The real estate sector has shown significant financial booms globally. In the USA particularly, the real estate market was worth $699.9 billion in 2021. With such booming figures, the need for real estate agents and agencies has risen.
More people are looking into real estate agencies as a career option due to the increased need and value of the sector. However, as more people delve into real estate agency as a career choice, it is becoming evident that they have not studied the job’s laws well.
It is no longer a rare occasion where clients take legal action against their real estate agents. When looking to get into the real estate market, it is vital to have a team of business startup lawyers who will stick with you all along to help with any sort of legal issues that you might encounter.
Real estate agents can easily find themselves in legal action for mishaps they did, either intentionally or unintentionally. With the increasing popularity of the career, prospective and existing real estate agents need to stay aware of what could get them into legal issues.
In this article, we point out some of the things that can get real estate agents into legal trouble.
1. Failure to Disclose Property Defects
Perfection in life is virtually impossible to attain. This basic principle applies to real estate properties too. In the resale of real estate property, it is common to encounter properties that have defects. A few of the property defects commonly encountered are:
- Plumbing leaks
- Poor drainage causing flooding
- Poor electrical wiring
- Roofing issues
When it comes to such properties, it is illegal to hide the defects. Any defect that can affect the buyer’s experience with the house or the value of the property should be revealed to the buyer before purchasing.
When a real estate agent fails to do this, the buyer can take legal action against the agent after purchasing the property.
2. Physical Injury to Clients
Site visits to check the properties on sale are a must-do for most people before paying for a property. When taking prospective clients on a site visit, the real estate agent has to ensure that the property is safe to visit.
If a client gets hurt while viewing a property on sale, they can take legal action against the agent for lack of ensuring the site is safe. As a real estate agent, it is advisable to visit all properties prior to the clients to ensure you clear any debris or items that can cause accidents.
3. Untrue Claims to Clients
The line between lying and emphasizing the features of real estate property to prospective buyers is always thin and risky. An easy example of this is a real estate agent assuring the house has air conditioning installed. However, after a client buys the house and finds that the AC does not include the house’s garage, this can be taken up as a case of lying to get a sale.
As a real estate agent, you should ensure that you are completely honest with your prospective clients to avoid such issues. When you mention something about the house to the client, include all necessary details to ensure the client is well aware of it.
4. Failure to Observe Data Privacy Laws
Real estate agents are often trusted with confidential client information to facilitate communication and payments if one opts to purchase the property. As a real estate agent, you should be aware of the data privacy laws that restrain you from using the data for its intended use and that you should keep the data confidential.
It is common to hear of cases whereby clients claim that their agents gave away their personal information to agencies or mortgage companies. You ought to ensure that client data stays private.
If you are to use a client’s information for some other purpose, obtain consent from the client first.
5. Breaching of Contracts
Contracts form an integral part of the real estate market. Real estate agents often underestimate the drafting of legal contracts. Given their familiarity with such documents, they misjudge the need to seek the assistance of a professional legal advisor.
It is highly important to employ qualified real estate lawyers who can guide you with drafting legal contracts while buying and selling properties so that you don’t land in client-agent disputes.
One area that can easily get a real estate agent arraigned in court is the timeline stipulated in the contract.
As a real estate agent, it should be common practice to study the contracts you give to clients. Consult with legal personnel whenever necessary to ensure that you have a clear understanding of what is entailed in the contract and all the clauses.
When making a sale, educate your client too. Ensure that they understand every clause in the contract and give them time to internalize. Also, allocate time for clients to ask questions about the contract to clear any areas that are open to interpretation or those that seem ambiguous.
Once the real estate agent and client understand the contracts well, cases of alleged contract breaches will not arise.
6. Offering Legal Advice
As a real estate agent, it is easy to fall into the trap of helping your clients with all their concerns to build a relationship and eventually make a sale. Clients can seek advice regarding how the property can be remodeled, the interior design, etc.
When helping clients and building a relationship, you should always remember that you are legally restricted from offering any legal advice. Legal advice also incorporates offering tax advice to clients for any reason whatsoever.
This is another instance where having business startup lawyers comes in handy for real estate agents. The lawyers can offer legal advice to prospective clients thereby bettering the relationship with the agency without putting a real estate agent at risk of facing legal action.
With the high growth trends of the real estate market, more changes and laws are bound to be implemented. It is therefore vital that all real estate agents stay updated on the new rules and regulations for this rampantly growing sector.