Document, Document, Document!
Sometimes the past is one of the best learning tools around! Use the following Real-Life Errors & Omissions Claim Situation involving square footage and documentation to avoid a similar legal showdown happening to you in your everyday real estate career. And always have a good Real Estate E&O Insurance policy in place to protect you in case you find yourself in the middle of a discrimination suit.
Forgotten Tax Installment Creates “He Said, She Said” Situation
A home was listed for sale. Among the information published in the MLS, the agent listed the home’s square footage and stated only one installment of taxes rather than two.
Problem
The buyer claimed the listing agent overstated the square footage of the home. He also claimed that although the agent acknowledged the error on the taxes before closing, he felt he was forced to proceed with the closing. He believed the agent deliberately chose not to disclose the information to secure the sale. If he had known of the additional tax installment, he would not have bought the property.
Mistake
The agent denied any problem with the square footage issue, but acknowledged the error on the taxes was an oversight. The agent should have reviewed the listing information before publishing the statistics in the MLS.
Result
The buyer filed suit against the agent for $3,000.
Prevention
Depending on the structure of the home, even professionals can easily disagree on measurements of square footage. That’s why many firms and agents today are adopting the philosophy of not disclosing square footage in their listings. The home is available for the potential buyer’s own measurements and the risk of argument over size is prevented.
As for the tax issue, the agent covered this openly with the buyer who chose to proceed without further questions. Had the agent documented this conversation, showing the original notification of the error in writing, the agent could have avoided the “He said, she said” issue and leaned on his documentation for defense.
Do you have a similar story involving an error in square footage or lack of 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.
