Broker Liability for Agents

Hi all,
I got a call from a lawyer today. He was specifically interested in my thoughts on the ability for brokers to limit their liability for the actions of agents under the broker's license.

Although, I've never been a party to real estate litigation, I think that Texas has a pretty clear point of view on the topic. Check out the Texas Real Estate Licensing Act:

Added by Acts 2001, 77th Leg., ch. 1421, § 2, eff. June 1, 2003.

§ 1101.803. GENERAL LIABILITY OF BROKER. A licensed
broker is liable to the commission, the public, and the broker's
clients for any conduct engaged in under this chapter by the broker
or by a salesperson associated with or acting for the broker.

Now the real question for this particular attorney is can the broker limit their liability with the broker/agent contractor agreement?

I don't think you can limit the liability built into the law with an agreement. It may be that the broker can make the contractor (agent) indemnify the broker in the event of lawsuit (as my broker does), but I'm not sure that that is really any guarantee of protection or liability limitation for the broker. Just maybe a warm feeling of "hey this guy will protect me and pay the legal bills if he does something and gets sued".

I'd love to hear what others think about this and what you or your broker does to limit their liability for agents' actions. It would be most interesting to hear about what folks in other states may know about this.

Joe

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