Real Estate Broker Liability for the Actions of a Real Estate Licensee

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Can a broker be liable for the actions of an associate? There are many large real estate brokerages that employ many sales associates, and if an associate does mishandle escrow funds or commits other law or rules violations the broker may be liable and subject to a disciplinary action by the DPBR.

Section 475.25, Florida Statutes lists the many bases for disciplinary action, but 472.25(u) provides that a violation exists if the broker “(u) Has failed, if a broker, to direct, control, or manage a broker associate or sales associate employed by such broker. ” And this failure to supervise basis for a violation could be used by the DPBR as a catch-all for associate misconduct.

But Florida Law recognizes that within a master/servant relationship, the master should not be liable for servant misconduct, especially if the misconduct is unknown to the master, unsanctioned by the master, and is an intentional act unauthorized and outside of the scope of employment.

“* * * ‘The liability of the master for intentional acts which constitute legal wrongs can only arise when that which is done is within the real or apparent scope of the master’s business. It does not arise where the servant has stepped aside from his employment to commit a tort which the master neither directed in fact, nor could be supposed, from the nature of his employment, to have authorized or expected the servant to do * * *.’ (Italics supplied.)…

The issue of whether the employer ‘could be supposed from the nature of [the agent’s] employment to have authorized or expected the servant to do’ the things which form the basis of this cause of action.” Dieas v. Associates Loan Company, 99 so.2d 279, 281 (Fla. 1957.)

To determine if the intentional act was authorized and expected, the Courts have considered who benefits from the wrongful act, the master or the servant and if such act “was not authorized by, or was forbidden by, the employer, or was not necessary or appropriate to serve the interests of the employer,’ unless the act was done to accomplish his own purposes as distinct from the employer’s business.” Dieas v. Associates Loan Company, 99 so.2d 279, 281 (Fla. 1957.)