Real Estate Agent Problems: Legal Issues to Check for New Real Estate Agents

There are thousands of legal cases are filed in the U.S. every year. A fraction of this number can be traced to the real estate industry. Property legal issues are relatively common for varying reasons. One of the most common reasons for it is that there are high stakes in the property. Many properties can cost between $350,000 to a million dollars.

Many people would like to either be recompensated for an overpriced property or get more money out of an underpriced one. Another reason for this is inheritance issues. Sometimes, inheritance isn’t thoroughly looked into by real estate firms, and legal issues can quickly arise from them.

Regardless of the reason, studies have found that newer real estate agents are more likely to find themselves in legal trouble than experienced ones. If you’re planning to become a real estate agent in the future or if you are a new agent in the industry, here are some of the most common legal issues that real estate agents experience.


Misrepresentation is the most common lawsuit filed in the industry, and for a good reason: new agents tend to forget to check properties under their care, which leads to the lack of information given to clients. This specific lawsuit relies on what they tell the client. Sometimes features of a property can be exaggerated in hopes of selling it.

Other reasons may come from negligence from the agent (i.e., forgetting to check for infestations in the property). Regardless of the reason, newer agents tend to be very excited in their first few sales, which can lead to this particular lawsuit. Although this lawsuit is mainly minor and can be addressed through a minor settlement, it can still be detrimental to the agent’s career.

False Advertising

False advertising can be fairly common in the industry. Pictures posted on the real estate market both in the physical and digital world can be changed over time, and not updating these pictures can lead to legal issues when it comes to representing the property.

However, most false advertising cases in the industry are shrugged, especially if there is no monetary transaction between the parties (e.g., purchasing the property). Real estate firm’s management usually addresses most false advertising issues. If you’re a private agent, ensure that you keep the pictures of properties under your management up to date to avoid this particular lawsuit.

Fair Housing

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The Fair Housing Act of 1968 is one of the most important laws in real estate. However, a percentage of real estate agents still break it, and it’s usually for reasons that can be avoided. In its essence, the Fair Housing Act protects buyers from any kind of discrimination. This can differ depending on the state, so new agents tend to break this particular law. For example, some states identify the LGBTQ genders as part of the act, while others don’t.

Additionally, because of the growing uniqueness of every human globally, all kinds of discrimination (e.g., obesity or overweight) could be taken into account despite having no relation to the Fair Housing Act. Also, there had been various changes that are implemented by individual states when it comes to this act, making it hard for some real estate agents to keep track.

Estate Planning

In some situations, an agent might sell a property that has not yet been fully transferred to the heir of the property. This can be troublesome, especially if you haven’t done your research and looked into both the will and property deed. Unfortunately, newer agents can overlook this process. This is why you should always look into the deed of every property and authenticate it, especially if the property comes from a deceased person.

However, if you ever find yourself in this situation, don’t hesitate to hire an estate planning attorney to look into the lawsuit. In most cases, the attorney can find something that will take you off from the case and keep the lawsuit between the deceased’s family members. However, if they can’t find anything to protect you, it’s good to have them represent you in court instead.

The Bottomline

What does this mean for you, a new real estate agent in the market? In most cases, you can agree upon a settlement with some of these legal issues. Sometimes your firm can even handle the legal issue for you. Needless to say, it’s always good to have several private attorneys to help you if you ever get yourself into these legal issues. They can save your career from such issues.

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