Sometimes the past is one of the best learning tools around! Use the following Real-Life Errors & Omissions Claim Situation involving discrimination to avoid a similar legal showdown happening to you in your everyday real estate career. And be sure to have a good Real Estate E&O Insurance policy in place to protect you in case you find yourself in the middle of a court battle over fair housing regulations.

A Real Estate agent was hired by a landlord to lease a two-story townhouse that had one bedroom on the first floor and two bedrooms on the second floor, which was also where the only full bathroom was located. The first applicant to view the property informed the agent that his wife was physically disabled and would require accommodations so that she could access the second floor bathroom. He informed the agent that he was willing to make arrangements to have a chairlift installed and provided the required security deposit together with the fee for a credit check.

Problem
Despite the fact the background check revealed that the applicant had an excellent credit rating, the landlord refused to rent the apartment because he did not want the applicant to install the chairlift or otherwise make physical changes to the property. He instructed the agent to inform the applicants that he decided to lease to someone else, even though there were no other applicants.

Mistake
When the agent conveyed the intentions of the landlord, it was a clear violation of Title VII of the Civil Rights Act of 1968, as amended by the Fair Housing Act of 1988.

Result
The applicant sued the landlord and the agent alleging that they discriminated against him and his wife when they were denied the opportunity to lease the property because of her physical disability. Their allegations were bolstered by the fact that the rental unit remained vacant for nearly four months after being informed that it was leased to someone else. Moreover, the eventual tenant testified that she became interested in the property at a date later than the complainants. After incurring thousands of dollars in legal fees, the case settled on behalf of the agent without the agent admitting liability.

Prevention
Prohibited practices that lead to fair housing claims include the refusal to rent, lease or negotiate; offering different terms or affording different treatment; keeping records describing clients/customers; and failing to make reasonable accommodations. Providing equal service to all and not making assumptions of your client’s preferences will reduce the possibility of discrimination claims. And, as evidenced in this case, working with a discriminatory landlord can lead to claims alleging civil rights violations.

Do you have a similar story involving fair housing and discrimination to share with us? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!

If you have any questions about Pearl’s Errors & Omissions Insurance for real estate professionals, give us a call at 800.447.4982—whether you’re looking for a new E&O policy or have questions about your current one. We’d love to hear from you!

You can also visit www.pearlinsurance.com/eo to find out more about our quality Errors & Omissions program, including policy features, risk management tools, and much more.

The new Massachusetts data security law is now in effect, as of March 1. This regulation—201 CMR 17.00—requires businesses to adhere to stricter guidelines to keep the confidential information of Massachusetts residents secure. It’s very important that all real estate professionals take all steps needed to comply with this law immediately. Here’s an explanation (see more by downloading the pdf of the article, “New Massachusetts Data Security Law: Are You in Compliance?” from Pearl Insurance).

Meant to protect Massachusetts’ residents from identity theft, the law now “establishes minimum standards to be met in connection with the safeguarding of personal information.” Now businesses must not only notify consumers of when a possible data theft or misuse has taken place, they must have standards in place to proactively protect their customers’ personal information.

If you don’t know if you’re up to speed on this law, PLEASE download the full Massachusetts Data Security Law article below! This regulation is not just meant for Massachusetts-based organizations, it is in effect for ANY company who does business with a Massachusetts resident.

Sometimes the past is one of the best learning tools around! Use the following Real-Life Errors & Omissions Claim Situation involving transfer of responsibility and lack of documentation to avoid a similar legal showdown happening to you in your everyday real estate career. And be sure to have a good Real Estate E&O Insurance policy in place to protect you in case you find yourself in the middle of a court battle over giving incorrect property information.

A Real Estate agent listed a high-end residential property for sale. The property was constructed prior to 1979, and because of its age, it was presumed to contain lead-based paint. The property eventually went under contract with the seller, who was an attorney, advising the agent that he would handle the negotiations directly with the buyers and would take care of the lead paint disclosure responsibilities.

