April 2019

Standard of Care for Real Estate Agents in a Transaction

The Standard of Care for agents in a transaction is difficult to measure since each agent has a different background and experience in real estate.  Standard of Care is what the client’s reasonable expectation is of the agent’s service in a transaction. What we find in a dispute is whether an agent’s actions are reasonable and then determine if the measure of Standard of Care is correct.

In litigation with an agent, one side claims that the agent fell below the Standard of Care. The other side indicates that the Standard of Care was appropriate. The methodology for determining the Standard of Care is measured by the following:

  1. Agent’s time in the business
  2. Education both from transactions and continuing education as required by the Bureau of Real Estate (BRE)
  3. What another agent would do in a similar situation based upon the same amount of education and time in the business
  4. What assistance/investigation was received from his or her broker in solving the matter at hand.

There is a requirement for brokers to manage their agents Business and Professions Code (10177 (h)) or at a minimum provide rules and regulations that the agent must follow. It is not uncommon for a newer agent with minimum experience and education to cross the line and open the door for litigation.

The role of the expert witness is to carefully determine if the agent’s actions in a matter are appropriate. The expert witness is key to a case of this magnitude.  The expert’s years of practice and wisdom in the business will properly determine if the agent acted in the best interest of the party he or she represented.



"Lee Segal was employed to assist our company in the acquisition of two industrial manufacturing facilities in Mexico.  I worked with him closely for several months, and I came to depend heavily on Lee for his technical knowledge and business acumen in commercial real estate.  He is absolutely my first choice as a consultant when I am faced with similar acquisitions.  In addition, he is the first person I recommend to colleagues and clients.Lee‘s capability and professionalism in commercial real estate matters make him the best addition anyone can have as a lead member of a critical team."
Sheldon Campbell, Corporate Facilities Manager, Compass Plastics Technology/AB Plastics; General Manager, Quality Laminates de Mexico, S.A. de C.V.