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The Basics of Professional Liability for Real Estate Agents
Posted on: December 17, 2014 by NewMark
As a residential real estate agent, you perform a very important duty to your clients; many of whom may be first time homebuyers. Even if they aren’t, they are often unaware of all the complexities of buying a home, and it’s your responsibility to make the process as smooth as possible for them. Of course, mistakes can happen; and in today’s litigious environment, lawsuits are becoming more common.
While the only fool-proof way to financially protect yourself and your business is with Professional Liability for Real Estate Agents, or Real Estate Errors and Omissions (E&O), understanding the basics and some common legal problems you will likely see in your career could help mitigate your risks. So what are these common problems?
Breach of Fiduciary Duty. Real estate agents and brokers aren’t always aware of exactly what duties they own, as common law duties frequently aren’t clearly defined by state. What you can do to combat this is continue your education and stay updated on changes within the industry as well as your state’s current laws on agency disclosure.
Misrepresentation. Do you consistently utilize seller disclosure forms and document all sources of information from your sellers? Doing so could help you avoid a negligent misrepresentation claim. The other types of misrepresentations you may be accused of include innocent, and fraudulent.
False or Misleading Advertising. Does your advertising comply with state licensing laws and regulations? They must do so, and must also comply with the REALTOR Code of Ethics. Real estate ads should always be truthful, and as an agent you should comply with any special rules adopted in your state that governs the advertising of property and the promotion of real estate services.
Fair Housing. This is actually one of the least frequent causes of lawsuits; but they can result in costly damages. Do you know what the fair housing laws are? It’s important to stay aware and make sure your sellers are educated too. Don’t take on a seller that refuses to sell to someone of a certain ethnic background or race.
These are just some of the possible legal problems that you may face as a residential real estate agent. As mentioned earlier in this post, the best way for you to financially protect yourself is by investing in a Real Estate E&O policy. Also, familiarizing yourself with these common legal issues could help you limit your risk exposure.
At NewMark, we understand that mistakes are bound to happen in the real estate industry- or in any industry for that matter- even by top talent with years of expertise. Our mission is to provide superior protection from financial loss to our client’s businesses, property and assets at affordable rates, as well as the best service experience in the industry. Please contact us at (855) 777-6549 for more information.