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Why Are Real Estate Agents Getting Sued or Having TREC Complaints Filed Against Them?


Todays real estate market has turned into a legal battlefield. Even though the real estate licensee might not be the reason a lawsuit is filed, they will probably find themselves caught in the crossfire. The trend in agent-related lawsuits and complaints has increased dramatically since the 1990s and will probably continue for the foreseeable future.

Why is the trend for suing an agent increasing? There are more and more complex real estate transactions than in the past such as property trades, assignments or transactions involving alternative financing. Whenever you have a complicated transaction, you increase the likelihood that something will go wrong and that the practitioner will end up getting sued.

Also, there is a lack of adequate agent training. Many real estate firms are not providing the type of training and coaching needed to ensure their real estate licensees are doing everything they can to minimize the risk of being sued or having a TREC complaint filed against them.

Society as a whole is growing more litigious. Everyone seems to be lawyering up. People are more willing to sue today than ever before. This trend is affecting a broad spectrum of business, not just the real estate industry. Studies have shown we are becoming a less trusting society and some question everything and everyone.

A real estate agent cant prevent someone from filing a lawsuit or complaint against them. However, an agent can be proactive and reduce the chances of seeing one come across their desk. The following tips can help keep a subpoena or a registered letter from the Tennessee Real Estate Commission showing up at your door:

1. Resolve problems far before the closing date. Dont wait until the last minute to address problem issues. When people are rushed to resolve matters, they are more likely to make mistakes or overlook items.

2. Dont try to be an expert at everything. Involve key professionals, such as attorneys, home inspectors, termite inspectors, appraisers, lenders, and surveyors when needed. Provide a list of several names or a copy of the yellow page listings but do not recommend a specific individual or firm! Keep a copy of the list you provide.

3. It is generally a good idea to require agency disclosure on every transaction. Be familiar with Tennessee laws regarding when a written agency disclosure is required, at what stage it must be completed, and who must be provided with signed copies. Typically, agency relationships should be disclosed as soon as possible, but in any event, prior to providing specific assistance to the client. For example, buyers should be advised if the licensee showing them the house is the sellers agent.

4. Document conversations, recommendations, and activities in a log. It is also often helpful to document conversations by sending a brief follow-up email. Keep organized, detailed records of all real estate transactions. This is often required by state law, will assist you in recalling details, and will be helpful to an attorney if a defense is needed in the future.

5. Listing agents should have the seller complete any required property disclosure form. The real estate licensee should never fill out this form. Additionally, if any issues arise while the property is listed, advise the seller to update the disclosure form accordingly. And, under Tennessee law, an agent who is aware of any adverse fact associated with the property must disclose the issue(s).

6. Recommend that buyers obtain a home inspection. If they decline, have them sign a form confirming this decision.

7. Utilize state and/or association standard contract forms (i.e. TAR forms). It is wise to address items that are outside of standard form language with the clients legal counsel, or else the real estate licensee risks the unauthorized practice of law.

8. Be a source of the source. When information is obtained from a third party, it is often a good idea to disclose the source when making representations, because sometimes information from what appears to be a valid source turns out to be inaccurate. For example, if you believe a property is on city sewer based on a prior listing or a statement by the city utility office, disclose the source of your representation.

These tips are just a few of the ways an agent can reduce many legal and/or regulatory problems facing todays real estate professional. The practice of real estate is becoming more and more challenging. When an agent is aware of problems that can arise out of a transaction and the parties associated with it, they are better equipped to meet the needs of their clients. Our Brokers at Benchmark are available to our agents and are a great source of knowledge. For more information on becoming an agent with us go to

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