What is Real Estate Liability?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 21 January 2020
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Real estate liability is legal liability connected with use, sales, and trades of real estate. It is a concern for brokers and agents involved in real estate sales, as well as people who own or manage real property, particularly investment property, where people are using the property as an income source. There are steps people can take to protect themselves from liability issues, and people can also purchase insurance to cover specific known problems. Insurance agents can provide specific advice to their clients on the basis of their needs.

One aspect of real estate liability concerns real estate sales. Sales can be legally complex and require contracts and a number of different steps. At various points, people can be liable for things like failing to represent a property accurately, not protecting the interests of their clients, and neglecting aspects of the sales process. Customers can sue brokerages and agents for damages, and the awards may be very large in the case of substantial sales. For example, if an agent does not provide a disclosure that she must offer by law, the buyer could sue upon discovering the issue to pay for fixing the problem.


For property owners, liability can include an array of topics from injuries incurred by tenants due to faulty maintenance to legal responsibility for misuse of the property by tenants. Liability insurance is available to provide coverage. The insurance can help cover the costs of lawsuits, as well as paying out in the event a judge or jury decides to award damages to a plaintiff. In some cases, people may need to carry a policy to comply with the law or the terms of a real estate loan.

Another tactic for limiting real estate liability is to get people to sign waivers. For example, when banks sell foreclosed homes, they offer them as-is to buyers. People cannot sue for defects with the property they find after the sale is complete, as the seller is protected by the as-is declaration. Likewise, a person running a business where injuries are a known risk, like a ropes course, might require customers to sign a liability waiver to protect the property and business owner from suit.

Real estate liability covers a wide range of legal topics. It is usually necessary to consult an attorney specializing in this topic to get the most accurate and helpful information. People with concerns about liability can meet with a real estate lawyer to discuss the situation and the steps they can take to protect themselves. Legal fees may vary, but are often worth the price, as an attorney can save someone money with suggestions for controlling, limiting, and addressing real estate liability.


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