Virginia Code Section 54.1-2100 et seq. provides a regulatory framework for real estate brokers and agents (defined in the statute as “salespersons”) in Virginia. In addition to said statute, the Virginia Administrative Code (VAC) contains numerous administrative regulations (the Regulations) that have been adopted by the Virginia Real Estate Board (the Board), which governs the licensing and conduct of real estate brokers and salespersons.

            A “Real Estate Broker” is defined under Va. Code Ann. § 54.1-2100, and the broker or agent must have a license to engage in real estate brokerage in Virginia. “The statute requiring real estate brokers to procure a license is designed to protect the public from fraud, misrepresentation, and imposition of dishonest and incompetent persons.”  See Massie v. Dudley, 173 Va. 42, 3 S.E.2d 176 (1939). You can verify a real estate broker or agents license at the Department of Professional and Occupational Regulation (DPOR) website here.

          Facing Disciplinary Action for DPOR Violations. Our office has successfully represented numerous brokers and agents on a variety of disciplinary actions. The Real Estate Board is empowered to “do all things necessary and convenient for carrying into effect the provisions of [the statute]” including the power to “promulgate necessary regulations” and modify existing regulations that “shall be consistent with [the statute].” Va. Code § 54.1-2143.

The Virginia Real Estate Board has the power to fine any licensee and to suspend or revoke any license issued under the provisions of the statute and Regulations where the licensee has been found to have violated or cooperated in violating any provision of the statute, Chapter 27.3 of Title 55 of the Virginia Code (the successor statute to the Consumer Real Estate Settlement Protection Act (CRESPA)), or any of the Board’s Regulations (18 VAC 135-20-250) Furthermore, any licensee who fails to comply with the provisions of the statute or Regulations in performing any acts covered by the statute may be charged with improper dealings, regardless of whether he or she was acting in a personal capacity or as a licensee.

Broker/Agent Duties to Client – § 54.1-2131; 2132 & the Duty to “Exercise Ordinary Care.”

             The relationship of real estate brokers/agents with their clients is an important aspect of real estate law, specifically purchase and sale transactions. Virginia law regards the broker-client relationship as a fiduciary one. “It is basic in this, as in most jurisdictions, that a real estate broker occupies a fiduciary relationship toward the client.” Jones v. Friedlander, 11 Va. Cir. 326 (Richmond 1967) (citing 3 Michie’s Juris. Va. & W. Va. Brokers § 13. This standard is codified under Virginia Codes §§ 54.1-2131 (Licensees engaged by sellers); 2132 (Licensees engaged by buyers), which requires licensees engaged by buyers/sellers to “exercise ordinary care,” along with the following duties:

  1. Perform in accordance with the terms of the brokerage agreement;
  2. Promote the interests of the buyer by:
    • a. Seeking a property of a type acceptable to the buyer and at a price and on terms acceptable to the buyer […];
    • b. Assisting in the drafting and negotiating of offers and counteroffers, amendments, and addenda to the real estate contract[s]…and in establishing strategies for accomplishing the buyer’s objectives;
    • c. Receiving and presenting in a timely manner all written offers or counteroffers to and from the buyer and seller, even when the buyer is already a party to a contract to purchase property; and
    • d. Providing reasonable assistance to the buyer to satisfy the buyer’s contract obligations and to facilitate settlement of the purchase contract;
  3. Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the buyer consents in writing to the release of such information;
  4. Exercise ordinary care;
  5. Account in a timely manner for all money and property received by the licensee in which the buyer has or may have an interest;
  6. Disclose to the buyer material facts related to the property or concerning the transaction of which the licensee has actual knowledge; and …

Liability of Real Estate Agent in a Residential Purchase and Sale Transaction – Virginia Code 54.1-2142.1 (the “Broker Shield” Statute).

Unless certain exceptions apply, a real estate agent is generally not liable for any false information provided to the other side. Virginia Code 54.1-2142.1 states:A licensee shall not be liable for providing false information if the information was

(i) provided to the licensee by the licensee’s client; or
(ii) obtained from a governmental entity;
(iii) obtained from a nongovernmental person or entity that obtained the information from a governmental entity; or
(iv) obtained from a person licensed, certified, or registered to provide professional services in the Commonwealth, upon which the licensee relies, and the licensee did not (a) have actual knowledge that the information was false or (b) act in reckless disregard of the truth.

In other words, the statute contemplates that the real estate agent is simply a mouthpiece for his or her client, and is otherwise not liable for any false information provide to the other sides unless the agent had actual knowledge of the falsity or acted in reckless disregard of the truth. These are often material issues of fact that are case specific.

Our office is very experienced in handling all aspects of broker-client legal relationships and compliance. Please contact Fox and Moghul today to set up a consult.

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