Liabilities and Obligations for Real Estate Professionals

Agenda

Real Estate Agent Fiduciary Duty to Buyer

• Duty of Loyalty
• Duty of Good Faith
• Obedience, Disclosure, Confidentiality, Reasonable Care and Diligence
• Accounting

Real Estate Agent's Role in the Housing Crisis

Ethical Duties of Real Estate Fiduciaries

• "It Is Axiomatic That Anyone Acting in a Fiduciary Relationship Shall Not Be Permitted to Make Sure of That Relationship to Benefit His Own Personal Interests"- Meinhard v. Salmon
• Fiduciaries Are Governed by the Common Law of Agency
• Real Estate Agents "In a Traditional Agency Relationship With Buyer Is Obligated to Procure the Greatest Advantage to His Client"

Liability of Real Estate Agents

• The Laws of Agency
• The Laws of Tort
• Liability Under the National Association of Realtors Code of Ethics and Standards of Practice

Agency

• For a Breach of a Real Estate Agent's Fiduciary Duties, the Plaintiff Must Establish Two Things
• To Demonstrate Breach of Fiduciary Duty Plaintiff Must Show Three Criteria
• Morely v. J Pagel Realty and Ins., 550 P.2D 1104 (Ariz. Ct. App. 1976)

Tort Liability

• Common Law Theory of Caveat Emptor "Buyer Beware"
• Under a Theory of Tort the Court Will Find That There Was Some Type of Misrepresentation, Whether Intentional, Negligent, or Innocent, or Some Kind of Professional Misconduct
• Question Becomes What Is the Applicable Standard of Care to Which the Real Estate Agent Will Be Held Accountable

Theories of Liability Under the National Association of Realtors Code of Ethics and Standards of Practice

• All Real Estate Agents Who Are Members of the NAR Must Abide by Its Code of Ethics
• Courts Generally Use the Code of Ethics to Find the Standard of Care to Which a Real Estate Professional Should Be Held Accountable, Easton v. Strassburger
• In Menzel v. Morse the Iowa Supreme Court Relied on the NAR's Code of Ethics to Hold That a Real Estate Professional Owed a Duty to the Prospective Purchaser

Modern Expansion of Broker Liability

Negligence and Broker Malpractice Theory

• Cechovic v. Hardin and Associates, Inc.
• In Gerard v. Peterson
• In Newbern v. Mansbach

Underground Storage Tanks

• A Broker Can Be Held Negligent for Failing to Disclose the Existence of a UST, Binette v. Dyer Library Ass'n, 688 A.2D 898, 903 (Me. 1996)

Credits

Faculty

Christopher B. Block

Marshall Dennehey Warner Coleman & Goggin

• Partner in Gordon & Rees’s Litigation Practice Group
• More than ten years of asbestos defense litigation experience having represented both regional and national defendants including a large national crane company, boiler companies, and several regional insulation contractors in New York and New Jersey
• Extensive experience in professional liability cases having represented a broad range of professionals involving, real estate brokers and agents, lawyers, insurance agents and brokers, appraisers, architects and engineers

Regularly represents clients in the defense of toxic tort litigation, commercial litigation, and construction defect litigation

• J.D. degree, Widener University School of Law
• B.A. degree in political science, University of Pittsburgh
• Can be contacted at [email protected]