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When can a real estate agent be sued?

Q: When can a real estate agent be sued?

A. Unfortunately, a real estate agent can be sued by a third party like a client, buyer, or seller that claims you're responsible for an injury or financial loss. Because there are so many scenarios that could lead to a lawsuit, let's take a quick look at a few examples:

  • Disputes about your work. One of your client's has a house on the market for 10 months. You've had lots of nibbles but no bites. A potential buyer pops up, but then backs out of the deal. Frustrated, your client sues and claims you've mismanaged the sale. The lawsuit alleges $50,000 in damages. (Errors and Omissions Insurance may cover lawsuits over problems with your work as a real estate agent).
  • Property damage. You're walking through a property, checking out its high-efficiency windows. You pull the cord on the blinds and accidentally tear them from the wall. The property owner sues you over the cost to repair the blinds and patch the wall. The repairs cost total $10,000.
  • Slip-and-fall accidents and injuries. While showing a home, you lead a young couple to the luxurious bathroom in a master bedroom. The husband opens the medicine cabinet, only to have the mirrored door slip off its hinges and falls on his foot, breaking it. Needless to say, they don't buy the home. Instead, they sue you for $25,000 in medical bills and pain and suffering. (General Liability Insurance may cover third-party injuries and property damage lawsuits).
  • Meritless accusations. Even if you've done nothing wrong and the lawsuit has no legitimate basis, your legal costs could be substantial. According to the U.S. Chamber of commerce's study [PDF] New browser window icon. of small business lawsuits, the typical cost of a frivolous lawsuits ranges between $2,000 and $5,000. (E&O and GL may also cover frivolous lawsuits).
  • Employee discrimination. Employees could sue you if they think you've unfairly passed them over for promotion, discriminated against them, or created a hostile work environment. (Employment Practices Liability Insurance may cover these lawsuits).

These examples cover a wide range of incidents including property damage, injuries, and real estate transactions gone wrong. What you probably noticed is that real estate agent insurance may cover many of these lawsuits. To learn more about covering your agency's risk, see our sample insurance quotes for real estate professionals.

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