Top 10 Concerns of Florida Home Brokers

Florida home brokers can make a nice fee on the sale of a home but they have to avoid legal risks such as acting as a lawyer. If they’re not honest with their clients and not truthful with the people they deal with, they could be looking at a lawsuit. If they fail to do their job, their right to their broker’s fee could be questioned.

According to the National Association of Realtors, these are some of the legal issues that brokers need to review with legal counsel:

1. Misrepresentation by Florida home brokers

Many lawsuits against brokers are due to misrepresentation or failing to make proper disclosures. While buying and selling homes is an art, brokers can’t represent the condition of the homes they are selling or the homes they are showing to prospective buyers. Brokers shouldn’t guess and should be untruthful when discussing whether the home has any title problems, easements, structure defects, boundary issues, termite problems, or the condition of the various parts of the home such as the roof and electricity are in question.

Intentionally dishonest brokers are likely to be sued for punitive damages and may lose their license. Florida home brokers who fail to disclose details about the home that they’re not aware may still be liable for not saying they don’t know. For a broker to be held liable for misrepresentation, the statement must be material to some aspect of the home or sale. Generally, material means the buyer/seller relied on the statement to agree to the sale.

Brokers should use Florida disclosure forms and should generally encourage buyers to work with inspectors and real estate lawyers. They should stay away from making speculative statements.

2. Understanding their fiduciary duty

Brokers act on behalf of the seller or the buyer. Every key decision regarding the listing of the property, the condition of the property, the sales agreement, and the mortgage and settlement process needs to be approved by their principal – the buyer or the seller.

3. Fair housing laws

There are federal and state laws that generally forbid discrimination by a seller. Generally, sellers and brokers can’t discriminate based on race, sex, sexual preference, gender, national origin, and other factors outlined in the laws.  Brokers should review with their agency and with experienced lawyers what discrimination laws apply. For example, brokers need to understand that prohibiting the sale of the property to families with children may be illegal.

4. Antitrust and unfair competition laws

Brokers and sellers generally can’t agree that they won’t work with competing brokers. Brokers need to be careful about changing the commission rates to get a client.

5. False and misleading statements

Advertising, online and in print, should comply with federal and state laws. Brokers who aren’t sure what they can and can’t say to promote and sell properties should speak with an experienced real estate attorney.

6. Independent contractor status versus employee status

Brokerage firms need to understand the difference between which of their brokers are employees and which ones are independent contractors. The more the firm controls when, where, and how the broker can do his/her job, the more that suggests employee status. Many Florida brokers are independent contractors.

The work status affects issues such as worker’s compensation – what happens, for example, if a broker gets into a car accident while going to a home or gets hurt while showing a home to someone. The work status may also affect the liability of the firm. Firms are generally liable for the negligence or misrepresentations of their employees. The liability for negligence or misrepresentation by independent contractors is less clear.

7. The Real Estate Settlement Procedures Act (RESPA)

Brokers need to understand what disclosures about settlement costs must be made. RESPA also addresses when brokers can receive referrals and when they can’t. Generally, referrals from one real estate broker to another may be OK. Referrals by or to a title company or lender to a broker may create legal problems since they raise the question – is the buyer being charged more than he/she should be for a mortgage or other home-related loan. RESPA also requires that homebuyers be notified about relevant consumer protection laws.

8.  Environmental concerns

Brokers should generally recommend the homebuyers work with qualified inspectors who, in addition to general home construction issues, understand environmental issues. These include lead paint, asbestos, and groundwater contamination. Some laws regulate the disclosure of any of these environmental hazards. Homebuyers should be given time to inspect for these defects. Brokers should understand what information about environmental home issues they need to tell their clients.

9. The illegal practice of law

Brokers can’t provide legal advice. If the broker has any doubt about what information the buyer needs to make an informed decision and to avoid legal risk, the broker should tell the client to speak with an experienced Florida real estate lawyer.  If a buyer or seller has hired a lawyer, the broker should make sure he/she works that lawyer and keeps the lawyer advised of any problems.

10. The Americans with Disabilities Act

Sellers and brokers can’t discriminate against buyers with disabilities. Additionally, brokers should equip their office so that potential buyers and clients can access their office.