Follow up from: “Ten Most Frequently Made Claims Against Real Estate Agents”

One of our readers posted a comment to this article and we wanted to respond to Dana Jenkins and all of our readers directly.

“Very thorough and in-depth analysis of the fraudulent behavior within the real estate industry. I clicked to read the full article and Lana really went above and beyond to breakdown the realities of the industry. It’s about time more articles are made to expose these injustices in FULL detail. Keep it coming RE-Insider!” from Dana Jenkins.

Dana thank you for your comment! This article was always interesting to us because we think these common mistakes could continue to happen and we hope this article helps keep some of our readers from making similar mistakes.

The full Story:

by: Lana Schroeder, Esq., Claims Specialist for Rice Insurance Services Company, LLC
It is no secret we live in a litigious society made worse by a difficult market economy. Lawsuits are filed every day in every part of the country. There are no guarantees that you will never receive a demand letter or be named in a lawsuit concerning your professional services as a real estate agent. However, by educating and familiarizing yourself with the most common types of claims made against our insureds, you may be able to recognize and hopefully avoid similar situations.
The ten most common claims made during the period 1/1/2001 through 7/31/2010 against our insureds include:
1. Fraud;
2. Breach of Duty;
3. Breach of Contract;
4. Negligence;
5. Bodily Injury / Property Damage;
6. Misrepresentation regarding the Condition of the Property;
7. Consumer Protection Act;
8. Earnest / Escrow Money Dispute;
9. Misrepresentation regarding Flooding or Leaks; and
10. Misrepresentation regarding the Value of the Property.
Fraud claims are the most common cause of action we see from claimants and plaintiffs. Generally speaking, fraud contains an element of intent. In other words, for a plaintiff to succeed on a fraud claim, the plaintiff must convince the judge or jury that there was an intentional act of the defendant that was designed to cause harm to the plaintiff. The “intentional act” complained of may be an affirmative statement by the real estate agent, or it could be the purposeful withholding of a material fact about which the real estate agent has knowledge. Claimed injuries are specific to each and every situation and therefore vary from lawsuit to lawsuit, but can include diminution of value of the subject property, cost to repair the defect, replace costs, lost profits, closing costs, physical and emotional distress, loss of consortium, and the plaintiffs’ attorney’s fees associated with the litigation.
Some frequent examples of fraud claims include:
• My real estate agent knew there was a discrepancy regarding the square footage of the home, and he purposefully did not disclose the discrepancy to us, the buyers.
• The listing agent had actual knowledge the well on the property did not produce the amount of water that she represented on the MLS.
• Even though the real estate agent knew there were problems jeopardizing the future of the development that we, the buyers, invested in, he purposefully withheld that information from us.
Damages may include not only the plaintiff’s actual damages, but also punitive damages, which are meant to be a punishment to the defendant or an example to the public to deter others from acting in such a way in the future. As a matter of public policy, damages awarded for acts of fraud are not insurable. Therefore, insurance carriers will not pay a judgment based on fraud. Because the defendant will be personally responsible for those amounts, fraud claims can be very dangerous. (
To read reasons 2-10 click here