Avoiding Negligent Misrepresentation

Negligent Misrepresentation

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As a Realtor, You Know that this occurs when an agent unintentionally misinforms a buyer, seller, tenant or landlord concerning a material fact either because the agent does not have actual knowledge of the fact, because the agent has incorrect information, or because of a mistake by the agent. If a reasonably prudent agent “should reasonably have known” the truth of the matter that was misrepresented, then the agent may be guilty of “negligent misrepresentation” even though the agent was acting in good faith.

Negligent misrepresentation by real estate agents occurs frequently in real estate transactions. A very common situation is the recording of incorrect information in an MLS® computer or book due to the negligence of the listing agent. When a prospective buyer is subsequently provided the incorrect information from the MLS® by the agent working with the buyer, a negligent misrepresentation by the listing agent occurs.
A listing agent is generally held to a higher standard with regard to negligent misrepresentation of material facts about a listed property to a buyer than is a selling agent who is acting as a seller’s subagent.

This is because -
(1) The listing agent is in the best position to ascertain facts about the property,
(2) the listing agent is expected to take reasonable steps to assure that property data included with the listing is correct and
(3) it is generally considered reasonable for a selling agent to rely on the accuracy of the listing data except in those situations where it should be obvious to a reasonably prudent agent that the listing information is incorrect.

However, a buyer’s agent may in some cases be held to a higher standard than a seller’s subagent because of the buyer’s agent’s duties to the buyer under the law of agency and the buyer’s agent’s special knowledge of the buyer’s particular situation and needs.