What Are the Most Common Claims Against Real Estate Agents?

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What Are the Most Common Claims Against Real Estate Agents?

Real estate agents hold a position of trust, often times involved in transactions that represent the largest monetary value that their clients have ever encountered. As such, real estate agents may be subject to a number of legal claims in their line of duty. It is important that real estate agents understand where their risk exposures are, what types of behaviors and interactions are most likely to cause trouble, and how they can protect their operations with a Business Insurance program geared towards real estate agents. We can start by taking a look at the most common insurance claimed filed against real estate agents.


Typically, fraud requires showing that the real estate agent had the intent to defraud, deceive or misrepresent facts to the detriment of the plaintiff. This may be affirmative action such as telling a lie, or it may be fraud by omitting certain information.

Fraud may arise when you knew that information in a listing was incorrect, such as the square footage of the home, but still maintained this information was true. Fraud can also result when failing to disclose information about property damage or a termite infestation.

Keeping knowledge of future development plans from clients in order to look out for personal interests is also considered fraud.

Breach of Contract

A breach of contract claim asserts that the real estate agent violated the contract between the agent and the plaintiff. Generally, you would not be sued for breach of contract under the real estate contract but may be sued for violating the broker’s agreement or another contract.

Breach of Duty

A real estate agent has a fiduciary duty to act in his or her clients’ best interests, requiring zealous client representation even if doing so would result in a lower fee for you.

Maintaining this duty of care requires you to act with all of your skill, care and diligence to best represent the client. A breach of duty claim may arise in failure to disclose important information to the client, such as an ongoing feud with a neighbor or a known property encumbrance.


Negligence asserts that the defendant owed a duty to the plaintiff but breached this duty. As a result, the breach caused the plaintiff to suffer some harm.  The duty may be expressly provided in the contract or it can be a general duty of care that the real estate agent was expected to exhibit, given the relationship with the plaintiff.

Negligence is a legal theory that is not based upon the intent of the defendant. It can rest on the theory that you were aware of a defect and accidentally forgot to disclose it.

Client Data

Hackers are prevalent and want client information. If they succeed in getting it, you’ll be the one who pays. Protect client information from criminals by installing security software, securing all records, and regularly changing your password.


Clients trust in their agent’s expertise and guidance through the real estate process. Be upfront that there are some areas that require a third-party opinion.

Identifying the Defendant

Client injury or economic damage due to the acts or omissions on your part brings about legal liability. The first named defendant is often the real estate agent.

About Bozzuto & Co. Insurance Services, Inc.

Bozzuto & Company Insurance Services has provided business and personal insurance solutions to clients throughout California since its founding in 1981. Our experienced staff understands the unique needs that each person has when insuring their lives and their businesses, and we pride ourselves on our deeply personal customer service. We are happy to help you through every step of the insurance selection process. Contact us today at (800) 400-6394 to learn more about what we can do for you.


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