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3 of the Most Common Legal Pitfalls that Agents and Brokers Need to Avoid

by | Jul 3, 2015 | Real Estate Law


There are legal pitfalls in every real estate transaction. Buyers and sellers can decide to file suit against their brokers/agents when they feel that the transaction violated either statutory or common law. Three of the most common legal issues facing brokers are: misrepresentation of property conditions, unlawful discrimination and breach of fiduciary duty.

As the real estate market’s health continues to improve, we can only expect to see an increase in the number of lawsuits filed in relation to residential and commercial real estate transactions. According to the National Association of Realtors® Legal Affairs, despite the increasing number of suits against brokers/agents, the licensees are found not liable in close to 75% of cases.

  1. Misrepresentation: The misstating of a material feature of the property. The most commonly misrepresented features are the foundation and structural features of the property. Other fairly common misrepresentations are boundaries, termite issues and the state of the roof.
  2. Unlawful Discrimination: Discrimination violations account for only 1-2% of litigation, but they can result in extremely costly judgments. If sellers don’t want to sell to someone of a certain ethnic background/race, they are very difficult to represent as handling the sale as they want leaves agent/brokers in violation. Common phrases that sellers might use that would indicate there is a problem in this area include: no children, perfect for empty nesters, etc.
  3. Breach of Fiduciary Duty: This type of claim is common when the broker/agent filed to disclose dual agency.

As the real estate market continues to improve, we can depend on the number of violations, and therefore lawsuits, to continue to increase.

If you need additional information regarding the California real estate market and what constitutes a violation of real estate law, get in touch with the experts at the Law Office of the Law Office of Ernesto Aldover.