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What E&O Risks do Real Estate Professionals Commonly Face?
Posted on: October 7, 2015 by Newmark Insurance
NewMark is a leading insurance agency for Real Estate Liability Insurance Based in Austin and we service clients nationwide. While the real estate agents we serve are faced with a variety of risks, the following errors and omissions issues are the most common.
Misrepresentation- Failure to disclose information regarding a property accounts for the majority of E&O claims. These lawsuits include omitted disclosures involving easements, renovating without a permit, environmental problems, and title issues, according to The National Association of Realtors. They are categorized as innocent, negligent, or fraudulent. Experts recommend clearly sourcing information and using explicit language in listings to avoid this issue.
Fair Housing- Although these lawsuits don’t account for much of the litigation claims, they often result in hefty fines and judgments. As state and local laws vary, discrimination laws can be tricky to navigate. If sellers refuse to sell to a specific ethnicity, it is wise for agents to refuse their business as any discrepancies are likely to burden the agent. Further, be mindful of the language used in listings such as stating “perfect for empty nesters” which could single out certain groups.
False Advertising- Accurate advertising must be compliant with state and local laws and align with the firm’s code of ethics. In addition, licensure must be indicated clearly.
Environmental Issues- According to Realtor Mag, asbestos, lead-based paint, and groundwater contamination can lead to lawsuits if the broker fails to disclose the issues or if they fail to recommend specialists to evaluate the issue.
Employee vs. Independent Contractor Status- The majority of firms use independent contractors as their salespeople in today’s market, which affects income taxes, federal taxes, workers’ compensation, and unemployment benefits.
At NewMark Insurance Services, we understand the risks that real estate agents and their firms face. We are dedicated to protecting agents and brokers against the scope of exposures associated with their practice. For more information, contact our specialists today at (855) 777-6549.