Tag Archives: liability for undisclosed property defects

4 Ways Illinois Realtors Can Protect Themselves from Liability for Undisclosed Property Conditions

By Christopher R Dunsing on June 12, 2014 | Posted in Blog

Illinois real estate agents and brokers perform extensive due diligence in completing a transaction, from a simple home inspection on a residential sale to environmental site assessments in commercial transactions.  Nonetheless, there are many things that an agent or broker simply cannot know about a property.  Recently, several cases have again addressed the extent of a real estate salesperson or broker’s liability for undisclosed, hidden or latent conditions in a property, including those conditions known only by the seller of the property.  While there are a number of different statutory and common law causes of action, each with their own unique requirements to prevail on a claim, the same fundamental questions permeate all of them:

Was there a false statement or omission of information by a salesperson or broker to a buyer or their representative regarding a condition of the property?

Did the salesperson or broker know that the statement was false when it was made or withhold some relevant information about the condition?

Even if the salesperson or broker did not know a statement was false or that omitted information was relevant, should they have? In other words, did the agent or broker negligently make the statement or withhold information?

Did the buyer suffer any damages as a direct result of the false statement or omission?

The field of potential undisclosed, latent or hidden conditions is wide, and Illinois courts have addressed claims against real estate professionals based on such varied issues as title defects, architectural or design flaws, termite damage, flooding history, commercial revenue statements, local ordinances and school district lines.  Just as the conditions vary, so do the defenses, but here are a few points to keep in mind for your business:

When in doubt, disclose any condition of the property to the buyer prior to any transaction.

No single transaction is worth the possible personal liability or licensure repercussions of withholding relevant property conditions.

The Illinois Consumer Fraud and Deceptive Business Practices Act (the “Consumer Fraud Act”) allows for statutory fraud actions against both a buyer’s or seller’s real estate salesperson or broker if “the salesman or broker knows of the false, misleading or deceptive character of such information.” The Consumer Fraud Act is a popular mechanism for plaintiffs’ attorneys because if a violation is proven, it allows for statutory recovery of the attorney’s fees.

The Illinois Real Estate License Act of 2000 also allows a private right of action for purchasers of property against their own real estate broker and the seller’s broker.  The Real Estate License Act provides: Read More…

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