When to Sue a Real Estate Broker for Misrepresentation - Law and Daily Life
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When to Sue a Real Estate Broker for Misrepresentation

Buying or selling a home can be a complicated, emotional, and stressful process, which is why you hired a real estate broker to help. Hopefully, you interviewed her beforehand, and hopefully, the broker is someone you can trust. But what happens when that trust is broken?

Of the many legal issues facing real estate brokers, lawsuits for misrepresentation are by far the biggest. So how do you know if your real estate broker has made misrepresentations, and when can you sue because of them?

Misrepresentations and Failures to Disclose

Legally, a misrepresentation is when a real estate broker misstates some material feature of the property. Often lumped in with misrepresentations are failures to disclose, which is when a broker fails to address or reveal a material feature of the property entirely. Most often, misrepresentations concern the foundation of the property or crucial structural features, property boundaries, or termite or pest problems. And the most common undisclosed issues involve easements on the property, title problems, and environmental problems.

The difficult part for home buyers and sellers is identifying these misrepresentations. We generally think of brokers as the experts, and aren't often in a position to question or correct what they tell us. Sadly, it isn't until much later, after a home is bought or languishes too long on the market, that we find out we've been duped.

Misrepresentation Lawsuits

There are three types of misrepresentations:

  1. Innocent -- simple mistakes with no intent and little harm;
  2. Negligent -- failure to disclose significant property issues due to ignorance;
  3. Fraudulen-- purposefully misleading a client or hiding a property issue in order to make a sale.

You can't sue a real estate broker for a bad opinion -- in order to win a misrepresentation lawsuit, the misstatement must involve some material fact about the property or the sale that would affect a reasonable person's decision regarding the purchase.

If you're thinking of buying or selling a home, or have had issues with a real estate broker, you should consult with an experienced real estate attorney near you.

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