If you need a purchase and sale agreement for real estate, or a real estate purchase contract or REPC, please call our office and request one. We would be happy to email a standard form to you free of charge.
Real Estate Agents’ Liability for Errors and Omissions
The Utah real estate market has long been attractive to buyers. As the Sunshine State experiences a construction boom and job growth since the great recession, the market continues to gain strength.
A strong real estate market means plenty of opportunities for real estate professionals. In their eagerness to close the deal, however, agents and brokers can make errors and omissions that cause financial losses for buyers and sellers.
Utah real estate agents and brokers are held to standards of professional conduct that, if not met, can expose them and the brokerage firms they work for to liability. If you have suffered financials losses due to misrepresentations or other misconduct by a realtor, you may be able to file a lawsuit to recover your damages.
PROFESSIONAL DUTIES OF UTAH REALTORS AND BROKERAGE FIRMS
Utah law sets forth the responsibilities owed by real estate brokers and sales associates to their clients. This same conduct can also be grounds for a lawsuit.
The professional duties that Utah realtors owe include:
- Dealing honestly and fairly
- Accounting for all funds
- Using skill, care, and diligence in transactions
- Disclosing all known material facts of the property to potential buyers
- Not making misleading, deceptive, or fraudulent representations to potential buyers
UTAH REALTOR LAWSUITS CAUSES OF ACTION
Lawsuits against residential or commercial realtors typically allege one or more of the following causes of action against the agent and/or the brokerage:
FRAUD BY A REAL ESTATE AGENT OR BROKER
Fraud means that the real estate agent intentionally made a false statement concerning a material fact, or intentionally omitted (left out) a material fact about a property. In the context of a real estate transaction, a material fact is a fact that a reasonable person would find relevant to the decision of whether to purchase or sell a property. A party suing their Utah realtor under a fraud cause of action may be entitled to punitive damages.
NEGLIGENT MISREPRESENTATIONS BY A REAL ESTATE AGENT OR BROKER
Negligence also relates to omissions and misrepresentations of material facts, but it deals with unintentional (instead of purposeful) omissions and representations. While negligence is a less serious offense than fraud, the harm suffered by buyers and sellers may be indistinguishable, and they can still recover their financial losses when their realtors make unintentional errors.
BREACH OF FIDUCIARY DUTY BY A REAL ESTATE AGENT OR BROKER
In certain cases real estate agents and brokers owe clients a fiduciary duty. A fiduciary duty requires a Utah real estate professional to put the best interests of their clients ahead of their own interests. This high standard of care reflects the fact that agents and brokers, as compared to their clients, usually possess superior knowledge about real estate, which creates the potential to abuse their position of authority.
BREACH OF A REAL ESTATE CONTRACT
The specific agreement between a real estate agent and a client can impose duties on the agent that go beyond their general duties of honest and fair dealing. When real estate agents breach a contract with a client, they can be liable for the financial losses stemming from that breach.
VICARIOUS LIABILITY OF Utah REAL ESTATE BROKERAGES
When a real estate agent/broker does not meet their professional duties and a lawsuit arises from their misconduct, the brokerage firm they work for may be held liable under a legal concept known as “vicarious liability.”
Utah courts have ruled that if a real estate firm profits from the actions of an agent—for example, by earning money on a real estate transaction that involved misconduct—then the firm cannot disclaim the misconduct while also accepting the fruits of the agent’s efforts.
EXAMPLES OF REAL ESTATE AGENT MISREPRESENTATIONS
Misrepresentations by Utah real estate agents and brokers can occur in commercial or residential transactions and take many forms. If you are concerned that you have been deceived or lied to by a real estate professional, the examples below should provide some more context.
MISREPRESENTATIONS ABOUT BUILDING REGULATIONS
Utah building regulations place limits on how an owner may build on a property. For many clients, building regulations are material to their purchase decision—especially if they plan to renovate the property.
MISREPRESENTATIONS ABOUT ZONING LAWS
Another material fact for potential buyers is how property is zoned. Zoning regulations and restrictions specify how property within certain areas can be used (e.g. for residential, commercial, or industrial use).
For the buyer who is looking to establish a new location for a business, whether or not the location allows commercial activity is of crucial importance. If a real estate agent assures the buyer that the property can be used for a business—but zoning laws prohibit this—the agent may be liable for the misrepresentation.
Other examples of residential and commercial real estate agent misconduct that can lead to legal action include:
- Misrepresenting the value of a property
- Not disclosing property damage or flaws
- Over-inflating or exaggerating property features
- Not disclosing an easement, title problems, or environmental problems
- Misrepresenting the property boundary
- Misrepresenting property information, such as the age of an addition or feature
Free Initial Consultation with Real Estate Lawyer
If you need a real estate lawyer, call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506