What is self-dealing in real estate?

What is self-dealing in real estate?


Self-dealing in real estate refers to a situation where a person with a fiduciary duty to act in the best interest of another party takes advantage of their position to benefit themselves. It is a breach of trust and can have serious legal and financial consequences. In this article, we will dive deeper into the topic of self-dealing in real estate, exploring its various aspects and implications.

Understanding Self-Dealing in Real Estate

Self-dealing can occur in various real estate transactions, involving individuals such as real estate agents, property managers, trustees, or anyone who has a duty to act in the best interest of another party. Here are some common scenarios where self-dealing may take place:

Conflict of Interest: A real estate agent may represent both the buyer and the seller in a transaction, creating a conflict of interest. In such cases, the agent may prioritize their own financial gain over the best interests of their clients.

Undisclosed Relationships: A property manager may hire a contractor for maintenance or repair work without disclosing their personal relationship with the contractor. By doing so, they may receive kickbacks or favorable treatment, compromising the interests of the property owner.

Insider Trading: In real estate investment trusts (REITs) or real estate partnerships, individuals with inside knowledge may use that information to their advantage, buying or selling properties before the information becomes public. This is similar to insider trading in the stock market.

Self-Dealing by Trustees: Trustees have a fiduciary duty to act in the best interest of the trust’s beneficiaries. However, they may engage in self-dealing by purchasing trust assets for their own benefit at below-market prices or by favoring their own interests over those of the beneficiaries.

Self-dealing in real estate can have severe legal and financial consequences for the parties involved. Some of the potential repercussions include:

Lawsuits and Legal Liability: The party who has been harmed by self-dealing may file a lawsuit against the individual responsible. If found guilty, the self-dealer may be required to pay damages and face other legal penalties.

Loss of Reputation: Engaging in self-dealing can tarnish an individual’s professional reputation in the real estate industry. This can lead to a loss of clients, business opportunities, and future prospects.

Voidable Transactions: Transactions tainted by self-dealing can be challenged and declared void by the courts. This means that any agreements or contracts entered into as a result of self-dealing may be invalidated.

Removal from Fiduciary Roles: Individuals found guilty of self-dealing may be removed from their fiduciary roles, such as real estate agents, property managers, or trustees. This can have long-term implications for their careers and their ability to work in similar capacities.


Self-dealing in real estate is a serious breach of trust that can have significant legal and financial consequences. It occurs when individuals with fiduciary duties prioritize their own interests over those they are obligated to protect. Understanding the various forms of self-dealing and its potential ramifications is crucial for both real estate professionals and individuals involved in real estate transactions.


– National Association of Realtors: www.nar.realtor
– Cornell Law School Legal Information Institute: www.law.cornell.edu
– Investopedia: www.investopedia.com