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The Legal Side of Real Estate

Over the last week, several real estate websites have been abuzz with news of the National Association of Realtors® recent release of its 2007 Legal Scan. Prepared for NAR’s legal department with the assistance of Legal Research Center, Inc., of Minneapolis, the Legal Scan is an extensive study of the legal issues and trends within the real estate industry. It tracks historical data regarding 86 legal liability issues faced by real estate professionals.

One of the goals of this study is to help reduce legal costs for Realtors®. Members can now quickly check and print out for their legal counsel the relative cases or legislative actions that pertain to their own new cases; this can mean a savings of time and money spent on legal costs. The study’s database contains an appendix listing each case, statute and regulation with full legal citation by issue and jurisdiction; it is based on detailed research of court documents, states, regulations and jury verdict reports, involving 655 court cases and 112 statutes and regulations.

Some key findings of the survey include the following:

  • Agency issues are among the most common types of real estate legal dispute.
  • Another major area of disputes is that of property condition disclosure, especially mold and structural defects.
  • Technology issues are growing in importance, especially with respect to privacy, spam and other forms of electronic solicitation.
  • Subject areas where future training will be vital include agency, disclosure, technology, antitrust, and real estate settlement procedures.

Also compiled by NAR, in conjunction with its affiliated Institute for Real Estate Management (IREM), was the 2007 IREM Scan. This study focuses on issues more specific to real estate or property management, including debt collection, accident claims, liability for tenants’ property conditions and conditions of common areas, and events occurring on managed properties.

Both studies may be viewed by members of the National Association of Realtors® website.

As real estate professionals, a vital part of our job is to stay informed of the legal concerns facing our industry. There is a certain risk assumed with any purchase or sale of property. Knowing the potential pitfalls associated with real estate transactions can only help us in the day-to-day interactions with clients and other professionals with whom we do business, as we are better able to focus on our role as agents and advisors, as opposed to the delays and costs involved in a liability case.