An agent’s primary responsibility is to the principal, and Illinois courts have long held that the contractual principal-agent relationship as defined in a listing agreement or buyer agency agreement gives the seller or buyer a cause of action against the licensee who breaches her fiduciary duties to the client. The courts have not demanded fiduciary duty to third parties.
However, Illinois license law does set forth the duties that licensees owe to third-party customers (buyers or sellers). Licensees are to treat all customers honestly. They cannot negligently or knowÂingly give customers false information.
Finally, licensees must disclose all material adverse facts about the physical condition of the property to the customer that are actually known by the licensee and that could not be discovered by a reasonably diligent inspection of the property by the customer (Latent Defects).
In Illinois, a licensee may be held liable to a seller or buyer if the licensee misrepresents material facts about a property and if the seller or buyer suffers monetary loss through reliance on these statements. The licensee’s loyalty to the principal is no defense even though the principal may have ordered the agent to misrepresent. Licensees have a duty to prospective sellers and buyers to disclose all material information within their knowledge. If the licensee knowingly makes untrue statements, Illinois courts will have no difficulty in finding the licensee liable to the appropriate party.
Furthermore, liability may be imposed when the licensee is aware of facts that tend to indicate she is making a false statement. For instance, if the seller tells his agent/licensee that “the roof was replaced last year,” and the agent has good reason to believe that statement is untrue, the licensee should attempt to ascertain the truth and pass the correct information on to the buyer. However, if the client provided the false information and the licensee did not have knowledge that the information was false, the licensee will not be held liable to the customer.
Licensees who attempt to avoid liability to buyers through the use of a waiver or an exculpatory clause in the sales contract will probably be unsuccessful.
