Real Estate Licensees and other staff members must always be careful about the statements they make. They must be sure that the customer understands whether the statement is an opinion or fact. Statements of opinion are permissible only as long as they are offered as opinions and without any intention to deceive.
Statements of fact must be accurate. If not, this is a violation of Illinois Licensing Law.
Exaggeration of a property’s benefits is called puffing and is legal. While puffing is legal, Licensees must ensure that none of their statements can be interpreted as fraudulent. Fraud is the intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person. That includes not only making false statements about a property but also intentionally concealing or failing to disclose important facts.
The misrepresentation or omission does not have to be intentional to result in Licensee liability. A negligent misrepresentation occurs when the Licensee should have known that a statement about a material fact was false. If the Renter relies on the Licensee’s statements, the Licensee is liable for any damages that result. Similarly, a Licensee who accidentally fails to perform some act – for instance, forgetting to deposit a security deposit check – may be liable for damages that result from such a negligent omission.
If a lease to rent Real Estate is obtained as a result of fraudulent misstatements, the lease may be disaffirmed or renounced by the Renter. In such a case, the Licensee not only loses a commission but can be liable for damages if either party suffers loss because of the misrepresentation. If the Licensee’s misstatements were based on the Owner’s own inaccurate statements and the Licensee had no independent duty to investigate their accuracy, the Licensee would not be liable for any damages.
