Mitigating the Risk of Liability 2020 saw a spike in reported errors and omissions claims, continuing a year-over-year trend of increased litigation against Realtors®. By Richard Westlund The measures agents and brokers need to take to avoid legal trouble can feel onerous at times, but dealing with a lawsuit can be much worse. Legal action by a buyer or seller, a fair housing complaint, or an alleged violation of the National Association of Realtors® Code of Ethics could result in a fine, penalty, or judgment for damages, not to mention lasting damage to a professional’s reputation. In today’s litigious environment, agents and brokers need to mitigate the risk of liability— being held legally responsible for conduct that results in a loss or injury to another person. That’s especially important as 2020 saw a spike in reported errors and omissions claims, continuing a year-over-year trend of increased litigation against Realtors®. Allegations of negligence and nondisclosure continue to be the most commonly reported claim types, according to Zach Vollmer, real estate E&O program manager with Victor Insurance Managers Inc., a Realtor Benefits® partner. “Losses pertaining to online services,
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such as virtual home tours and home staging, are becoming more commonplace,” he said. “Looking forward, we expect to see an increase in losses alleging fair housing violations and wrongful eviction stemming from the ongoing economic impact of the COVID-19 pandemic.” Broadly speaking, to reduce liability risks at any stage of their business dealings, agents should educate clients about every stage of a transaction, disclose all relevant information, and treat everyone in the same professional manner, said Bob Arnold, an agent who leads the M2M Team at Realty Executives Integrity in Milwaukee. “If agents make decisions for clients without discussing the options, they can get in trouble.” Deanne Rymarowicz, NAR associate counsel, takes that idea one step further. “Agents need to be careful about serving their clients and avoid overstepping their role,” she said. “If a legal issue arises during a transaction, agents should talk to their broker, call their association’s legal hotline, or refer the client to a lawyer.”
