Avoiding Negligent Misrepresentation: What North Carolina Real Estate Agents Need to Know
Real estate agents in North Carolina are regulated by the North Carolina Real Estate Commission (NCREC), which takes negligent misrepresentation very seriously. This article explains how negligent misrepresentation is defined under Commission rules, what it can look like in real-world situations, and practical steps agents can take to avoid it in the future.
Even the best agents can face complaints for misrepresentation — sometimes even when they acted in complete good faith. Understanding what the NCREC considers negligent conduct is the first step in protecting your real estate license.
What Is Negligent Misrepresentation Under the NCREC?
According to the Commission, negligent misrepresentation occurs when a licensee unintentionally provides incorrect information about a material fact to a buyer, seller, tenant, or landlord. This can happen because the agent:
Does not have actual knowledge of the fact,
Relies on incorrect information, or
Makes an honest mistake.
The key takeaway is that negligent misrepresentation does not require intent or malice. The NCREC assumes that most agents are acting in good faith; however, an agent can still be disciplined if they “should have known” the information was inaccurate.
Even honest, well-meaning agents can face allegations if their mistake falls below the standard of care expected of a reasonably prudent real estate professional.
Examples from the North Carolina Real Estate Commission
The Commission provides examples showing how negligent misrepresentation can arise for both listing agents and buyer’s agents.
Example:
A seller tells their listing agent that the home has 1,850 heated square feet. Without verifying, the agent enters that figure into the MLS. A buyer’s agent later relies on that same MLS data when showing the home. The buyer later discovers that the house actually has only 1,750 square feet.
In this case, the listing agent is guilty of negligent misrepresentation because they failed to verify the information before publishing it. The buyer’s agent may also share some risk if the error should have been obvious to a reasonably prudent agent (for example, if the size difference was significant enough to notice).
This example underscores a key point: acting in good faith is not a defense if an agent should have known the information was wrong. The Commission will measure conduct against the standard of what most competent agents would have done under similar circumstances.
Common Situations That Lead to Negligent Misrepresentation
Negligent misrepresentation often arises from simple oversights. Common problem areas include:
Incorrect MLS data: Errors in square footage, year built, septic capacity, or other property details.
Relying on seller statements without verification: Taking the seller’s word at face value without confirming material facts.
Failing to update listings: Leaving outdated or corrected information in public listings after discovering an error.
How to Avoid Negligent Misrepresentation
There are many ways agents can reduce the risk of a complaint—or strengthen their defense if one arises. Here are key best practices:
1. Verify Before You Communicate
Never assume information is accurate just because it came from the seller or another source. Confirm key details using county records, permits, surveys, or inspections. Verification shows that you acted with reasonable care.
2. Document Your Due Diligence
Keep records of what you checked and when. Save emails, reports, or notes from conversations that show how you verified facts. Documentation can be crucial evidence if a complaint is filed with the Commission.
3. Double-Check MLS Data
Before publishing or sharing MLS information, confirm all major data points such as square footage, year built, and permitted uses. A second set of eyes—like a broker-in-charge—can help catch errors before they go public.
4. Use Conditional Language When Uncertain
If you haven’t verified a fact, make that clear. Use phrases such as “per seller” or “buyer to verify” when referencing information outside your firsthand knowledge. This sets realistic expectations and prevents misunderstandings.
5. Stay Within Your Expertise
Avoid giving opinions on matters outside your professional training, such as soil suitability, structural integrity, or zoning law. When in doubt, refer clients to qualified experts and document that referral.
6. Train Regularly and Review Office Procedures
Brokerages should hold regular training sessions on identifying material facts and avoiding misrepresentation. Review and update office policies for listing verification, recordkeeping, and MLS accuracy.
7. Correct Errors Promptly
If you discover an error, notify all affected parties immediately and correct the record. Acting quickly can prevent further harm and demonstrate to the Commission that you take your duties seriously.
What To Do If You’re Accused of Negligent Misrepresentation
If you receive notice of an NCREC complaint or investigation, do not ignore it. The Commission will typically invite you to provide a written response explaining your side of the story. That response is your first—and often most important—chance to shape the record.
Consulting a professional licensing defense attorney early can help you frame the facts properly, present mitigating circumstances, and identify legal arguments that support your position. Many cases can be resolved without a hearing when handled strategically from the outset.
Conclusion
Negligent misrepresentation often stems from small oversights, not bad intentions. By verifying facts, documenting diligence, and seeking guidance early, North Carolina real estate professionals can protect both their clients and their careers.
If you’ve received a notice from the North Carolina Real Estate Commission, Brooks Peterson PLLC can help you navigate the process and safeguard your real estate license.
This is not legal advice. If you do need legal representation call the office at: 919-616-3317