Liability of Real Estate
Brokers
In Hawaii, real estate
brokers and sales persons are required to be licensed by the State of Hawaii real
estate commission under Chapter 467, Hawaii Revised Statutes. In addition
to the requirements contained in Chapter 467, Hawaii Revised Statutes, real
estate brokers and sales persons are governed by Chapter 99, Hawaii Administrative
Rules.
Under Section 467-14,
Hawaii Revised Statutes, a broker=s or sales person=s license can be revoked or suspended (or a fine imposed) where
the broker or sales person commits certain acts. As examples, a broker or sales person
cannot make any misrepresentation, cannot make false promises or fail to ascertain
and disclose material facts concerning a real estate transaction or property.
Under Section 16-99-3,
Hawaii Administrative Rules, a broker or sales person is required to conduct
themselves to protect the general public in its real estate transactions. As examples,
a broker or sales person cannot add to or modify the terms of an instrument previously
signed, cannot convert other people=s money and cannot advertise a property without written authorization.
In addition to the
general statutory requirements set forth above, brokers and sales persons (and their
clients) are subject to certain other laws when engaging in certain real estate transactions
such as the sale of condominium apartments, vacant land and Aused@
residential property. The propose of such laws is to protect the general public and
requires the seller (broker and sales person) to make full disclosure of material
facts concerning the property being sold.
Brokers and sales
persons have a fiduciary relationship with their clients. The law imposes upon real
estate brokers and sales persons fiduciary obligations of utmost good faith, integrity,
honesty, loyalty and, in addition, the duty of due care and diligence. In addition,
a broker or sales person has the duty to make full, fair and timely disclosure to
their clients of all facts within their knowledge which are, or may be, material
to the transaction and which might affect their client's rights and interests or influence their client=s actions.
As such, real estate
brokers and sales person are required to comply with both the statutory requirements
and the duties imposed by the law in their dealings for their clients. In Hawaii,
residential and commercial real estate transactions involve substantial amounts of
money and are complicated transactions. Thus, the above statutory requirements and
duties imposed by the law are necessary to protect the public against harmful conduct
that may be committed by brokers and sales persons.
Where a broker or
sales person violates the requirements and duties set forth above, a person or company
who has been damaged by such harmful conduct does have the right to bring an action
against such broker or sales person to recover such damages. In addition, a brokers=s or sales person=s harmful conduct is
usually a unfair and deceptive trade practice. In the event that such broker=s or sales person=s harmful conduct is
an unfair or deceptive trade practice, then a person or company can recover three
(3) times the amount of damages (treble damages) that person or company has suffered
against the broker or sales person. Also, a person or company can recover attorney=s fees from the broker
or sales person.
Problems areas between
brokers and sales persons and their clients have been:
1. Value
of Property. Buyers and sellers of real estate are always concerned about the
value of the property they are buying or selling. A broker=s or sales person=s statements of current or future value of a property is a statement
of opinion and such statements are often times a source of disagreement between clients
and brokers and sales persons. Whether an incorrect opinion of a property=s value is actionable
against a broker or sales person is a complex question that requires analysis by
an attorney.
2. Nondisclosure.
Sellers of real estate are concerned about what should be disclosed to a buyer. Buyers
of real are concerned about what should they know about a property before they buy
such property. Brokers and sales persons are required to assist a seller in making
all necessary disclosures of material facts to a buyer. As such, when disclosures
of material facts are not made, then the seller and buyer may have claims against
the brokers and sales person involved in the transaction.
3. Negotiations
and Contracts. Brokers and sales persons often assist their clients in negotiating
and drafting the agreement to sell/buy property. Where the agreement to sell/buy
property does not accurately reflect the agreement between the seller and buyer,
the broker or sales person may not have exercised the due care required of them in
the transaction.
4. Restrictions
and Limitations. In Hawaii, restrictions and limitations are imposed upon the
use of real estate either by the government or by private agreement. The government
imposes restrictions and limitations by zoning laws, easements for public right of
ways and utilities, native Hawaiian rights and building codes. Private entities such
as homeowner and community associations imposes restrictions upon what an owner can
build upon his property (separate and apart from zoning laws and building codes).
Brokers and sales persons are required to inform a buyer of such restriction and
limitations so that the buyer can make a decision whether he or she should buy a
particular property. A buyer may have a claim against a broker or sales person where
the buyer cannot build or use his or her property as intended because of restrictions
and limitation he or she did not know.
In Hawaii, the types
of problems and possible claims against brokers and sales persons are complex and
numerous. Any serious problem arising from the sale or purchase of property should
be examined by an attorney.
By: Glenn K. Sato 9/6/97
If you need help with any of your legal matters, to contact
us, please call, e-mail
or visit us. We are in Honolulu, Hawaii at:
or online: http://www.ST-Hawaii.com
ph: 808-537-1625 f: 808-537-1093
email: sato@ST-Hawaii.com
Copyright SiteSys
Inc
