NYC Attorney for Real Estate Broker Breach of Fiduciary Duty 

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Fiduciary relationships are crucial to ensure fair play and protected interests in the real estate market. We trust professionals to guide us through real estate transactions filled with legal jargon, financial intricacies, and potential pitfalls. But what happens when fiduciary responsibility is broken?

At Richman Law Firm PLLC, we work on cases where brokers and real estate agents misrepresent property details, fail to disclose crucial information, or act negligently. Other common issues include conflicts of interest, failure to follow client instructions, and dual agency. Contact us today for a free consultation.

Understanding Fiduciary Duty Claims

Fiduciary duty refers to the legal obligation that real estate agents and brokers have to act in the best interest of their clients. It consists of several key responsibilities, including

  • Exercising a high standard of care in managing the client’s affairs.
  • Acting in the client’s best interest, excluding all self-interest.
  • Act in good faith and deal fairly when handling the client’s matters.
  • Protect the client’s confidential information.

It is crucial that real estate professionals uphold a high standard of care, act in good faith, and protect confidential information. Fiduciary duty is essential to building trust and, when breached, may create a legal liability for damages.

Examples of Breach of Fiduciary Duties

Breaches of fiduciary duty can occur in various scenarios involving real estate agents, brokers, property managers, and other professionals who owe a fiduciary duty to their clients or others. In proving a breach of fiduciary duty, a plaintiff must prove that three factors exist in the claim. They are:

  1. The existence of a fiduciary relationship
  2. Misconduct by the defendant
  3. Damages that are a direct result of misconduct

Below are some common examples of breaches of fiduciary duty that can result in legal liability. If you’ve experienced any of these, you should consult a NYC breach of fiduciary duty attorney.

Misrepresentation of Property

Misrepresentation involves providing false or misleading information about a property. This could include overstating the property’s value, understating its defects, or providing inaccurate information about its features. Misrepresentation is a clear breach of fiduciary duty.

A fiduciary is obligated to provide accurate and complete information about a property. If they knowingly or negligently misrepresent the condition, value, or any other aspect of the property, this can lead to financial losses and legal complications for the client.

Failure to Disclose Relevant Information

The fiduciary role requires that agents disclose all relevant information about a property. This includes known defects, potential legal issues, or other pertinent facts affecting the client’s decision to buy or sell. Failure to disclose such information is a breach of fiduciary duty.

For instance, if a real estate agent is aware of a structural defect in a property but fails to inform the potential buyer, the buyer could face significant repair costs after the purchase. This lack of disclosure could be grounds for a lawsuit against the agent for breach of fiduciary duty.

Negligence

Negligence refers to the failure to exercise the care that an ordinarily prudent person would exercise in similar circumstances. In real estate transactions, negligence can take many forms, such as failing to conduct adequate due diligence, properly documenting transactions, or failing to advise clients of potential risks.

If negligence results in financial loss or harm to the client, this could constitute a breach of fiduciary standards. For instance, if a real estate broker fails to review a contract before advising their client to sign it, and this oversight leads to negative consequences for the other party, the broker could be held liable for breach of fiduciary duty.

Conflicts of Interest

A conflict of interest arises when a fiduciary’s obligations go against their duty to act in their client’s best interests. For example, a conflict of interest could occur if a real estate fails to disclose that the seller is a family member. Cases where agents are self-dealing are also problematic (when the agent stands to gain personally from a particular outcome).

Such conflicts can compromise the fiduciary’s ability to provide unbiased advice and representation, potentially harming the client. A fiduciary who fails to disclose and manage conflicts of interest may be liable for committing a fiduciary breach.

Failure to Follow Client Instructions

A fiduciary is required to follow the instructions of their client. This includes adhering to the client’s preferences and executing transactions following the client’s directions.

For instance, if a client instructs their real estate agent to list their property at a specific price, but the agent lists it at a higher price without the client’s consent, this could be considered a breach of fiduciary duty. The client may have grounds for legal action against the agent for any financial loss or other harm resulting from this breach.

Dual Agency

Dual agency occurs when a real estate agent or broker represents both the buyer and seller in the same transaction. In a dual agency situation, the agent has a fiduciary duty to both parties and must balance these duties fairly.

However, this can be challenging as the interests of the buyer and seller often conflict. For instance, the seller wants to sell at the highest possible price, while the buyer wishes to buy at the lowest possible price.

While dual agency is not legal in some states, it is legal in New York. However, it comes with inherent risks that should be carefully considered. It must be disclosed and agreed upon by all parties involved. If dual agency is not properly disclosed and managed, it can lead to conflicts of interest and breaches of fiduciary duty.

Disclosing Confidential Information to Third Parties

A fiduciary should not disclose confidential information about their client or affairs without express permission. Disclosing such information can harm the client’s interests and constitute a breach of fiduciary duty.

For instance, if a real estate agent discloses a client’s financial situation or negotiation strategy to a potential buyer or seller, this could disadvantage the client. Such a breach of confidentiality could be grounds for legal action against the agent.

Contact Us for a Free Consultation

A fiduciary breach in real estate transactions can lead to financial losses and other complications. We may help you file a claim and seek compensation for your losses.

At Richman Law Firm PLLC, we provide personalized, client-focused representation to seek the best possible outcome for our clients. Contact us today for a free consultation.

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    SCOTT B. RICHMAN, ESQ.

    Mr. Richman is the Managing Member and Founder of Richman Law Firm PLLC. In his role as Managing Member, Mr. Richman oversees the day-to-day operations of the firm and handles the litigation of the most complex legal matters across a vast array of practice areas and disciplines. ​

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