Realtors…Are you at Risk for Performing Non Traditional Listing Services

What Should Brokers/Agents Do To Protect Themselves From Liability?

1.  The Brokerage can restrict their agents’ activities to those defined by the listing contract. The typical listing contract does not contain language that would obligate the listing agent to “oversee the property”, “close up/ open up the property”, “check periodically on the property”, or take on other non‐traditional real estate listing services.

2.  If an agent does undertake any additional tasks which are not defined by the listing agreement,the listing agreement should be amended to clearly state what it is that the agent is undertaking. Vague statements such as “keeping an eye” on the property should be avoided.

3.  Any contractual obligation for maintenance or repair should run from the owner to the service provider and not through the agent. The agent should not be a party to a contract with a service provider regardless of the owner’s assurance of reimbursement.

4.  The brokerage should determine, before any non‐traditional tasks are undertaken, if there is  appropriate insurance coverage to provide protection in the event of any claims.  If the agent is performing actual property management, it is important that the agent  understand that all payments for management services must be run through the brokerage. Any payments outside the brokerage may undermine insurance coverage and may be in violation of state licensing laws.

5. If the property requires work before it can be listed, the agent should confirm the work has been completed and done properly before the property is opened for showings. For example, if the agent was called upon by the seller to arrange for a repair to the property, the agent should determine that repair was made prior to the property being listed for sale especially if that repair, if not done properly, could injure people viewing the property.

6.  Any knowledge the agent acquired because of their role in overseeing or arranging for repairs to  the property is knowledge that will need to be disclosed by them as part of the real estate transaction. Specific state laws define the obligation of real estate agents to disclose material facts but knowledge acquired by the agent as a result of their taking on non‐traditional tasks is knowledge nonetheless that may need to be disclosed to potential buyers.

Agents taking on non‐traditional tasks to aid sellers in maintaining and marketing property need to appreciate that all additional tasks that they undertake may expose them to potential liability. Such additional tasks should be undertaken with caution. If undertaken, the exact parameters of the task should be memorialized in writing. The agent should not be the contracting party for repairs with service providers. The agent should also make sure that insurance coverage is in place. Finally, any knowledge they acquire as a result of this additional work may need to be disclosed to potential buyers.

Many real estate agents pride themselves on providing full service to their clients. But full service should not include full liability.   An excerpt from the Real Risks Newsletter, Travelers.

 Not sure your E&O coverage would cover these situations. 

Travelers Real Estate Agents / Property Manager E&O provides professional liability protection for claims or suits resulting from real estate agent or broker professional services.

Call SWFL Insurance Agency, Inc. for a review of your present coverage and a Competitive Premium proposal – 239-265-9577