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News & Information: ORRA BrokerWise

Broker found not liable for agent's alleged fraud

Tuesday, September 25, 2012  
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A California appellate court has considered whether a corporation's designated broker could be personally liable for the actions taken by one of the corporation's salespeople, absent a showing of special circumstances.

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A higher court affirmed the appellate court's finding that the broker did not owe a fiduciary duty to the plaintiff, a trust. Looking at the statutory history of corporate brokerage statute, the court found that it was clear that the intent of the legislature was to make licensed real estate brokerage corporations operate under the same rules as other corporations. Therefore, the corporation's designated officer did not owe any general duties to clients of the firm, unless special circumstances existed. Since the broker's statutory duty to supervise a salesperson was a duty owed to the brokerage (corporation) and the broker otherwise had no contact with the trust, the broker did not owe any duty to the trust.

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