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Updated over 7 years ago on . Most recent reply

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Llewelyn A.
  • Investor / Broker
  • Brooklyn, NY
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What is the Liability of a Salesperson? Does s/he ever gets sued?

Llewelyn A.
  • Investor / Broker
  • Brooklyn, NY
Posted

I've tried looking up the potential liability of a Salesperson in the line of doing normal work.

There are a number of tricky things, especially here in NYC.

Just to give a clear example, let's say your client is a Buyer and you are showing him a Property built in 1960.

According to the the EPA, the Buyer should be presented with a Lead Paint Disclosure when purchasing any property built prior to 1978.

If a Buyer never receives this disclosure, buys the property, then later discovers there was Lead Paint, then sues.... who can he sue? Just the Broker or can he also sue the Salesperson as well?

If the Broker is sued, does he then sue the Salesperson to recover any amount lost from the suit?

Or is this not an issue for the Salesperson because he must be supervised by a Broker at all times?

I'm asking the question mainly because I am wondering if a Salesperson can also incorporate and use that Corporate Entity to be associated with the Brokerage.

Therefore, if the Brokerage gets sued, the Brokerage can only sue the Corp of the Salesperson.

Hopefully this is a non-issue where Sales Agents do not need to worry about potentially getting into a lawsuit, even at his own doing because he was not supervised correctly to prevent the liability in the first place.

Thanks for any replies in advance.

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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied

Yes, I think you are being a bit over concerned. As a former agent, I never really saw any risk of it.  Federal/state mandated disclosures are something your broker will have a checklist for. Mostt brokers have some type of cloud based system for storing documents, and their checks and balances would alert you to something required that is missing.   Any actually in the case of the lead based paint disclosure, it is the Seller who is required to execute that, and would also be liable.

Of course, education and paying attention to what you are doing are your best prevention. There certainly are some incompetent/slacker/dishonest agents out there.....don't be one of these and you'll be fine. E&O insurance is typically provided to you by your broker, usually a fee per closed transaction, $50 or so.

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