The number of legal battles over real estate transactions are on the increase in the US with unhappy buyers and sellers more willing to take brokers to court, according to a new survey.
The National Association of Realtors reports shows that disputes over disclosure of a property's condition are the most common cause of lawsuits.
Disgruntled buyers or sellers who believe they’ve been wronged are willing to spend the time and money to take their realty professionals to court.
The vast majority of transactions are trouble free but the biennial report, Legal Scan, reveals that cases that are adjudicated tend to come down in favor of the defendant and a handful of agents and brokers either don't know the law or don't care to follow it.
The research, which combined surveys of state real estate commissions and other key people in the business with an analysis of case law and recently enacted statutes, shows that disputes involving disclosure of a property’s condition now exceed disputes over agency issues.
And overall the number of disputes has grown since the last report in 2007 and a significant number of survey respondents, some 45%, think this trend is likely to continue.
Water intrusion and the mold problems that often follow are a major issue and disputes concerning structural defects are also extremely common.
Septic and sewer systems and square footage measurements and descriptions also generate more than their fair share of legal problems.
The property crisis may have added to the number of disputes.
For example, more disputes are appearing when the seller is a bank and their numbers have increased in line with the growth in foreclosures.
Problems with water and mold have become a larger issue due to the number of houses not being maintained or sitting empty for long periods of time.
Another major issue is the inability of agents to understand the requirement to disclose known material defects and even what constitutes a material defect.
More training may be needed, the report suggests.
‘Too many agents still do not understand what their duty is, or they put their commission first.
The goal is the deal and not correct representation,’ said one respondent to the survey.
