Even when you know and can ultimately prove you’ve done everything right, it can still happen to you. Being named in a lawsuit is unsettling at best. It can also be scary, emotionally draining and in some instances downright nasty. It can even temporarily destroy your self-respect, challenge your integrity and make you question whether you should be listing or selling real estate at all.
While it’s a fact that many real estate brokerages in Arizona have the expense and comfort of carrying E&O insurance, many other firms do not. Some brokers boast about being in the business for 10, 20 or even 30 years without ever having been sued. As a result, they refuse to get any form of coverage for their firm and agents. With all due respect to that business decision, which is rightfully theirs to make, the common response by those who are insured is: “Either they’ve been very lucky over the years or just haven’t done enough business.”
Whether you do or don’t have the security of E&O insurance, agents, brokers, managing brokers and designated brokers have an on-going responsibility and fiduciary obligation to reduce risk for their clients, customers, themselves and fellow real estate practitioners.
In addition to satisfying standard statutory and broker requirements for proper file management and always having a discussion on a potential problem with your broker first, consider some of these ideas, which at little or no cost can help you minimize your risk and avoid potential lawsuits:
- Check to see if your firm’s designated broker is signed up for AAR’s Legal Hotline. It’s free, a member benefit and an inexpensive way to get professional input on a particular dilemma you may be facing.
- Set aside some time on a weekly basis to log on to the Law & Policy section of NAR’s site and become familiar with current podcasts (a favorite of mine is on social media) and the latest risk management ideas. For example, did you know that NAR has a brochure you can download on mortgage fraud and is in the process of developing a similar brochure on short sale fraud?
- Visit the Legal section of AAR’s site and select an article written by Michelle Lind to read and discuss with fellow agents.
- Explore your local association’s risk management resources or find out about attending one of the local risk management committee meetings. Committee members openly discuss current emerging trends and potential challenges that arise.
Want to learn more and become better educated on reducing risk? Spend a couple of bucks wisely and invest in yourself:
- Sign up for the rCRMS courses and state designation. These courses are held throughout the year at different locations within the state. The instructors are attorneys who specialize in their given area of expertise. This certification is a must for designated and managing brokers as well as agents practicing in Arizona.
- Attend local and state seminars such as Tucson’s RESPA Round Tables and AAR’s Industry Partners Conference to name just two of the many programs offered throughout the year.
- Buy either the hard copy or e-book format of the second edition of Michelle Lind’s book, “Arizona Real Estate-A Professional’s Guide to Law and Practice.”
What are some of the ideas you have put into practice to minimize risk in your real estate practice? Let us know in the comments section below. We’d love to hear from you and share the ideas with fellow REALTORS®!