Real Estate Standard of Care Expert
Real estate standard of care expert. When disputes arise involving real estate professionals, attorneys will use the standard of care doctrine to determine if a real estate agent was negligent in providing his or her client, the appropriate real estate standard of care.
Black’s Law Dictionary defines the standard of care to mean “Standard of care refers to the degree of care a reasonable person will exercise under certain circumstances.”
In Arizona, a real estate professional is licensed by the Arizona Department of Real Estate. All real estate agents are required to be licensed. Real estate agents that refer to themselves as “Realtors™” are members of the National Association of Realtors, the Arizona Association of Realtors, and likely, a local Association of Realtors.
The Arizona Association of Realtors and the Arizona Department of Real Estate discuss what is expected of a real estate agent and/or Realtor™ in their daily practice.
The Arizona Association of Realtors provides online access to its members regarding discussion and education of what is expected in the utilization of real estate standards of care, citing Arizona Statutes.
“What is standard of care?
Standard of care is generally defined as the degree of care an ordinary, reasonable, and prudent person would exercise in given circumstances. Put another way, how would a similarly qualified practitioner manage the client’s care under the same or similar circumstances?
The standard of care may vary depending on the facts, as well as the skills and knowledge of your client. For example, a first time buyer would most likely require more guidance than someone who routinely invests in real estate.
Is there a standard of care in real estate?
Yes, all professions have a standard of care which is required either by law or custom. In Arizona, State statutes set forth the basic standard of care. Specifically, A.R.S. § 32-2124(E)(2) provides that:
At a minimum, an understanding of the general purpose and legal effect of any real estate practices, principles and related forms, including agency contracts, real estate contracts, deposit receipts, deeds, mortgages, deeds of trust, security agreements, bills of sale, land contracts of sale and property management, and of any other areas that the commissioner deems necessary and proper.
The Arizona Department of Real Estate’s Commissioner’s Rules provide further guidance. The rules discuss fiduciary duty, disclosure with regard to the agent’s knowledge about the condition of the property or interest in the property, and compensation, amongst other requirements. See A.A.C. R4-28-1101.
Who determines if the standard of care is met?
Whether the standard of care was met is typically brought into question by a client or customer. More specifically, unhappy clients or customers may complain about the services that were provided or believe that you failed to perform a duty owed to them.
If a lawsuit ensues, one of your peers, typically a broker, may opine as to whether you met or fell below the standard of care. Generally, this occurs when the broker furnishes an expert opinion on how you handled the transaction. Based on the facts presented and the broker’s expert testimony, a jury of your peers may then determine whether you met the standard of care.
What happens when the standard of care is not met?
A claim for wrongdoing will usually appear as a negligence claim. In order to find negligence, a jury must determine the following: (1) Did you owe a duty?; (2) Was there a breach of that duty?; (3) Did the breach of duty cause injury?; and (4) Was there any damage?
If you are found to owe a duty and do not meet the standard of care, you could be held legally liable and have to pay damages to the client or customer.”
8/23/2020, Arizona Association of Realtors Blog, http://blog.aaronline.com/2017/03/02/standard-of-care/
In another article prepared by the Arizona Association of Realtors, the role of a professional is further outlined,
“Reviewed May 2016
A “professional” is a person who has received special or advanced education in a particular occupation and is capable of providing competent services to others who are less knowledgeable. A professional has a duty to provide services consistent with the standard of care in the industry. We expect this from doctors and lawyers. The buying and selling public deserves that same degree of professionalism from real estate brokers and agents.
As a real estate professional, it is important to be knowledgeable about the standard of care in the industry. The failure to act professionally often involves conduct that falls below the standard of care, which may result in both an unsatisfied client and legal liability.
What is the standard of care for a real estate broker or agent?
The law requires that a real estate broker or agent (hereinafter “broker”) exercise that degree of care that a reasonable broker would exercise in the same or similar circumstances. A broker complies with the standard of care by performing the broker’s duties with reasonable care and skill. For example, a listing broker must exercise reasonable care to sell the seller’s property at the best price and terms. Vivian Arnold Realty Co. v. McCormick, 19 Ariz. App. 289, 506 P.2d 1074 (1973). Stated another way, a broker must “exercise reasonable due care and diligence to effect a sale to the principal’s best advantage.” Haldiman v. Gosnell Development Corp., 155 Ariz. 585, 588, 748 P.2d 1209, 1212 (App.1987).
What is reasonable care?
Reasonable care in the course of a transaction will vary depending on the situation. Therefore, the specific disclosures, advice and counsel required of a broker depend on the facts of each transaction, the knowledge and the experience of the client, the questions asked by the client, the nature of the property and the terms of the sale.
Do the Commissioner’s Rules prescribe the standard of care?
The Arizona Department of Real Estate’s Commissioner’s Rules can form the basis for the standard of care. For example, in Lombardo v. Albu, 199 Ariz. 97, 14 P.3d 288 (2000), the Court stated that Commissioner’s Rule R4-28-1101 prescribed an appropriate standard of care in that case, which was the duty to disclose any information relating to the buyer’s inability to perform. Therefore, a broker should be familiar with the Commissioner’s Rules and stay updated on any revisions.
What happens if a broker’s conduct falls below the standard of care?
The broker is subject to legal liability. If a broker’s conduct fell below the standard of care, the broker is negligent. Once a broker’s negligence is established in a lawsuit, the broker will be held liable to the plaintiff for all damages caused by the broker’s negligent conduct.
What does a plaintiff in such a lawsuit have to prove?
To prevail in a lawsuit, a plaintiff must prove that the broker’s conduct fell below the standard of care by failing to use the skill, prudence and diligence that other real estate brokers commonly exercise. Also, a plaintiff must prove that the broker’s conduct caused harm to the plaintiff.
In a lawsuit, who decides if a broker fell below the standard of care?
After listening to all the testimony or evidence, the “trier-of-fact” decides whether a broker fell below the standard of care. The “trier-of-fact” is generally a jury, but may also be the judge or arbitrator in the case.
How does the trier-of-fact know what the standard of care is?
The standard of care is generally established by expert testimony, unless the conduct required by the particular situation is within the common knowledge of a layperson. Therefore, a plaintiff who alleges that a broker acted negligently usually must present testimony of a qualified expert, i.e., another broker, that the defendant broker acted unreasonably and breached the standard of care.
How can a broker keep informed as to the standard of care in the industry?
A broker can take advantage of quality educational programs and become involved in professional organizations. Advanced education and professional development will enable brokers to maintain a high level of professionalism, provide better service to their clients and avoid legal liability. Remember, in court, expert brokers establish the standard of care. Strive to be one of those experts.”
8/23/2020, Arizona Association of Realtors, http://blog.aaronline.com/2017/03/02/standard-of-care/
The role of the real estate professional is under continual evolutionary refinement. Real estate professionals and REALTORS™ are required exercise industry accepted “standard of care” in their dealings with the public.
Real Estate Standard of Care Expert Witness
If you are an Arizona attorney requiring the services of a real estate standard of care expert witness, my firm will provide you with that service.
For more information and qualifications, please go to my Real Estate Expert Witness Page.