Contractor Referrals Can Carry Legal Risk
A recent court case shows how recommending an unlicensed contractor can trigger an agent’s duty of reasonable care and lead to costly liability.
CHICAGO – Referring a contractor may seem routine, but it can carry serious legal risk for real estate professionals. When agents recommend home improvement services, that referral can fall under the duty of reasonable care — a fiduciary obligation that requires competent, professional conduct.
A recent New Mexico case underscores the stakes. After a broker recommended an unlicensed, uninsured roofer, the work led to a fire that destroyed the home. The court ruled the broker violated that duty and upheld more than $143,000 in damages.
A recent Window to the Law video by the National Association of Realtors® explains how to reduce liability when customers ask for contractor recommendations and what best practices can help protect both consumers and professionals.
Source: National Association of Realtors®
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