The real estate industry is a complex mix of many moving parts and people, but at the end of the day, a potential buyer or seller meets with an agent to help close a real estate deal. The broker, who may be working on their own or under the umbrella of an agency, should be working in the best interest of the client. This legal responsibility, should it not be met, may create liability concerns that must be addressed or assumed by the employing agency. The vicarious liability real estate agencies may face usually stems from the actions of one of its agents.
What Does Agency Mean?
In the world of real estate, the relationship that the broker has to the client is defined as the agency. The experts at HighlandRisk Insurance reveal that there are three types of agency in real estate:
- Single Agency- the broker is a seller’s agent or a buyer’s agent
- Dual Agency- the broker is the agent for both seller and buyer
- Subagency- the broker has been granted permission by the seller to use agents outside the firm to source a buyer
There is a professional obligation of the broker to openly acknowledge their agency relationship with a client, but this doesn’t mean they aren’t liable for their actions and adverse consequences, nor is their employing company removed from liability. For this type of protection, you need to speak with an insurance provider about policy coverage that addresses these liabilities.