Navigating Brokerage Liability, Risk Management, and the Changing Landscape of Agency Relationships
In the real estate world, the most dangerous risk isn’t always the one staring you in the face—it’s the one you didn’t even think to prepare for. That was a key takeaway from legal experts speaking at the 2025 REALTOR® Broker Summit, where brokers were urged to proactively identify and manage the hidden liabilities that can threaten their business.
Exclusive Agreements and Buyer Representation: A Growing Concern
Since the industry-wide changes implemented last year requiring written buyer agreements, many brokerages are facing challenges enforcing those agreements—especially in cases where a buyer signs with one agent, then closes with another.
If your brokerage has a signed exclusive agency agreement and the buyer purchases a property with someone else, how should you respond? Some brokers may choose to pursue legal remedies, while others may avoid the legal route, wary of bad publicity or damaged client relationships.
The key is preparation. Make those decisions now, not after a situation arises. Discuss these scenarios with your agents and establish a consistent policy so everyone is on the same page when challenges occur.
The Silent Threats: Risks You Might Be Overlooking
According to legal professionals, the real danger often lies in the risks that sneak up on you. Here are several emerging issues every broker should have on their radar:
1. Seller Impersonation Fraud
Scammers are using public records to impersonate property owners—especially of vacant or unoccupied homes—and walk away with funds at closing. This type of fraud has been on the rise in several states, prompting local associations to take action. Brokers play a vital role in educating their agents and preventing such fraud from slipping through the cracks.
2. Copyright Violations
There’s been a rise in cease-and-desist letters—and even legal fines—for brokers using copyrighted images without proper licensing. Always ensure you have written permission to use marketing photos, and keep a clear record of that permission.
3. Recommending Contractors
Recommending a contractor might seem like a helpful favor, but it can expose your brokerage to serious liability. In one case, a broker was held liable after an agent suggested a roofer who was neither licensed nor insured—and whose work was later blamed for a fire. Before making any referrals:
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Confirm the contractor is licensed and insured
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Never hire a contractor on behalf of a client
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Offer multiple recommendations and include a disclaimer that the brokerage isn’t liable for the contractor’s work
Practical Steps to Safeguard Your Brokerage
Legal experts recommend a proactive approach to risk management:
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Educate your team regularly on changes in laws, disclosure requirements, and agency policies.
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Implement strong oversight procedures to ensure agents comply with your brokerage’s standards.
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Use checklists and workflows to guide transactions and catch potential issues before they escalate.
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Keep comprehensive documentation—including texts and emails. In case of an audit or legal issue, thorough records can make all the difference.
Final Thoughts: Plan Now, Protect Later
Whether it’s a broken agreement, a fraud case, or an innocent photo used without permission, brokers can’t afford to be caught off guard. As one attorney at the summit said, “The worst kind of risk is the one you never saw coming.”
Take the time now to identify potential risks, develop internal policies, and equip your agents with the knowledge they need. In a changing real estate landscape, proactive planning is your best defense.