Are Realtors liable if you buy a defective property?

Defective Property

Let’s say you buy a property built on sand. Then as the Good Book says, a storm happens and the house collapses.

Is the realtor liable to you because he didn’t tell you that houses built on sand are not very stable? Probably not.

In Illinois Normally a realtor can rely upon the disclosures of the seller and is not liable if the seller failed to disclose something. A realtor does not need to make a separate investigation of the property before showing it.

A seller’s realtor’s duty is found in the Illinois Real Estate License Act of 2000, 225 ILCS 454/1-1 et seq.  .  A seller’s broker– or as they call it in the industry, the listing broker–owes a duty to the seller to perform the terms of agreement between the broker and client; to seek the price and terms stated in the brokerage agreement acceptable to the client; to disclose all material facts concerning the transaction; to obey all specific directives of the client; to act in a manner consistent with promoting the client’s best interests; to exercise reasonable skill and care in the performance of brokerage services; to keep confidential information of the client and otherwise comply with the Illinois Residential Real Estate License Act

The Buyer’s realtor’s duty to the buyer–or as they call it in the industry, the selling broker– to:

A.  Promote the buyer’s best interests in seeking a transaction at the best possible price and in their best interests; See 225 ILCS 454/15-15 (a) (2);

B. Disclose all facts known by the realtor; 225 ILCS 454/15-15(a)(2)(C;

C. Act in a manner consistent with the client’s best interests; 225 ILCS 454/15-15(a)(2)(F);

D. Exercise reasonable skill and care in the performance of brokerage services: 225 ILCS 454/15(a)(3);

E. Help arrange for property inspections; 225 ILCS 454/15-45(a).

F. Provide information about comparable properties that have sold in order that the clients may make educated decisions; 225 ILCS 454/15-45(a)

Thus it is buyer beware in this scenario.

However there are times when the broker is liable.   I had one where the broker forgot to do a lead based paint disclosure form and under Federal Law the broker is liable to the buyer if there were lead based paint violations on the property at any time and they were not disclosed.

Another one where the buyer’s broker lived in the condominium building that had a noise problem  If someone dropped a pin the neighbors heard the noise.  The broker frequented a rowdy bar located in the commercial space of the building and sold a unit immediately above the bar to the buyers.  The buyers couldn’t sleep because the bar played house music until 2 am.  The realtor should have disclosed this noise issue to the buyers.

Bottom line buyers need to do their homework and investigations before buying.  Caveat emptor–Buyers beware.   Always ask why the seller is selling and talk to the seller if they or their tenants realized any problems while living there.


Keil Larson