With every client, real estate agents are at risk of being sued. Real estate agents are often very busy managing their business, representing multiple clients, marketing, running open houses, reviewing contracts, etc. If you are a real estate agent for long enough, running into legal issues is inevitable and while you are so busy, you may make unintentional mistakes.
Some tips for real estate agents to avoid lawsuits and to protect themselves from a lawsuit include the following:
- Do not give legal advice – As a real estate agent, you are on the front line and you have the most interaction with the buyer or seller. You are a professional, and you are happy to field a large range of questions from your client. But be careful about giving advice that can be considered legal advice. And do not be afraid to tell your clients when you do not know the answer to something. It is common for professionals to feel like they need to know everything, but saying you do not know can prevent you from opening yourself up to liability for a costly wrong answer. Real estate can be very complicated. If you are unsure about the answer to a question or you think your client might be looking for an answer to a legal question, err on the side of caution and refer your client to a real estate attorney.
- Disclose defects – Florida law requires real estate agents to disclose any known material defects that are not readily observable and that impact the value of the property. It is good practice to disclose any known defects.
- Communicate and document – When communicating with your client, document the discussions. Anytime a client gives you consent to do something important, make sure you have that consent in writing.
- Do not rush – Everyone wants the real estate transaction to close as fast as possible but be careful with making hasty decisions and taking shortcuts.
- Be suspicious – Be suspicious of prospective clients who will not meet you in person, who rush the transaction, who are located in another country, and who refuse to jump on a Zoom call. Fraud is common in the real estate world. If you let your guard down, you could end up representing a fraudster looking to sell someone else’s property or commit wire fraud. Make sure to have a vetting process for your clients to ensure they are legitimate clients.
- Inspections – Encourage your buyer to inspect the property, never discourage it. I have seen real estate agents discourage their buyer from performing inspections to close quicker. This is generally bad advice and usually does not end well. Generally, always encourage an inspection.
- Educate yourself – Educate yourself on the expectations of a real estate agent and the standard of care you have to your client(s). Use the resources available to you as a Florida licensed real estate agent. For instance, Florida real estate agents have access to a legal hotline where attorneys are available to answer your questions for free at 407-438-1409. Take advantage of your resources and work with an experienced attorney/title company to close your transactions.
- Insurance – While you can take steps to avoid a lawsuit, you cannot always prevent one from being filed against you. It is important to have an adequate insurance policy to protect yourself.