Errors and omissions lawsuit tips for real estate professionals

Keep those common errors and omissions triggers at bay with a thorough risk management plan. This might include:

Be sure to treat all clients equally, regardless of their spending abilities. You should always keep up to date on fair housing laws so you don’t accidentally make a mistake when helping someone buy or sell a home.

When you are sued for professional liability, you will need records to prove your business isn’t liable for negligence or other wrongdoing. Be sure to document and properly store all client communications, but especially any challenges that arose during the process.

Let’s say you facilitate the sale of a newly constructed home. After closing, the buyer discovered water intrusion defects on the property. However, the inspector you hired didn’t make note of any of these alleged defects.

The buyer then decides to sue you because it was your responsibility to select an inspector who specializes in roofing and foundations. To avoid this scenario, be sure to vet your specialists based on their reputation, expertise, and references.

Buyers rely on your expertise to guide their purchasing decisions. So if you encounter a situation where you’re not sure what the correct answer may be, avoid offering an opinion. Instead, refer your client to someone who can offer the advice they’re looking for.

Always verify the information you receive from a seller before you inform the buyer. If you accidentally repeat a seller’s exaggerated claims about the property, you could be sued for someone’s oversights (or outright deceptions).

Say, for example, a seller claims the property is 1,582 square feet, and you list the property as such. If the property turns out to be only 1,282 square feet, the buyer could sue for the diminished value of the property based on the square footage discrepancy.

To avoid being sued for negligence and breaching fiduciary duty, be sure you disclose a property’s flaws before a sale ever takes place.

Let’s say you are a real estate agent representing sellers in the sale of their residential property. If undisclosed flaws are discovered after closing, the buyer could try to recover current and future repair costs from your small business.

Never make a promise you can’t keep, lest you want to risk a lawsuit. This means never promising that a property could be bought or sold for a certain price or preemptively saying a seller will pay for closing costs when you are still waiting on confirmation.

A real estate transaction is punctuated with deadlines to ensure a smooth sale. To ensure you aren’t the reason for any delays, be sure to submit paperwork by the stated due date to avoid unexpected cancelled agreements.

A realtor who appeared on the ‘Million Dollar Listing' TV show was hit with a lawsuit that accused him of flooding a clients' home. According to the lawsuit, realtor Matt Isbell showed a vacant condo to a potential buyer, but failed to turn off a gas fireplace when he left. A few days later, heat from the fireplace caused the sprinkler system to turn on, which filled the residence with water and caused about $200,000 in damage.

Make sure a client’s dissatisfaction isn’t the downfall of your small real estate or title business. Instead, implement a thorough risk management plan, and be sure to carry errors & omissions insurance as a fail-safe for when your prevention efforts simply aren’t enough.

While errors and omissions insurance can be an important part of your risk management plan, you should consider these other small business insurance policies to fully protect your business from financial losses:

General liability insurance: This covers common business risks like customer injury, customer property damage, advertising injury, and copyright infringement. It protects your small business from the high costs of lawsuits and helps you qualify for leases and contracts.

Business owner's policy: A BOP bundles general liability coverage and commercial property insurance together at a discount. It protects against the most common third-party lawsuits and property damage.

Commercial auto insurance: Vehicle insurance is required in most states for businesses that own vehicles. This policy covers your legal bills, medical expenses, and property damage if a business vehicle is involved in an accident.

Hired and non-owned auto insurance (HNOA): This provides liability coverage for accidents involving personal, leased, or rented vehicles used by your business.

Cyber insurance: Also known as cyber liability insurance, this policy insures against the costs of data breaches and cyberattacks. It covers things like customer notification, credit monitoring, legal fees, and fines.

Complete Insureon’s easy online application today to compare quotes from top-rated U.S. carriers for E&O and other types of business insurance. Once you find the right policy for your small business, you can begin coverage and get your E&O certificate in less than 24 hours.