As licensed professionals, real estate agents are expected to uphold a standard of care and act in the best interests of their clients. However, like any professional, they are not immune to making mistakes or engaging in misconduct that can result in a loss to their clients.
In Australia, it is possible to sue a real estate agent for professional negligence.
Real estate misconduct can take different forms. It can include making false or inaccurate claims, misleading or deceptive conduct, or other unethical behaviour where the real estate agent acts in a way that may benefit themselves rather than acting in the client’s best interests.
Questions of real estate negligence can also arise when a real estate agent unknowingly fails to provide an accurate account of a property’s condition, even if they were unaware themselves. This includes failing to perform the required inspections or checks that inform how the property is represented.
Real estate agents will be held accountable when they engage in forms of misconduct — examples can include:
Making false representations about the property or its features.
Misleading buyers or tenants about the state of the property or its history.
Concealing known defects in the property.
Failing to disclose pertinent information.
Failing to act in the best interests of the client.
Each Australian state and territory independently regulates the responsibilities and codes of conduct for real estate agents which can include various thresholds for what amounts to real estate negligence. In NSW, real estate agents are subject to the Property and Stock Agents Act 2002.
Real estate agents are required to exercise all reasonable care and skill in performing their duties, including the provision of accurate information, advising clients of their legal obligations, and disclosing any known issues with the property. If a real estate agent fails to discharge their duty of care and the client suffers a loss as a result, the client has the opportunity to prosecute a professional negligence claim against the real estate agent.
In general, the duty of care owed by a real estate agent to their client can be divided into two broad categories. They are:
a duty to disclose and
a duty to take reasonable care to avoid foreseeable loss or harm to the client.
Real estate agents are obligated to disclose any material facts concerning the property, such as defects, easements, or zoning restrictions that may affect the client’s decision to buy or rent. Additionally, a real estate agent must take reasonable steps to prevent harm to the client, such as inspecting properties before showing them, warning the client about known hazards and investigating whether there are factors that impact the property.
To successfully sue a real estate agent for negligence, you must be able to prove the following:
That the real estate agent owed you a duty of care
That the real estate agent breached that duty of care
That you suffered loss or harm as a result of that breach
The loss or harm was a foreseeable consequence of the breach.
If these matters are substantial — requiring you to consult a lawyer on the question of “can I sue a real estate agent for negligence,” — and it can be proven to the satisfaction of the court, then you would be entitled to recover compensation for your losses. Your remediation for professional negligence can include damages for repair costs, loss of rent in the short and long term, decrease in property value, and, in some circumstances, non-economic damages for pain and suffering.
When submitting a claim of professional negligence, your lawyer will need to demonstrate negligence constituting incompetence or deception and the extent of your loss or resulting from same.
However, it is worth noting that not every mistake or error made by a real estate agent will amount to negligence. In some cases, the mistake may be minor or not causally linked to any loss or harm suffered by the client.
Both the buyer and seller can be affected by the real estate agent’s negligence. It is important to conduct your own due diligence and not solely rely on the information provided by the real estate agent. By not uncovering defects or issues of easements, among others, the impact of mistakes and potential misconduct can have a short or long-term effect on you financially or impede your use and enjoyment of the property.
Property buyers can best protect themselves prior to submitting an offer and before settlement closes by verifying the property title and condition through formal reports. This information can be sourced via the real estate agent and other relevant sources such as council records, solicitors, surveyors, insurers and other agents. Examples of reports or factors you may want to consider can include:
Building and pest inspection reports
Strata reports (if applicable)
Title searches
Zoning and land use regulations
Environmental factors — i.e. the lot is in a registered flood zone, which may affect insurance costs
Utility and telecommunication connections
Fine print disclaimers and professional indemnity insurance may protect real estate agents in certain circumstances, but it also does not exclude them from professional negligence compensation claims where they have actively or passively acted outside of their professional and regulatory responsibilities. Ultimately it is mandatory that a real estate agent act in the best interests of the client and provide accurate information.
Prospective buyers should be cautious and avoid forming a false impression based on the real estate agent’s representations. Real estate agents who work with multiple clients should also take care to avoid any conflicts of interest and prioritise their client’s best interests.
Additionally, if you have decided to hire a lawyer to prosecute your claim, it is important you support your case by providing clear examples or evidence of where and when the real estate agent failed to perform their responsibilities. By maintaining a record, your lawyer can successfully argue a case of misconduct as opposed to a situation that arose from a mistake or misunderstanding on the part of both parties, which may not constitute negligence on the part of the real estate agent.
Factors that can be relevant to any claim include:
The communication between both parties — yourself and the real estate agent
There was a lack of communication due to a change in the professional relationship, i.e. the real estate agent representing the property changed during the course of events
You withheld your expectations and requirements
You failed to pay fees or make other payments required to proceed with or finalise the transaction
There is a language barrier preventing clear communication of defects, easement, and other issues
An individual or group hired in some capacity to represent your interests failed to share the relevant information provided by the real estate agent with you before, during or after the transaction
Real estate agents play an important role in the property market and are required to uphold a standard of care when performing their duties. Whilst not all mistakes made by real estate agents will amount to professional negligence, clients have the right to expect their agents to act in their best interests and take all reasonable steps to prevent any loss or harm. In the event a real estate agent breaches their duty of care and, as a result, there is loss or harm to the client, the client may be entitled to sue for compensation through the prosecution of a professional negligence claim.
If you believe you have suffered any loss or harm by the actions or inactions of a real estate agent, it is important to seek legal advice as soon as possible. An expert professional negligence lawyer, such as those at Brydens Lawyers, can help you understand your legal rights and options and assist you in pursuing a claim for compensation.
Our professional negligence lawyers take the time to investigate the finer details regarding your claim, help collect evidence and argue your claim of damages or loss. We understand that submitting a professional negligence claim can feel overly complex — our experienced team will clearly communicate with you to ensure you are informed regarding the state of your case and what you can expect to happen.
To best understand how much compensation for professional negligence you may be entitled to, do not hesitate to contact us. Book an in-person or virtual consultation today at your closest Brydens Lawyers location, and our experienced team will do all the work to help protect your best interests.
We're here to assist you in claiming the compensation you deserve on a No Win, No Fee* basis. Enquire now to start your claim today. *Conditions apply.