Liability for marketing material misrepresentation

When marketing material contains incorrect or misleading information, both real estate agencies and individual agents can face significant legal risks. Without proper indemnity clauses in place, liability may arise from:

• Misleading or deceptive conduct
• Misrepresentation

It is crucial for agencies and agents to be aware of the potential legal consequences tied to their marketing efforts. Misstatements or omissions in property descriptions can lead to lawsuits, financial penalties, and reputational damage.

Types of Liability

1. Misleading or Deceptive Conduct
   Misleading or deceptive conduct occurs when the information provided in marketing materials leads a potential buyer or client to believe something that isn’t true. Even unintentional misstatements can be considered deceptive.
2. Misrepresentation
   Misrepresentation involves giving false or incomplete information about a property, either deliberately or inadvertently. This can include overstating rental returns, misdescribing property access, or failing to disclose essential details.

Key Examples of Liability in Action

To illustrate the real-world impact of marketing misrepresentation, here are two cases where agencies and agents faced substantial liability:

• Misstating Net Rent Return on a Shopping Centre
  In one case, an agency was held liable for misstating the total net rent return on a shopping centre. The marketing material incorrectly inflated the rental income, leading to significant buyer losses. The agency was required to compensate the buyer for damages amounting to $1.6 million.
  Read the full story here.
• Misdescription of Rear Street Access
  In another case, an agent misrepresented rear street access to a property. Although the marketing material advised buyers to “make their own enquiries,” the failure to disclose that the driveway was not owned by the seller amounted to misleading conduct. This oversight resulted in legal action against the agent, underscoring the importance of complete and accurate disclosures.
  Read more about this case here.

How to Protect Your Agency and Agents

To avoid potential liability, it’s essential to implement the following measures:

• Comprehensive Indemnity Agreements
  Ensure that all marketing materials are backed by proper indemnity clauses, protecting the agency and agents from claims arising from misstatements.
• Due Diligence and Accurate Representation
  Conduct thorough checks on the property’s attributes before including details in marketing materials. Always verify information such as:
  • Rental returns
  • Property access and easements
  • Ownership details of driveways or shared spaces
• Clear Disclaimers
  Include clear disclaimers in marketing materials, advising buyers to perform their own due diligence. However, disclaimers alone are not always sufficient to absolve liability if misstatements are found to be misleading.

What To Do If You Face a Misrepresentation Claim

If your agency or an individual agent is facing a legal dispute over misrepresentation or misleading conduct, it’s crucial to act swiftly:

• Engage Legal Representation
  Consult a property lawyer experienced in misleading conduct cases. They can assess the validity of the claim and help minimize your liability.
• Gather Evidence
  Collect all relevant marketing materials, communications, and documentation that demonstrate the efforts made to provide accurate information.
• Explore Settlement Options
  In many cases, resolving the dispute through negotiation or mediation can reduce financial costs and preserve your professional reputation.

Learn More About Misleading Conduct and Unfair Contract Disputes

For more information on handling disputes related to misleading conduct in marketing materials and unfair contract terms, visit our comprehensive guide on Unfair Contract Terms + Misleading Conduct Disputes.

Conclusion

The risk of liability for misrepresentation in marketing materials is a serious concern for agencies and agents. Without thorough due diligence and legal protections in place, the consequences can be costly. By ensuring your marketing materials are accurate, supported by proper indemnity agreements, and regularly reviewed for compliance, you can reduce the risk of facing significant legal and financial penalties.

If you have concerns about liability in your marketing practices, reach out to our experienced team of property lawyers. We’re here to help you navigate the legal complexities and protect your business from potential risks.