | Home and Family
"In the past, a family saw your house, it was just right for them, and you had a sale. Today the decisions are more based on financing options available to them rather than the considerations of neighborhood, style, or space.
Real estate brokers agree that the most important questions are,”How much will this property cost me per month?” and, “What kind of financing can I qualify for?”
There are many ways to finance the purchase of a new property. The first is to pay cash, but most people can’t
What Do Real Estate Brokers Do?
By: Bob Miles | 20/05/2007 | Real Estate
A real estate broker performs a variety of functions to facilitate the consummation of a real estate sales transaction between a buyer and a seller. A real estate broker usually works for the seller, not the buyer. Perhaps the most important among her functions is to locate a potential buyer...
Real Estate Brokers And Commissions
By: Bob Miles | 20/05/2007 | Real Estate
A real estate broker is usually engaged by the seller of a particular parcel of real estate to find a buyer. The agreement between the broker and the seller is known as a "listing agreement". Although the terms of listing agreements may vary, its terms usually entitle the broker to...
Buyer Beware! The Truth About Real Estate Brokers And Multiple Listing Services
By: Bob Miles | 20/05/2007 | Real Estate
Most people believe that if they hire a real estate broker, then only that broker will help them find a buyer. In many cases, however, this is not true. Most brokers have access to multiple listing services, which allow a broker to list the concerned real estate with many brokers...
The Importance of Setting the Scene
By: Kim Johnson | 23/05/2008 | Real Estate
The booming real estate market of 2006 has reached a cooling off point for most places around the United States, and for some it has gone cold. Now, more than ever, staging a home for sale can be the most important thing a seller can do. By following a few tips from the experts, a seller can increase the value of their house as well as reduce the length of time it is on the market.
Property Management - the Key to Increasing Your Real Estate Brokerage's Income
By: Ryan Windley | 30/07/2008 | Real Estate
In today's difficult real estate market many real estate brokers are looking for other sources of income. Here are three reasons why a real estate broker should consider starting their own property management business.
Easy Tips To Identify Good Real Estate Brokers
By: Prudence Wong | 04/08/2008 | Real Estate
This article talks about easy tips or steps in getting good real estate brokers to add value to real estate investment.
How To Identify Real Investment For Investors?
By: Prudence Wong | 07/08/2008 | Real Estate
This article defines the excellent ways to the best real estate investment for investors. In this article, it explains the reasons to obtain the best investment.
Got a Question? Ask.
Ask the community a question about this article:
Q&A Powered by:
Latest Real Estate Articles
Motivated Real Estate Seller Negotiation
By: Mark Walters | 21/08/2008
When it comes to being successful at real estate investing the term "motivated seller" is the key to the bank.
When you see the words 'motivated seller' next to a name on your list, it can seem like you've just been given a gift from the gods. Sellers who come...
One of the Suitable Places for Real Estate Investment: Faridabad
By: Matinez | 21/08/2008
Some of the renowned developers from Delhi and its neighboring cities, such as Eldeco Group, Ansals, Omaxe, Parsvnath Developers and so on are reaching Faridabad to start new high end projects that include integrated townships, shopping malls cum multiplexes, residential dwellings, group housing projects, IT parks and modern office spaces.
Jacuzzi Types and Styles
By: Ed Terran | 21/08/2008
You have decided to buy a Jacuzzi for your home. Have you done your homework to see what style you are going to purchase? If not, you may want to learn a few things about these oversized bathtubs before you actually purchase one.
There are bathtub, portable, steam room, hot tub,...
Some Support Talat and Some Do Not
By: Linda Cartwright | 21/08/2008
Efforts to solve the Cyprus issue are being evaluated in different ways in Turkey. While the Turkish Government supports the Turkish Government supports the Turkish Cypriot President Talat's efforts, the main opposition party (CHP) has criticized Talat after a long period.
Orders to the ambassadors from Babacan
Turkey's Minister of foreign Affairs...
Different Types Of Ceramic Tiles For Bathroom, Kitchen.
By: Ed Terran | 21/08/2008
Everyone has gotten into the craze of ceramic tiles lately. This is what they want on their floors, walls, and especially the bathroom area. When it comes to shopping for the type that you want installed, prepare yourself to be overwhelmed. The different types and manufacturers will astound you.
These tiles...
Bathtub Sizes, Types, And Styles
By: Ed Terran | 21/08/2008
Your bathroom can often be one the simple luxuries you enjoy every day at an affordable price. In fact, a well styled bathroom can add value to your house. A well selected bathroom is central to the utility and ambience of your bathroom, so think carefully before you buy one.
When...
New Range of UK Style Mortgages to be Expanded
By: Mark Smalls | 21/08/2008
The range of UK - style mortgages being offered to British and Irish citizens interested in buying property in North Cyprus is set to be expanded.
British company Lewis Finance says the scheme, which is already receiving a lot of interest from expats and people looking to buy holiday homes on...
Chennai's Expanding Real Estate Market
By: George Gonigal | 21/08/2008
Chennai is experiencing an extensive real estate growth in past one year. Chennai real estate developers are having a good business deal happening during this period of time.
More from Bob Miles
Yew Git Off My Property! The Law Of Trespassing
By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice.
What is "trespassing", anyway? Most of us think we know. But the more you think about it, the more complex it can get. For example, could you be sued for trespassing on property that you are...
Real Property Law: Fixtures
By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice.
What is a fixture, anyway? Odds are you own one. The formal definition is "a tangible object that was once personal property but has become so connected with real property that it has become a part...
Real Estate Law: Underground Water
By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice.
Do you own the water running under your property? If you're not the kind of person who would care one way or another, then read no further (although it is beyond me how anyone could fail...
Real Property Law: Nuisances
By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice.
"He's such a nuisance, constantly drumming his fingers on the table like that!"
Just what is a "nuisance", anyway? Well, it has one meaning in common parlance and another more specific meaning in law, although the...
Airspace Over Your Property - How Much Of It Do You Own?
By: Bob Miles | 29/05/2007 | Law
CYA Disclaimer: The following is intended for reference purposes only and not as legal advice.
The short answer is, "as much of it as you can use". No, you cannot float a "No Trespassing" blimp and shoot down passing airliners for trespassing. But believe it or not, you can build a...
How Mortgages Work
By: Bob Miles | 28/05/2007 | Real Estate
A mortgage is created when someone uses real estate to secure a promise to repay a debt. For example, if you borrow money from a bank and give the bank permission to sell your house to pay off the debt if you don't pay it back yourself, then you have...
Registering The Purchase Of Your Real Estate
By: Bob Miles | 27/05/2007 | Real Estate
As soon as you buy real estate, it's a must to register it at the recording office or wherever real estate transactions are registered in your particular jurisdiction. If you don't, you could end up losing title to your real estate due to the misconduct of the previous owner or...
Real Estate Law: Damages For Breach Of Warranty Covenants By A Seller
By: Bob Miles | 27/05/2007 | Real Estate
If you own real estate and sell it to a buyer under a general warranty deed, you can be liable to the buyer years later for some defect in the title that you didn't even know about at the time you sold him the real estate, and you could end...
Finance 
