Montana Real Estate Malpractice (Professional Negligence)

Between Gary and C.J., we've handled more than 150 real estate malpractice lawsuits and claims. The duties of seller's, buyer's, and dual agents under Montana law are set by the Montana Real Estate Licensing Act. See M.C.A. 37-51-313. The MRELA sets agent and broker duties and provides:

(2) A seller agent is obligated to the seller to:
(a) act solely in the best interests of the seller, except that a seller agent, after written disclosure to the seller and with the seller's written consent, may represent multiple sellers of property or list properties for sale that may compete with the seller's property without breaching any obligation to the seller;
(b) obey promptly and efficiently all lawful instructions of the seller;
(c) disclose all relevant and material information that concerns the real estate transaction and that is known to the seller agent and not known or discoverable by the seller, unless the information is subject to confidentiality arising from a prior or existing agency relationship on the part of the seller agent with a buyer or another seller;
(d) safeguard the seller's confidences;
(e) exercise reasonable care, skill, and diligence in pursuing the seller's objectives and in complying with the terms established in the listing agreement;
(f) fully account to the seller for any funds or property of the seller that comes into the seller agent's possession; and
(g) comply with all applicable federal and state laws, rules, and regulations.

(3) A seller agent is obligated to the buyer to:
(a) disclose to a buyer or the buyer agent any adverse material facts that concern the property and that are known to the seller agent, except that the seller agent is not required to inspect the property or verify any statements made by the seller;
(b) disclose to a buyer or the buyer agent when the seller agent has no personal knowledge of the veracity of information regarding adverse material facts that concern the property;
(c) act in good faith with a buyer and a buyer agent; and
(d) comply with all applicable federal and state laws, rules, and regulations.

(4) A buyer agent is obligated to the buyer to:
(a) act solely in the best interests of the buyer, except that a buyer agent, after written disclosure to the buyer and with the buyer's written consent, may represent multiple buyers interested in buying the same property or properties similar to the property in which the buyer is interested or show properties in which the buyer is interested to other prospective buyers without breaching any obligation to the buyer;
(b) obey promptly and efficiently all lawful instructions of the buyer;
(c) disclose all relevant and material information that concerns the real estate transaction and that is known to the buyer agent and not known or discoverable by the buyer, unless the information is subject to confidentiality arising from a prior or existing agency relationship on the part of the buyer agent with another buyer or a seller;
(d) safeguard the buyer's confidences;
(e) exercise reasonable care, skill, and diligence in pursuing the buyer's objectives and in complying with the terms established in the buyer broker agreement;
(f) fully account to the buyer for any funds or property of the buyer that comes into the buyer agent's possession; and
(g) comply with all applicable federal and state laws, rules, and regulations.

(5) A buyer agent is obligated to the seller to:
(a) disclose any adverse material facts that are known to the buyer agent and that concern the ability of the buyer to perform on any purchase offer;
(b) disclose to the seller or the seller agent when the buyer agent has no personal knowledge of the veracity of information regarding adverse material facts that concern the property;
(c) act in good faith with a seller and a seller agent; and
(d) comply with all applicable federal and state laws, rules, and regulations.

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(7) A dual agent is obligated to a seller in the same manner as a seller agent and is obligated to a buyer in the same manner as a buyer agent under this section except that a dual agent has a duty to disclose to a buyer or seller any adverse material facts that are known to the dual agent, regardless of any confidentiality considerations.

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(12) Consistent with the licensee's duties as a buyer agent, a seller agent, a dual agent, or a statutory broker, a licensee shall endeavor to ascertain all pertinent facts concerning each property in any transaction in which the licensee acts so that the licensee may fulfill the obligation to avoid error, exaggeration, misrepresentation, or concealment of pertinent facts.

As you can see, the MRELA is not a one-size-fits-all scheme; agent duties vary greatly relative to their role as a seller's, buyer's, or dual agent, the information communicated, and the individual with whom they are dealing when that communication occurs. Most frequently, we see real estate malpractice (also referred to as professional negligence) claims arise where: (1) the seller's agent or broker allegedly fails to disclose an adverse material fact; (2) the buyer's agent or broker allegedly fails to recommend follow up on potential adverse material facts; (3) the buyer's agent or broker recommends against a home inspection on new or relatively new home construction; or (4) a dual agency relationship exists and the agent or broker allegedly fails to promptly and accurately communicate information between the parties. Unquestionably, the most frequent type of real estate agent or broker malpractice we see arises over the alleged failure to disclose adverse material facts.

Listen, people: If you know it, disclose it. If you're wondering whether you should disclose it, disclose it. If you're worried about what will happen if you do disclose it, find out by disclosing it. There is a theme here . . . .