News / Business
Real Estate Expert Warns Agents of Possible E&O Problems
If Your Brokerage Company Was Recently Sold Check, The Policy.
Imagine answering the doorbell some Saturday morning only to be met by a process server who is prepared to deliver a blow that has the potential to wipe out your life savings and create havoc and stress for months or even years to come.
You open the registered envelope and find yourself faced with a lawsuit on a property you sold 18 months ago while under a broker who has since sold his company. No problem. You paid your Errors and Omissions (E&O) insurance premium on that transaction so you’re looking at the most maybe a $1,500 deductible. You contact the current Broker/Owner of the brokerage you were working for when you participated in the transaction and ask that legal counsel be provided, as detailed under your E&O insurance – and the answer is:
“Sorry, you’re not covered. The past owner did not purchase an Extended Reporting Period (ERP) policy and all prior transactions are no longer covered. I’m afraid you’re on your own.”
What if you were a top producer and had hundreds of transactions with the same broker? What if that broker has filed bankruptcy? Unfortunately this is a TRUE story that affected a real agent and his entire family. But the bigger picture is even worse.
By not purchasing the ERP insurance necessary to cover prior acts, the Broker/Owner has left over 20,000 transactions open to lawsuit without any coverage for the agents involved.
And the worst part - there is no requirement that agents under that broker be informed of their “uninsured” status.
Could this happen? Yes, it already has. Follow the discussion online here or get recommended action steps to protect yourself in the new Swanepoel Trends Report 2009.
