As licensed professionals, real estate agents are expected to uphold a standard of care and act in the best interests of their clients. However, like any professional, they are not immune to making mistakes or engaging in misconduct that can result in a loss to their clients.
In Australia, it is possible to sue a real estate agent for professional negligence.
What is real estate misconduct?
Real estate misconduct can take different forms. It can include the making of a false or inaccurate claim, misleading or deceptive conduct, or other unethical behaviour where the real estate agent acts in a way that may benefit themselves rather than acting in the best interests of the client. Real estate agents will be held accountable when they engage in such forms of misconduct. Further examples of such misconduct can include:
- Making false representations about the property or its features.
- Misleading buyers or tenants about the state of the property or its history.
- Concealing known defects in the property.
- Failing to disclose pertinent information.
- Failing to act in the best interests of the client.
What is negligence in real estate matters?
Real estate agents are required to exercise all reasonable care and skill in the performance of their duties, including the provision of accurate information, advising clients on their legal obligations, and disclosing any known issues with the property. If a real estate agent fails to discharge the duty of care and the client suffers a loss because of that failure, it may be open to the client to prosecute a professional negligence claim against the real estate agent.
In general, the duty of care owed by a real estate agent to their client can be divided into two broad categories. They are:
- a duty to disclose; and
- a duty to take reasonable care to avoid foreseeable loss or harm to the client.
Real estate agents are obligated to disclose any material facts concerning the property, such as defects, easements, or zoning restrictions that may affect the client’s decision to buy or rent. Additionally, a real estate agent must take reasonable steps to prevent harm to the client, such as the inspection of properties before showing them to the client or warning the client about known hazards.
When can I sue a real estate agent for negligence?
In order to successfully sue a real estate agent for negligence, you must be able to prove the following:
- That the real estate agent owed you a duty of care
- That the real estate agent breached that duty of care
- That you suffered loss or harm as a result of that breach
- The loss or harm was a foreseeable consequence of the breach.
If these matters can be proven to the satisfaction of the court, then you would be entitled to recover compensation for your losses, which can include damages for loss of rent or repair costs, as well, in some circumstances, non-economic damages for pain and suffering.
However, it is worth noting that not every mistake or error made by a real estate agent will amount to negligence. In some cases, the mistake may be minor or not causally linked to any loss or harm suffered by the client.
Conducting due diligence
Both the buyer and seller can be affected by the real estate agent’s negligence. It is important to conduct your own due diligence and not solely rely on the information provided by the real estate agent. Fine print disclaimers and professional indemnity insurance may protect the real estate agent in certain circumstances, but ultimately it is mandatory that a real estate agent act in the best interests of the client and provide accurate information. Prospective buyers should be cautious and avoid forming a false impression based on the real estate agent’s representations. Real estate agents who work with multiple clients should also take care to avoid any conflicts of interest and prioritise their clients’ best interests.
Real estate agents play an important role in the property market and are required to uphold a standard of care in the performance of their duties. Whilst not all mistakes made by real estate agents will amount to professional negligence, clients have the right to expect that their agents will act in their best interests and take all reasonable steps to prevent any loss or harm. In the event a real estate agent breaches their duty of care and as a result there is loss or harm to the client, the client may be entitled to compensation through the prosecution of negligence claim.
If you believe you have suffered any loss or harm by the actions or inactions of a real estate agent, it is important to seek legal advice as soon as possible. An expert professional negligence lawyer, such as those at Brydens Lawyers, can help you understand your legal rights and options, and assist you in pursuing a claim for compensation.