Don’t Fall into These Legal Pitfalls! – Part II | The Zebra Blog

Don’t Fall into These Legal Pitfalls! – Part II

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Last week I addressed five mistakes to avoid getting into legal and ethical trouble. Here are an additional five that you should be aware of.

6. FAILING TO RECOMMEND AN INSPECTION – If you are in a busy market with multiple offers being common place and buyers wanting to win at all costs, it could be tempting for a buyer not to get an inspection or waive the inspection contingency. However, that must be the buyers’ choice with the pros and cons clearly laid out. Make sure you list out all of their options, the potential costs, the benefits, and what might happen if they decide to have an inspection or include that contingency. They can decide from there how they want to proceed after hearing the benefits of having an inspection from you. In fact, I like to have those benefits in writing. Buyers have sued real estate agents that have failed to inform them of the need and benefits of an inspection.

7. NEGLIGENCE (not to be mistaken for fraud. Negligence lacks intent to harm) – there is a big difference between negligence and fraud and for the purposes of this article I am making the assumption that none of my readers would ever knowingly commit fraud on a real estate transaction. But there are many instances where a real estate agent has neglected to do something on a transaction that has caused harm to a buyer or seller. Negligence can include issues such as forgetting an important date which causes your client to lose their sale or be beholden to the complete the transaction if a contingency has expired. It could include not doing something that was essential to the sale of your sellers’ home or even failing to warn the buyers about a local prevalent issue such as the case in some agricultural areas, by airports, etc. The list of issues that pertain to negligence is very long. Clients can even make a claim for negligence if a real estate agent should have known something but did not and failed to take appropriate action. This is by far the hardest thing to prevent because you don’t always know what you should have known!

8. BREACH OF CONTRACT – One of the most common causes for a breach of contract claim is failing to comply with important time lines and deadlines on a signed contract. Often you will find that a breach of contract claim is accompanied by a claim of negligence and breach of duty.

9. FAILURE TO KEEP CLIENTS’ DATA SAFE – In a world where cyber fraud and hackers are widespread, it is very important that your client’s confidential information is kept, well, confidential. Protect your clients’ information by making sure you have installed security software on your computer, have a firewall installed at your internet access point, use public wireless in a safe manner, lock up paper files, and use strong passwords for any system, hardware (think computer, hard drive backups, phones, etc), or program that contains client data. Make sure you have a policy for handling client files and keep those files in a secure location. It is also important to have a system for regularly changing passwords and make sure your data is encrypted.

10. BODILY INJURY – If you list a home and you know there is somewhere in the home that is dangerous, you need to have the seller address this BEFORE the home is put on the market. Listing a property basically is an invitation for buyers to tour the home at a showing and you need to ensure that the home is safe to go through.

Many years ago an agent I know listed a property with a rotted front porch. The seller was adamant that they wanted the house sold as is, and without giving it too much thought, the agent listed the home. A real estate agent who came to preview the home fell when a rotted piece of wood gave way. A lawsuit was filed and both the agent and the homeowner were found liable for her damages.

Again, I don’t want this list to scare you. But with the current market as busy as it is, agents are burning the candle at both ends. Busyness can lead to errors, mistakes, and fast judgments. I encourage you to slow down a bit and consider your actions. Just as you encourage your clients to practice due diligence, make sure you do so yourself. Your future self will thank you later.

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