Updated on July 6, 2022
What are the general duties of a real estate broker? Even though it is possible for Californians to buy or sell property without a real estate broker, people typically buy and sell property with the assistance of a licensed broker. Even the most basic real property transactions can get fairly complicated for the average person without the assistance of an experienced real estate professional. In this blog post, we provide a general overview of the relationship between a buyer or seller and his/her real estate broker.
Real estate brokers have a agency relationship with the buyer or seller he/she is representing. The real estate broker is the “agent” while the buyer or seller is the “principal.” In an agency relationship, the principal delegates to the agent the right to act on his or her behalf, and to exercise some degree of discretion while so acting. There is an old and significant body of law governing the agency relationship in California. The agency relationship creates a fiduciary duty that the agent owes to the principal, which includes among others––the duty of loyalty, utmost care, full and complete disclosure of material facts, the act fairly and honestly, and to account to the principal.
There are also statutory duties that the real estate broker is bound to under the state’s licensure laws codified under the Business and Professions Code. A real estate broker who violates licensure laws must answer to the Real Estate Commissioner through disciplinary proceedings before the California Department of Real Estate (DRE) and there are separate penalties for the broker’s noncompliance. For example, the law provides that a person cannot receive compensation for acting as a broker or salesperson without a license, and further provides penalties for such a person acting without a license.
There are also statutory duties legislated and incorporated into the California Civil Code. For example, Section 2079 of the Civil Code provides that real estate brokers have the duties to conduct a reasonable physical inspection of the property and disclose material facts affecting the value or desirability of the property. A real estate broker who violates this civil code section may be liable in a civil lawsuit for breach of contract or tort damages, depending on the facts.
There are some interesting disputes (see this post) that may arise between a buyer or seller and his/her broker. Based on the interconnectedness of the common and statutory laws, a real estate broker’s actions or omissions can violate one or multiple areas of law.
Schorr Law is experienced in resolving disputes involving property owners and real estate brokers. If you are a owner or broker with a potential dispute, please contact us at [email protected] or 310-954-1877.