Part of a Real Estate Agents duties, pursuant to NRS, 645 et. seq., requires that a real estate licensee:
1. Use reasonable skill and care with respect to all parties to the real estate transaction; and
2. Advise the client to obtain advice from an expert relating to matters which are beyond the expertise of the licensee.
In today’s market, many real estate agents are prudently advising their clients to seek the advice of tax or legal counsel in regards to and prior to the disposition of property. As many of the considerations related to selling a property fall outside of the acumen historically necessary for a real estate agent, agents should avoid giving the legal and tax counsel clients need.
However, it is important to keep in mind that when you refer a client to a third party for advice or assistance, you should take care to make sure that the party to which you refer your client is properly licensed and able to legally and adequately perform the requested services. If you refer a client to a party who cannot or does not perform adequately, you may be liable to your client pursuant to the theory of intentional misrepresentation or negligent referral.
Intentional Misrepresentation is established by three factors:
1. A false representation that is made with either the knowledge or belief that it is false or a representation that is made without a sufficient foundation;
2. An intent to induce another’s reliance; and
3. Damages that result from this reliance.
Though it is highly unlikely that you would ever intentionally put your client in harm’s way, there are many unqualified and predatory service providers. Because you are in an esteemed position with your client, you advice is likely to be relied upon. If damage should result, and the negligent service provider is not properly insured or has closed shop, you will likely be the only “pocket” available. Accordingly, and to protect yourself when referring a client to another party for advice, make sure that you are personally familiar with the referral or have done sufficient diligence to ensure that they are qualified to perform the services for which you are referring you client.
In present day context, if you are referring a client to a company for foreclosure assistance, loan modification, short sale processing or debt consolidation, you should take care to determine that the referral is properly licensed and bonded as required by Nevada statute. If you fail to do so, and your client is injured due to negligent or fraudulent acts of the referral, you may be sued.
Tisha Black Chernine, Esq.