Theories of Real Estate Broker Liability and the Effect of the 'as is' Clause

Abstract

The article explores the history of real estate broker liability and various tort theories for liability of real estate brokers to purchasers of real property. The article considers statutory and contractual provisions limiting real estate brokers' potential liability and in particular focuses on how courts construe and apply the "as is" clause and similar exculpatory clauses. The article concludes that these clauses are and should be viewed with skepticism. Courts should not enforce exculpatory clauses in residential real estate sales contracts unless the broker can prove that the disclaimers were actually agreed to by the purchasers and that the clauses adequately identify the qualities disclaimed. These requirements are necessary to ensure that purchasers genuinely understand and knowingly accept the risks purportedly allocated by such provisions.

Keywords: real estate, broker, real estate agent, as is clause, exculpatory clause