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JULY 2012 • VOLUME 17 • ISSUE 3
How to avoid disputes and protect yourself against lawsuits by Stacy Hale
I
n real estate, homebuilding and property management, disagreements will arise. Fortunately there are some easy methods for avoiding them before they turn into true liabilities. For the instances when that’s not possible, we’ll share some strategies for navigating safely through disputes.
Protecting yourself – the givens
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Protecting yourself from future disputes is something you should ideally consider before even hanging out your shingle.
Consider the structure of your business—sole proprietorship, incorporation, LLC—and set yourself up under the model that best limits your legal liabilities and tax burden and fits the way you do business. Know the laws, codes, and standards of practice specific to the professional organizations that issue licenses, protect your interests, and that act as governing bodies in your industry. For example, if you are a builder, the National Association of Home Builders (NAHB), Texas Association of Builders (TAB), and Home Builders Association (HBA) of Greater Austin offer a wealth of resources. If you are a REALTOR, the Texas Real Estate Commission (TREC) is the state’s regulatory and licensing agency. Agents (in addition to real estate inspectors, residential service companies, real estate schools and timeshare managers) are required to follow the rules of the Texas Real Estate Commission in every transaction. TREC also provides the contracts and forms you will need for real estate transactions. Membership with the National Association of REALTORS (NAR), Texas Association of REALTORS (TAR), and local affiliates such as the Austin Board of REALTORS (ABoR) and Williamson County Association of REALTORS (WCAoR) will keep you networked and up-to-date on the latest industry news and regulations. If you’re a property manager, check out the National Association of Residential Property Managers (NARPM) and its local chapters, as well as the National Property Management Association (NPMA). Property management is one of the most litigious areas of real estate. If you are not considering hiring a property manager for your investment properties, this is one area where you’ll definitely want to do your homework. All of these organizations offer the guidelines, best practices, rules, resources and education (including accredited classes) you’ll need to stay knowledgeable and protected.
Put policies in place It’s a good idea to have written policies in place that everyone in your organization understands and follows. For example, TREC rule 535.2 states “A broker shall maintain, on a current basis, written policies and procedures to insure that each sponsored salesperson is advised of the scope of the salesperson’s authorized activities subject to the [Real Estate License] Act and is competent to conduct such activities”… and so on. Rule 535.2 is important because it stresses the relevance of maintaining an organizational standard in your company— so that everyone’s on the same page about how you do business. But as TREC Chairwoman Avis Wukasch (also of Keller Williams Realty in Round Rock) says, the best policy is the policy of people taking care of people.
Follow the golden rule – and commit to communicate About 90 percent of disputes, according to Wukasch, are minor and can be resolved by active listening. First, that means returning your calls. Human nature is to stick our heads in the sand when conflict is imminent, but that’s the worst thing you can do. Be proactive when you feel the agitation of a client. Make sure they feel heard. The faster and more effectively you can communicate that you hear the aggrieved person, that you are actively listening and taking notes, and that you are committed to finding a mutually agreeable solution, the faster the issue can be resolved without a formal complaint or litigation. Let them vent, and after they have communicated everything they wish to say, go back over your notes and be sure you’re clear on what happened. Confirm the facts with them. Most of the time, the client simply wants you to know that they are hurt, and they want to know that you care. Offer a solution
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