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Top 3 Legal Issues in Real Estate Law & how To Avoid Them

Bochnewich April 15, 2015

Buying and selling properties can be a stressful process that can often times fall subject to legal pitfalls. Here are a few of the most common cases involving real estate law in California and tips on how to avoid them happening to you.

1. Misrepresentation

In Real Estate Law, misrepresentation deals directly with misstating or hiding some material or feature of the property that is being sold or purchased. The failure to disclose certain information like damages, past incidents, foundation problems or concerns and other details that a homeowner has the right to know is against the law.

The most common feature that sellers hide from their buyers is structural or foundational features. These are the most expensive to fix and may not always be as noticeable to the average home buyer.

In California, the law requires you, to disclose all information you know about the property AND you must conduct an inspection of the home and disclose what was found.

Avoiding Misrepresentation

If you are not in California, and for added safety, ensure that your real estate agent or broker fills out the proper seller disclosure forms. This will document property owner’s information and sources used for inspections. This will ensure that, if anything were to be wrong with the home, that seller will be properly charged.

2. False Advertising

This is another case that is heavily seen in real estate. The California Department of Real Estate or DRE, realtors must advertise their properties and listings with their realtor license number listed in plain sight. Realtors are also required under the same law to publish their license number on:

  • Business Cards

  • Stationary

  • Website

  • Promotional Ads, Flyers, Brochures, etc.

The DRE has stated that some forms of advertisements DO NOT have to comply with the law to provide your license.  These forms of advertising are:

  • Electronic Media Advertisements on radio, television and streaming video

  • Print advertisements in periodical or newspaper

  • For Sale signs on or around the property being sold

Avoiding False Advertisements

To avoid being falsely advertised to, ensure that the listing you are interested is advertised with proper information and lists the realtor’s license number. In California real estate law, you, as a buyer or seller, have the right to interview and select a professional to assist you. During this interview, you are allowed to ask for license information and other information about their professional career. Be equipped with the right information before you make your big purchase.

3. Unauthorized Practice of Law

When a realtor, broker or salesperson gives legal advice to a buyer or seller, they are breaking the NAR Code of Ethics. This code states that, “realtors shall not engage in activities that constitute the unauthorized practice of law.”

Unfortunately, there is a fine line between public policy and unauthorized practice of law. California courts are trying to separate the two by looking at whether the issue at hand is in the public interest, such as drafting legal documents.

How to Avoid Unauthorized Practice of Law

In California real estate law, you have the right to have all documents reviewed by an attorney, if you have concerns. Your escrow company or realtor is a third party that is enforcing the terms of the contract, but you can still seek further review from an attorney or lawyer, at your own expense.