Agency Representation

A major increase in real estate litigation comes due to issues surrounding agency representation according to Winter Park attorney Eric Lanigan. Buying and selling a new home is an emotional experience. It can also become a legal experience if you hire a realtor to find the home of your dreams or sell your home and something doesn’t work out as planned.

Regardless if it’s your home, a home you’re buying, are having issues with a disclosure form or a dispute over a home warranty, a property line, a land zoning or quality issue consult with Lanigan and Lanigan, P.L. If you have a problem purchasing property work with Florida real estate attorney Eric Lanigan or Roddy Lanigan to handle your legal issues.

The number one reason that real estate agents and brokers are involved in litigation are due to  client and agent issues regarding agency representation according to a survey conducted every two years by The National Association of Realtors.

Agency representation issues refer to whether a real estate agent represents buyers or sellers or provides dual agency representing both parties. If a realtor represents both parties, it must be divulged before the contract for agency is signed. Agency representation cases rose 36 percent from 2009.

Agency issues were one of the top 3 causes of litigation:

  • Agency 73%
  • Property condition disclosures 68%
  • Ethics 53%
  • Third-party liability 49%
  • Fair housing 48%
  • Technology 48%
  • Anti-trust issues 47%

The lawsuits were based on accusations that an agent or a broker had breached client fiduciary duty. For example, an agent was accused of failing to explain the importance of property disclosures and instructing them on how to complete a disclosure form.

The sellers said that the agents, who were dual agents and represented the buyer in the transaction, breached their fiduciary duties because they failed to instruct them on how to complete the property disclosures form or explain the importance of the form.

The judge residing over the case agreed that the seller should not fill out the property disclosure form without benefit of the agents’ experience, instruction and knowledge.

However there was a twist because the sellers resisted the agents’ advice to disclose new floors they had installed on a list of alterations they had made the house, the judge said, which should have alerted them that other work they had done was also an alternation that needed to be disclosed. The judge ruled in the agents’ favor.

Real estate professionals said that breach of fiduciary duty is a catch-all for consumers not satisfied with the outcome of a real estate transaction. Agents are responsible for putting clients’ interests ahead of their own–a fiduciary duty.

Brokers practicing dual agency have a more limited duty of loyalty to their clients — by definition, they can’t be advocates for both — and have to maintain client confidentiality. For example, an agent who tells a seller in negotiations how much a buyer might pay is breaching fiduciary duties to the buyer.

By limiting or eliminating fiduciary duties that brokers and agents owe their clients, lawmakers in more than 24 states have reduced the legal liability of realtors providing services in non-agency relationships such as transaction brokerage. But that hasn’t stopped consumers from filing lawsuits testing those defenses.

A client served by dual agents may also conclude that their agent has withheld crucial information or advice from them in order to keep a deal on track. This is where lawsuits have an opening.

The extent to which real estate brokers and agents are expected to put their skill, competency and experience to work to uncover issues about a property that their clients may think they should know goes beyond property defects — particularly in the world of commercial real estate.