Avoid getting sued

Five tips for real estate agents to stay out of the firing line

Real estate is a tough game, with tough rules. With sizeable transactions and high stakes on the line, real estate laws are strict to protect the interests of all parties involved.


For agents, this means there are a lot of ways you can slip up and potentially land yourself, and your agency, in hot water. We’ve outlined our top five tips below to help you avoid legal liability.

1. Don’t be misleading or deceptive

It seems obvious, but it’s easier to break this rule than you may think – and it often happens unintentionally. Any person you deal with day-to-day could suffer loss or damage if you are misleading or deceptive, not just your clients.

Misleading or deceptive conduct refers to activity – or, in some cases, inactivity – which creates an untruthful overall impression. This could include the misrepresentation of a property in an advertisement, or failure to disclose an undesirable aspect of a property.

Evidence is the key here. Making statements and/or representations without supporting evidence is risky and will expose you and your agency to liability if your statement turns out to be wrong.

2. Put everything in writing

Verbal promises are difficult to enforce, and frequently result in disputes between the parties involved.

If an agreement is made verbally, it is best practice to send a quick email to your counterparty confirming what was discussed and requesting their confirmation by email. Even if they do not respond, it is a far better situation to have your email backing up your claims than simply your word that the discussion took place.

3. Stick to what you know

While professional development and learning new skills are important, it can be risky to stretch yourself too far too soon. Performing a new task or providing advice on an area you are unfamiliar with can easily result in an accidental error if not reviewed by an expert.

Where appropriate, spread the risk of a transaction across multiple parties rather than taking it all on your own. Refer your client (or whoever you are dealing with) to seek independent advice from a lawyer, accountant, town planner or other adviser with relevant qualifications.

4. Don’t be the only decision maker

Your role requires you to make many decisions regarding a transaction, but in some instances the decisions are not yours to make. There are times where you need to step back and let the correct party take responsibility for a decision, such as your client or employer.

Making decisions that aren’t yours to make unnecessarily increases your risk of liability. If your decision results in someone suffering a loss, then the hammer comes down on you. You can support your clients in their decision-making, without making the call yourself.

5. Know the relevant law

Ignorance of the law is not a defence to breaking it. In real estate, there are many laws which apply to specific situations, depending on your practice area and jurisdiction.

If you are a real estate agent, you need to know (among others) the laws relating to:

  1. seller and agent disclosure requirements;
  2. how contracts are prepared;
  3. how they are signed; and
  4. for residential property, when the cooling off period starts and ends, and how buyers can terminate under the cooling off period.

Real estate agents are also subject to a Code of Conduct, a breach of which could result in an agent losing his or her licence. If you haven’t read through the Code of Conduct recently, now is a good time to refresh your memory.

If you aren’t sure about your legal standing in a matter, don’t hesitate to get in touch with us to discuss how to de-risk and avoid liability. Phone us on 07 3223 6100 or email DavidC@redchip.com.au.