Real Estate Licensees Can Be Held Personally Liable For Negligence

Real Estate licensees frequently ask their legal counsel of board certified attorneys if they can be personally sued by a party to a sales contract or a lease.  Surely, these licensees reason, they can’t be sued personally – they are working for a company, after all, and isn’t limited liability the main benefit of working for a company?

WRONG! According to the third district court of appeals, which includes Miami, in the recent case of  Muchnick v. Goihman, Case No. 3D17-122 (Fla. 3d DCA 2018), a real estate licensee is not shielded from personal liability due to the fact that he was acting within the scope of his corporate employment because the evidence showed that the licensee personally participated in the negligence.  The court said that the licensee owed a duty of reasonable care to the tenants under the “undertaker’s doctrine” where he made a promise to fix the problems in the apartment and he managed repairs.

Most real estate attorneys cite the following example:

In 2012, licensee Richard Goichman, who worked for Fortune International Realty, rented an apartment in Aventura to Michael and Valerie Muchnick. The Muchnicks signed a two-year lease agreement to rent the apartment for $7,500 a month. During their walkthrough, the Munchnicks pointed out some minor cosmetic issues with the apartment. Goichman assured them that these issues would be fixed prior to their moving in. However, the cosmetic issues were never addressed, and worse, after the Muchnicks moved in, they discovered more serious problems, such as water damage and mold. Goichman did not quickly address these problems either. After they put their child on medication due to the mold problems, the Muchnicks canceled the lease because they believed the apartment was not safe to inhabit. They also sued Goichman for, among other things, negligence.

Goihman sought summary judgment on the negligence claim, alleging that: (1) he was acting in the scope of his employment with Fortune International Realty, and thus, was not a proper party; and (2) he owed no duty to the Muchnicks. But the appellate court disagreed. The court said that Goihman could be held personally liable for his actions and inactions because he personally participated in the negligence, which is a tort. “[J]ust because Goihman was acting in the scope of his employment when he rented the apartment, promised to fix it, and managed the repairs, doesn’t mean that he was shielded from personal liability under all circumstances. ‘[O]fficers or agents of corporations may be individually liable in tort if they commit or participate in a tort, even if their acts are within the course and scope of their employment. All that needs to be alleged is that the agent or officer personally participated in the tort, even if the complained of action was because of and entirely within the scope of his or her employment.’  Vesta Const. & Design, L.L.C. v. Lotspeich & Assocs., Inc., 974 So. 2d 1176, 1180 (Fla. 5th DCA 2008) (Lawson, J.)”

Further, the court said that once Goihman promised to fix the problems in the apartment, and managed the repairs, he had a duty through the “undertaker’s doctrine” to exercise reasonable care in making the repairs. The court found that by not quickly fixing the defects, he failed to meet the reasonable care standard. The court stated that “[b]y undertaking the responsibility for the repairs throughout the time the Muchnicks lived in the apartment, Goihman ‘assume[d] a specific, legally recognized duty to act with reasonable care.’ Pascual v. Fla. Power & Light Co., 911 So. 2d 152, 154 (Fla. 3d DCA 2005)…Goihman repeatedly told [the Muchnicks] that he would take care of the repairs and yet Goihman never resolved the issues”.

This case likely has far-reaching implications. It involves a factual scenario that happens every day. Indeed, seemingly any licensee at some point in their career could be accused of the kind of inaction that Goihman was accused of. So, to avoid being the next Richard Goihman, all licensees would be well advised to remember that they are personally liable for their actions while acting in the scope of their employment, even if they work for a company, and that if they say they are going to do something, then they need to actually do it.

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By |2022-11-08T01:11:58-05:00August 29th, 2020|Real Estate Law|0 Comments

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