When working as a real estate agent, it is important to adhere to the Code of Ethics and any applicable state and federal laws. Violating these laws or breaching contracts can result in serious claims against you, and these claims may significantly impact your career. Understanding the most common claims against real estate agents—and how to avoid them—can help you better manage your risk and protect your career.

The Most Common Claims Against Real Estate Agents

While state real estate laws and the specific duties of agents in each state can vary, there are certain claims against real estate agents that are commonly encountered throughout the profession. In general, these claims are brought against agents when the client uncovers a hidden issue or realizes that the agent violated a contract or expectation during any part of the property purchasing or selling process.

Common claims against real estate agents include:

• Failure to Disclose: This is the most common claim against real estate agents,¹ and it happens when a property defect is not disclosed by the agent, or the agent fails to disclose pertinent facts that may influence their client’s decision about a property.
• Breach of Duty or Contract: Failing to put their client’s best interests first is considered a breach of duty, and it goes against the REALTORS® Code of Ethics.² Breach of duty often happens alongside breach of contract, when a real estate agent fails to uphold their part of a contract with a client.
• Misrepresentation: Misrepresentation claims occur when a real estate agent lies about a property’s value and features, either on purpose or negligently, or lies to a client by omission; the misrepresented information is something that would typically influence a client’s decisions about a property.
• Personal Injury or Property Damage: When showing properties, clients may become injured³, or elements of the property may become damaged in the process. If there are possible dangers in a property, such as a tripping hazard or dangerous mold, and the real estate agent ignores or tries to hide them before showing the property, they may face a serious claim down the line should injury or damage occur.

Real estate agents should also be cognizant of federal Fair Housing laws; discriminating against protected classes during property showings or even during the marketing process for properties can result in significant claims and fines.

How Claims Can Affect Your Career

Dealing with a claim as a real estate agent can be incredibly detrimental to your career and business, even if the claim is ultimately found to be baseless. Negative effects of claims include financial tolls, such as damages, settlements, and legal costs outside of what is covered by your errors and omissions policy.

Additionally, real estate agents could face a loss of business leading to further financial impacts and, depending on the severity of the claim and the terms of a potential settlement, an agent could lose their license, their reputation in the community, and deal with more expensive insurance premiums moving forward.

Avoiding Common Claims and Managing Your Risk

Avoiding common claims as a real estate agent involves managing your risk appropriately and staying informed about the potential for claims. Typically, real estate agents will want to follow state and federal laws, licensing laws, and the REALTORS® Code of Ethics. Agents should always follow the law first and then turn to the Code of Ethics for situations that are less well-defined by local regulations.

Additionally, real estate agents should always operate with their client’s best interests in mind, disclose potential conflicts of interest, and ensure that all pertinent information about a property is disclosed to clients as necessary.

Finally, real estate agents should strongly consider investing in reliable errors and omissions insurance; this is only required by some states, but it is a worthwhile investment for all real estate agents when it comes to protecting your career and business should the worst happen and a claim is filed against you. Additional supplemental protection can be made with general liability and cyber liability coverage for real estate agents.

Pearl Insurance is committed to helping you manage your risk. Our carrier, AXA XL, rated A+ (Superior) on AM Best, has been partnering with Pearl for 20 years, providing you with the best E&O protection. If you have questions about E&O insurance or the claims process, schedule a time to talk to our experts.

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¹“Top Claim Against Agents: Failure to Disclose.” NAR Realtor News, 2022.
²“The Code of Ethics.” National Association of Realtors, 2025.
³“Top 10 Reasons Real Estate Agents Get Sued.” Garcia & Gurney, 2016.