Real estate brokers and their clients sign a binding contract in order for the broker to officially represent these clients. A broker that breaches this contract and the Philippine law can get himself in legal trouble. For instance, these five actions are often why brokers get sued by the people they’re working for:
Failing to disclose defects
Full disclosure is essential when dealing with real estate, and brokers should know the implications of leaving clients in the dark regarding probable defects of properties being sold. Such failure opens the broker to liability for possible fraud under the New Civil Code, or violation of Republic Act No. 7394, otherwise known as the Consumer Act of the Philippines.
Consent is an essential element for the perfection of any contract. If clients were substantially misled through fraud, accident, mistake, or excusable negligence regarding certain aspects of an agreement to buy or sell real property, said clients can bring an action to nullify the contract based on vitiation of consent under the New Civil Code.
Breach of contract
The New Civil Code and the general concepts of law both provide that agreements made in a contract stand as the law between the parties. As such, any breach in the stipulations agreed upon is a violation of the contract which opens the erring party to liabilities under the New Civil Code.
Failing to keep clients’ information safe
Brokers may be liable for revealing clients’ information to third persons if the same information is protected under a non-disclosure clause in the principal contract. However, without that clause, brokers may still be liable for damages under the New Civil Code if the same can be proven by the injured party in court.
Negligence by a broker may be the basis for either civil or criminal liability, depending on the degree it was performed. For normal damages suffered by the injured party, a civil suit may be made for indemnification or reparation against the damage caused. In cases of reckless imprudence resulting to a greater injury, a criminal action on the basis of Article 365 of the Revised Penal Code may be filed against the erring party.