Top 5 Legal Issues Real Estate Brokers Need to Know

As a real estate broker, your first priority is marketing yourself and your skills to both the seller and the buyer; however, each and every transaction presents potential pitfalls. Buyers and sellers alike may bring suits against you based on common law and statutory law for a number of reasons. You should be mindful of legal issues that affect your work by staying up to date with the laws that govern your daily real estate activities. To help you avoid potential legal issues, below are some issues to consider.

Misrepresentation Issues

This is the top reason why many real estate brokers get sued. Real estate brokers strive to make their property stand out and this might put some pressure on them to exaggerate the house features and the property condition. This kind of deception can lead you to court. To avoid this, always be truthful in your claims and leave no room for misinterpretation.

Data Security

As you collect client information, be aware that there are laws that govern the storage and protection of this information. There are hackers everywhere looking for this information, and if they get the information that you have, you will be the one paying. Protect your clients’ information by installing security software. If you use paperwork, ensure that all sensitive information is stored in a secure location.

Breach of Contract

If a client feels that their real estate broker did not perform in accordance to the terms in their contract, they may seek legal action. One common reason for breach of contract is not complying with the time frame stated in the contract. Breach of contract is usually in conjunction with claims of the following:

  1. Negligence
  2. Fraud
  3. Breach of duty

Examine every aspect of the contract with a lawyer to ensure that all the information is accurate. Identify any unclear terms, clauses or issues to reduce the chances of legal action.


Negligence is a cause of action where your client alleges your failure to exercise due care toward them. Your client can claim that you should have known specific information, but did not and hence failed to take the appropriate action. Negligence differs from fraud if the client cannot prove intent.

Fraud occurs when a person purposely makes a misrepresentation for the benefit of financial gain. This is especially common in the real estate industry as many times, taxes and other reports become falsified.

Breach of Duty

Real estate agents must always act in the best interest of the client since their clients place special trust in them for their expertise. Brokers are held to a high standard of honesty, as well as full disclosure. Breach of their duty due to negligence or intentional action can subject you to a lawsuit.

Even the best real estate brokers can get into legal battles. The good news is that you can avoid these common mistakes and drastically reduce your risk of being sued. Our experts are ready to help you with a successful career in real estate. Contact our Naples office at (239) 649-6555, Marco Island office at (239) 394-5161 or visit

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