How Real Estate Agents Can Protect Themselves From Lawsuits
- Jun 29
- 4 min read
By Fusion Growth Partners Staff
Most lawsuits against real estate agents are preventable, and the protection has almost nothing to do with the law. It comes down to three things: building a real relationship, communicating consistently, and telling the truth. Agents who do those well rarely end up in a dispute, because they establish trust and eliminate the confusion that disputes feed on.
Here's what that looks like in practice.
Why agents get hit with lawsuits
During the post-COVID buying frenzy, I watched buyers waive every contingency and pay tens of thousands over asking to win a home. Months later, some of those same buyers turned on their agents, threatening to sue, insisting they'd been "made" to overpay. No one made them do anything. But in real estate, it's almost always someone else's fault.
This isn't just anecdotal. At the National Association of Realtors' 2025 conference, a senior executive at E&O insurer Victor reported that the average paid loss on a real estate agent's claim has climbed roughly 60% over the past decade — and while the number of claims is finally leveling off, their severity keeps accelerating, much of it traced to frustrations that surfaced coming out of the pandemic.
The cultural backdrop only makes it worse. The American Bar Association's 2023 Survey of Civic Literacy found that 85% of people believe civility has declined over the past decade. When clients are more frustrated and quicker to assign blame, the largest financial decision of their lives becomes a flashpoint.
Here's the part most agents miss: the claims rarely start with a technical error. They start with a broken expectation, a conversation that didn't happen, or a client who stopped trusting their agent. In fact, failure to disclose and misrepresentation — gaps between what a client expected and what they got — are the most common claims of all. Which means the best protection isn't defensive. It's the relationship itself.
Build a real relationship first
The first business fundamental I teach is simple: be the professional you would actually hire. Hold yourself to the standard you'd expect from the best person you've ever worked with — trustworthy, responsive, a genuine listener. When you operate that way, clients don't just like you; they believe you're on their side. And people don't sue the person they believe is on their side.
That belief is also what builds a referral business. One of our agents, Jeffrey Vaiselman, gets 95% of his business from his sphere and referrals — by measuring his inputs, staying accountable, and nurturing relationships consistently. Trust doesn't scale through advertising; it transfers through relationships.
Communicate consistently — and have the hard conversation early
Most claims could have been defused by an honest conversation the agent avoided. Sometimes the conversations you skip are the ones that matter most.
Protection here is twofold. First, communicate consistently — disciplined, frequent, meaningful contact, so clients always know where things stand and never feel left in the dark. Second, when a problem appears, address it early, directly, and with composure. A small issue raised today is a conversation. The same issue ignored for three weeks is a complaint.
Tell the truth, even when it costs you
The agents who don't get sued are the ones who refuse to sugarcoat. As one of our agents puts it: "I'm not here to sell you a house. I'm here to advise you." Be a service, not a product, which is the difference between TurboTax and a CPA. Clients aren't paying you to open doors; they're paying for honest counsel, including the things they don't want to hear.
Most lawsuits live in the gap between what a client expected and what actually happened. Honesty closes that gap before it can open. Set real expectations up front, deliver hard news straight, and put your client's interest ahead of the commission — that's the code of ethics, and it's also the cheapest legal insurance you'll ever carry.
Play the long game
Put those three together and you become the kind of agent clients defend rather than sue. That's not a one-deal mindset; it's a career one. In my conversation with Brent Gove — a nationally recognized top producer — he compares real estate to a peach orchard: the agents who nurture relationships consistently and refuse to quit early are the ones who build something that produces for decades.
None of this replaces the basics, which include documenting your interactions, understand the contracts you ask clients to sign, and carry appropriate errors-and-omissions coverage. For anything specific to your contracts, disclosures, or policy, work with your broker and a licensed attorney.
While the documentation is your backstop, the relationship is your protection.
Frequently asked questions
Can a client sue their real estate agent?
Yes. Clients can sue for breach of duty, misrepresentation, failure to disclose, or negligence. In practice, most claims stem from miscommunication and unmet expectations rather than serious misconduct — which is why relationships and honesty matter more than defense.
What are the most common reasons real estate agents get sued?
Failure to disclose and misrepresentation of property condition top the list, followed by poor or missing documentation and communication breakdowns that let small problems escalate.
How can a real estate agent avoid lawsuits?
Build genuine client relationships, communicate consistently, tell the truth even when it's hard, document your interactions, and put the client's interest first. Clients who trust their agent rarely pursue legal action.
What should I do if a client threatens to sue me?
Stay calm, stop the informal back-and-forth, gather your documentation, and notify your broker and errors-and-omissions carrier promptly. Consult a licensed attorney before responding further.
Does E&O insurance protect real estate agents? Errors-and-omissions insurance can cover defense costs and certain claims tied to professional services, but coverage varies. Review your specific policy with your provider and broker.
This article is for general educational purposes and is not legal advice. For guidance on your specific situation, contracts, or disclosures, consult your broker and a licensed attorney.
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