Common disputes between Minnesota real estate brokers and their agents include unauthorized practice of law, fraud, broker misconduct, negligence, misrepresentation or failure to disclose material information, breach of duty, payment of commission, escrow money dispute, consumer dissatisfaction, and failure to be licensed.
The key statute relevant to real estate broker and agent disputes is Minnesota Statutes chapter 82, which includes provisions on broker licensing, disclosure requirements, compensation, trust account requirements, and civil actions.
Important Minnesota cases involving real estate brokers and agents include Gardner v. Conway, Swanson v. Domning, White v. Boucher, Anderson v. Anderson, Olson v. Penkert, and Matter of Haugen.
Unauthorized Practice of Law
In Gardner v. Conway, the court articulated the law regarding broker unauthorized practice of law:
Whether a difficult or doubtful question of law is resolved by the giving of advice to, or the doing of an act for, another must in each case depend upon the nature of the problem involved. As ancillary to the closing of a real estate transaction, a real estate broker may draw the ordinary instruments of conveyance. Gardner v. Conway, 234 Minn. 468, 482, 48 N.W.2d 788, 797 (1951).
In Swanson v. Domning, the court articulated the law regarding fraud:
A person is liable for fraud if he makes a false representation of a past or existing material fact susceptible of knowledge, knowing it to be false, or as of his own knowledge without knowing whether it is true or false, with intention to induce the person to whom it is made to act in reliance upon it, or under such circumstances that such person is justified in acting in reliance upon it, and such person is thereby deceived and induced to act in reliance upon it, to his pecuniary damage. Swanson v. Domning, 251 Minn. 110, 114, 86 N.W.2d 716, 720 (1957).
Failure to Disclose Key Information
In Olson v. Penkert, the court articulated the law regarding failure to disclose information:
A broker is always bound to make a full and fair disclosure to his principal of all facts within his knowledge affecting the rights or interests of the principal in the sale. The agent must deal fairly with his principal to the extent that he must lay bare the truth, without ambiguity or reservation in all its stark significance. If he acts in bad faith or commits a fraud upon his principal, he will forfeit his right to compensation. This rule is based upon the requirement that a broker owes the utmost good faith and loyalty to his principal. Olson v. Penkert, 252 Minn. 334, 342-43, 90 N.W.2d 193, 200 (1958)
Undisclosed Dual Agency
In Anderson v. Anderson, the court articulated the law regarding undisclosed dual agency:
[A]gent vested with discretionary authority cannot represent two parties having conflicting interests without the principal’s prior consent or subsequent ratification after full disclosure of all the facts. Anderson v. Anderson, 293 Minn. 209, 216, 197 N.W.2d 720, 724 (1972).
Right to a Commission
In Olson v. Penkert, the court articulated the law regarding a right to a commission:
The great weight of authority is that, unless the broker and his employer have expressly stipulated to the contrary, the broker is entitled to his compensation upon the completion of the negotiations which he undertook, irrespective of whether or not the contract negotiated is actually consummated or whether the failure to complete the contract is due to the default or refusal of the employer or to that of the party procured by the broker, so long as the failure to carry it through is not due to any fault of the broker or so long as he has not been guilty of fraud or bad faith. Olson v. Penkert, 252 Minn. 334, 335, 90 N.W.2d 193, 196 (1958).
Earnest Money Disbursements
In Matter of Haugen, the court articulated the law regarding earnest money disbursements:
[T]hat disbursement of funds from a trust account can only be made in accordance with the terms of the applicable agreements. Matter of Haugen, 278 N.W.2d 75, 78 (Minn. 1979).