The real estate market in Rhode Island can be volatile. Changes in supply or demand, investors’ speculation, and broader economic factors can result in sudden changes in the market. Because the real estate market is always in flux, real estate agents often have the incentive to publish the most desirable listings in order to secure customer interest and the highly sought-after sale. Like any advertiser, real estate agents have a responsibility to be honest in what they publish. Real estate agents who intentionally misrepresent the products they are advertising can be held both civilly and criminally accountable for fraud. In some instances, a real estate agent may share untrue information without knowing, and the consequences may not be as clear.
The Rhode Island Supreme Court has addressed the question of how real estate agents and brokers should be held to account for false or misleading information that a buyer relied on to make a purchase. A unique factor in the Rhode Island real estate market involves the use of MLS systems to organize listings among brokers. MLSs, or Multiple Listing Services, are databases prepared and managed by one or more real estate brokers to conveniently organize listings. The information obtained from an MLS may have been entered incorrectly, and real estate agents have a duty to confirm that the information they are using from an MLS is accurate.
If an agent fails to disclose a known defect in a home or even fails to confirm that the information in an MLS listing is accurate, the agent could be held accountable in state courts for negligence or even fraud. Rhode Island General Laws Title 5, Section 20.8 details the rights and duties of licensed real estate agents in the state. Provisions of the code permit both sellers and their agents to be held financially responsible for information that was not disclosed to the buyer under the requirements of the section. Determining whether an agent had “actual knowledge” of a defect can be a difficult task. If a seller misleads their agent into publishing inaccurate information, the agent may be able to avoid liability for the mistruth; however, the seller may be on the hook for the fraudulent misrepresentation.
Participating in a real estate transaction can be a complicated and stressful endeavor. Although agent and legal fees may appear excessive to buyers or sellers seeking to perform a simple transaction, many problems can be avoided by seeking professional advice early in the process. If you are interested in buying or selling a residential or commercial property in Rhode Island, seeking competent legal advice from the start can ensure that your rights are protected and that your time and money are invested wisely.
If you are looking to buy or sell a home in Rhode Island, the experienced Rhode Island real estate attorneys at Bilodeau Capalbo, LLP can help you protect your assets and ensure your disclosure obligations are met. Our qualified property lawyers know how to avoid many of the pitfalls that complicate real estate transactions. Our attorneys can help you maintain confidence that your transaction will proceed as intended. If you have questions about a Rhode Island real estate issue, call us at 401-300-4055 for a free consultation.