agency
vicarious liability
Vicarious liability is legal responsibility for the wrongful acts of another person. In real estate, a principal may be held liable for an agent's misrepresentations, and a broker may be liable for the acts of affiliated licensees within the scope of their work. Some states limit a client's vicarious liability for an agent's misstatements unless the client knew of them.
- Exam tip
- Exams test that brokers are responsible for supervising salespeople and can be held liable for their acts, which is one reason errors and omissions insurance exists.
- Example
- A salesperson tells a buyer a basement never floods, knowing it does. The buyer sues both the salesperson and the supervising broker.
Related terms & state variants
Sources
Source verification pending. Confirm current requirements with your state regulator.
Last verified: 2026-10-23