LawsonGroupMediation

A lot of people think that just because they have E&O insurance, they are fully protected from liability. Not so!

First, there are many lawsuits across the country involving short sales and loan modifications. They are on the increase. If you are sued, it will cost your time, and time away from your business is money. It will cause you stress, and stress shortens your life span according to the experts. It will cost you your reputation, because a lawsuit is public.

A lawsuit, if you are found liable, could cost you more than the amount of liability coverage you have. Then, you have to pay the balance of the judgment.

Some of the lawsuits have found agents liable, and the E&O refused to pay, because the activities of short sales, particularly negotiating with lenders, were not activities covered for real estate agents. So, just check with your insurance agent to make certain all of your activities are covered.

Even if the insurance covers you, a judgment affects your personal credit. Wow! That is a big impact. Think about what that would do to you.

The best way to handle liability is to prevent it in the first place. It is rather easy to do. Legal disclosures go a long way to prevent anyone from suing you, and from having a judgment rendered against you if they do sue.

Every agent needs to understand liability. We have a complete chapter devoted to liability in our book. There are other sources that you can learn about liability as well, ours is only one source among many. Disclosures and knowledge are the keys you can use to prevent someone from holding you liable.

Our other book, the Short Sale Business Manual, contains the disclosures that are so important, but that is only one source. You can find disclosures from other sources as well, or you can have an attorney draft them for you.

Do I want you to buy our materials? Well, I hope you do, but there are other sources of disclosures as well. It is more important that you gain knowledge and protection from any source, whether from us or others. Most of the others sources will likely provide you with the protection you need.

There are, however, some areas of liability that disclosures will not protect you from. They include the sheriff’s sale date that gets missed when you did not know about it in the first place. Not having a binding contract waiver from the seller. A buyer’s agent who gets angry at you for a commission reduction. Disclosing that you cannot guarantee approval but being a postive thinker. These are areas where court cases have held agents liable. There are ways to avoid them and it is important to educate yourself.

Common sense is a great shield from potential liability. Common sense will guide you to disclose, disclose, disclose. The problem comes in when people lie and claim you did not disclose. That is where signed disclosures are the evidence you need.

Here is what you need to prevent liability:

1. Common sense

2. Legal disclosures

3. knowledge about liability to guard against known liable behaviors

4. understanding of liability to guard against potential liable acts

Armed with these 4 shields against liability, you can enjoy your short sale and loan modification business with confidence.

In future blogs I will go into more detail of specific liability situations and explain how to avoid them.

Ken

TheLawsonGroup Mediation Services