How Real Estate Agents Can Avoid Litigation

How Real Estate Agents Can Avoid Litigation

Real estate transactions are usually the largest investments most people will make during their lives, and because of the large amount of money involved, there is always the threat of litigation looming, including for real estate agents.

Here are some tips on how real estate agents can avoid litigation:

Insist on full disclosure. Most litigation involving real estate agents involves disclosure issues. Real estate agents are required to disclose certain negative information about a property if they are aware of it, so be sure you always follow disclosure rules (whether you are assisting buyers or sellers).

Address complaints quickly. Many lawsuits can be avoided if complaints are addressed quickly. Sometimes a buyer or seller just wants a sympathetic ear. Work with your clients to find solutions to their problems.

Don’t assume expertise you do not have. While you may be tempted to advise clients on a legal or financial issue based on your experience, remember that unless you are also a lawyer or a CPA, you should limit your advice to the real estate arena.

Avoid dual agency. Although you can protect yourself with waivers, representing both a buyer and a seller in one transaction is risky since you have duties to both parties, and those duties can sometimes conflict.

Document everything. Keep meticulous records, including emails and notes about conversations you have had in person or by phone. This is especially important if the deal is complicated.

Consider incorporating. Although incorporating your real estate business will not in and of itself help you avoid litigation, it can protect your personal assets from any judgments stemming from your business. There may also be tax benefits for setting up your real estate business as a limited liability company (LLC) or corporation.

Purchase insurance. Be sure you have sufficient liability insurance, both for personal injury if you routinely drive clients around, as well as professional liability insurance, also known as errors and omissions (E&O) insurance.

Jurado & Farshchian, P.L. assists both buyers and sellers and their agents with real estate transactions and questions. Please call one of our experienced attorneys at (305) 921-0440, or email us at info@jflawfirm.com today.

 

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