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Real Estate Malpractice

Fairfax Injury Lawyer Brien Roche Addresses Real Estate Malpractice
Brien Roche

Real Estate Malpractice-Role Of The Agent

Real estate malpractice by a real estate agent is a form of professional negligence. The claims are similar to legal or medical malpractice cases. The plaintiff must prove what the standard of care is.  The standard of care is a function of the real estate regulations, state code or what a reasonable and prudent agent would do.

The relation between a real estate agent and a seller is governed by a listing agreement.  The listing agreement is in large measure going to define what the duties are. The duties define the standard of care.

As to a buyer there may be a Buyer/Broker Agreement between the agent and the buyer. This defines the duties.

Common Problems

Some common areas where real estate agents get themselves into trouble in terms of dealing with buyers and sellers are:

  • failing to properly describe the property for sale.  For instance if the seller informs the agent that the property has certain features and those are not set forth in the sales info presented to the public then there may be some fault on the part of the agent;
  • if the agent fails to convey all offers and demands for settlement then there may be fault.
  • if the agent incorrectly explains certain contract language to the buyer or seller, there may be fault.  However the sellers and buyers are expected to read the contract. If they do not know what something means then they should ask the agent.  The agent is not an attorney. The agent cannot give legal advice. Furthermore most residential real estate contracts are prepared by the local Board of Realtors. They are form documents.
  • sometimes zoning issues arise as part of a real estate deal.   Although the agent is not a zoning attorney the agent must be certain not to mislead either buyer or seller as to rights or duties. These questions may apply to streams or bodies of water that are nearby, set-back issues or right to build issues.  The Listing Agreement and/or Sales Contract probably cover these matters. They put the burden on the buyer or seller to check out these issues.


As is true with most malpractice cases the core issue may be not so much one of fault but what did that fault cause?  For instance an agent fails to make some disclosure about the property. The real issue may be what did that cause?  It obviously didn’t cause the underlying condition.  It may however have caused the buyer to buy property that she otherwise would not have bought.  In contrast it may have caused the buyer to incur certain expenses.  Those issues of causation can be tricky. They frequently become the focal point of the claim.

In addition there may be a defense of contributory negligence or breach of contract by the plaintiff.  That breach of contract or fault may consist of the plaintiff not reading the contract documents. Or it may be their failure to obtain professional assistance. This may be from a lawyer, architect or otherwise. Call, or contact us for a free consult.

Real Estate Malpractice-Property Conveyances

In the early 1990s the mortgage industry undertook to form an entity known as the Mortgage Electronic Registration System (MERS). This entity came to hold thousands of mortgages.  The idea was that this central electronic clearing house would allow companies to transfer thousands of mortgages electronically. This sped up the process by which loans could be bought and sold. In addition it simplified the process by which mortgages could become the security for mortgage backed securities.  The time consuming  process of having to record assignments of mortgages at local courthouses was slowing down the process.

Over time it was unclear as to who actually was the holder of these promissory notes or mortgages and/or deeds of trust. On paper they were the security for the original lender.  Mortgage bankers decided to simplify their record keeping. As a result MERS became the nominee for the mortgage holder. 

When the loans changed hands the new owner or servicing company would register the transaction electronically with MERS. There was no need to record the deal at the local courthouse.  That left MERS as the owner of record of  many mortgages. When these mortgages went into foreclosure it  then had to initiate the foreclosure.  MERS did not have the man power to accomplish that. As a result it allowed employees of the mortgage companies to sign its name to the foreclosure documents to begin the process.  This raised questions about the intervening transfers that were not recorded at the local courthouse. Were they valid?

It may be that many of these mortgages held by MERS were not enforceable.  The chain of title of transfers may be in need of a redo. Although these matters did not directly involve the real estate agent sometimes the agent was entangled in the mess.

Real Estate Malpractice-Look to The Lawyer

Call, or contact us for a free consult. For more information about real estate malpractice and related topics dealing with legal malpractice see the other pages within this site.  Also for more information on legal malpractice see the pages on Wikipedia.


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