Problem
The seller met with the buyers, who were also represented by the agent, and entered into the Purchase Agreement without the agent knowing its details until after execution. It was then brought to his attention that during the course of finalizing the Purchase Agreement, the seller never provided the buyers with the legally required lead paint disclosure.

Mistake
Unfortunately, the agent relied on the seller of the property to negotiate the terms of the contract and to produce the lead paint disclosure instead of handling the details himself. After the buyers signed the Purchase Agreement, they realized that they would have to incur thousands of dollars for lead abatement.

Result
The buyers, who were expecting their first child and wanted the home free of lead-based paint, attempted to terminate the contract, but ultimately purchased the property at a significantly reduced price. The seller, being a lawyer, knew that it was truly the agent’s responsibility to assure proper disclosure and then filed suit against him and the broker alleging that they violated both disclosure requirements and the state consumer protection statute. The state’s consumer protection statute called for an award of treble damages in the event the jury determined a violation existed.

The matter was resolved following a failed summary judgment motion (which would have dismissed the broker and agent from the litigation). The seller’s attorney argued that the agent misunderstood the instructions by the seller and that there was no evidentiary documentation from the agent on a transfer of responsibility.

Prevention
The agent would have avoided litigation if he had not allowed his client to assume his responsibilities during the course
of the transaction.

Do you have a similar story involving transfer of responsibility and documentation to share with us? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!

If you have any questions about Pearl’s Errors & Omissions Insurance for real estate professionals, give us a call at 800.447.4982—whether you’re looking for a new E&O policy or have questions about your current one. We’d love to hear from you!

You can also visit www.pearlinsurance.com/eo to find out more about our quality Errors & Omissions program, including policy features, risk management tools, and much more.

Sometimes the past is one of the best learning tools around! Use the following Real-Life Errors & Omissions Claim Situation involving failure to disclose to avoid a similar legal showdown happening to you in your everyday real estate career. And be sure to have a good Real Estate E&O Insurance policy in place to protect you in case you find yourself in the middle of a court battle over giving incorrect property information.

A Real Estate agent listed a residential property for sale. The seller correctly completed a property disclosure form indicating the home was experiencing a termite infestation problem. The problem was detected when a previous potential buyer had a pest inspection performed. The findings resulted in a failed transaction, with both the seller and the real estate agent having received a copy of the report. Another buyer came along and eventually purchased the property knowing it had a termite problem.

Problem
Even though the agent provided the seller’s property disclosure form and verbally advised the buyer’s agent that the property had a termite infestation problem, the buyer alleged that the agents failed to disclose it.

Mistake
The listing agent neglected to provide the buyer with a copy of the termite inspection report, which detailed all the locations in the home where pest infestation existed.

Result
The buyer sued the seller, the listing agent, and the buyer’s agent alleging that by not providing the inspection report they failed to disclose the “true extent” of the pest infestation. It was also alleged that the buyer’s agent recommended to the buyer that he waive the inspection contingency in the Purchase Agreement. A $20,000 arbitration award was granted to the buyer after the arbitration panel determined that the inspection report contained information detailing a far greater problem than what was disclosed in the seller’s property disclosure or by the agents’ verbal representations.
The legal expenses to defend the listing agent alone amounted to $12,500.

Prevention
The litigation may have been prevented if the termite infestation report was provided to the buyer. Although this would not necessarily guarantee that the buyer would not have brought suit under the same pretext, it certainly would have bolstered efforts to have the court grant the defendants’ joint motion to have the case dismissed.

Do you have a similar story involving disclosure (or lack thereof) to share with us? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!

If you have any questions about Pearl’s Errors & Omissions Insurance for real estate professionals, give us a call at 800.447.4982—whether you’re looking for a new E&O policy or have questions about your current one. We’d love to hear from you!

You can also visit www.pearlinsurance.com/eo to find out more about our quality Errors & Omissions program, including policy features, risk management tools, and much more.