Employment Related Lawsuits – Do Real Estate Firms have Risk?

As the new year progresses, many firms use this time to assess their internal policies and practices. One risk that is often ignored by real estate firms is employment practice liability. This is due to the fact that most real estate agents are independent contractors, human resource duties are often handled by a PEO firm and the employed office staff is usually minimal.  Because of this, firms view employment practices liability insurance (EPLI) as unnecessary. However, there are three dynamics that must be assessed by each firm.

  1. For large real estate practices that do employ a number of individuals, EPL Insurance is a purchase they should consider. Thinking a your firm is immune from EPL claims simply because it is a real estate firm is short-sighted. The peril needs to be assessed on the basis of the firm itself – not the industry it is in.
  2. For small and mid-sized firms who may only have family or close friends as employed staff might not have a great need for EPL insurance. A forthright discussion with a knowledgeable insurance agent should take place to see if the benefits outweigh the expense, or if this risk is better to remain self-insured.
  3. For all firms, it is important to note that EPL insurance covers some perils and situations that a firm will encounter even with independent contractors. One such example is discrimination. The wronged contractor may still sue as an independent contractor and an EPL policy can be structured to provide defense for a firm in this situation.

As 2013 continues, consider whether employment practices insurance is right for your real estate firm. Contact a broker to discuss additional ways to protect your firm against wrongful employment claims.

PA Real Estate Agents Not Required to Disclose Murder

**UPDATE:  The plaintiff in the matter has asked the Pennsylvania Supreme Court take the case.  Stay tuned as the matter develops.

A split state superior court in Pennsylvania has ruled that real estate agents in the state are not required to disclose when a murder has happened in a house.

In 2008 an investor purchased a house at auction that was the site of a murder suicide. The investor and his agent confirmed with both the Pennsylvania Real Estate Commission and the Pennsylvania Association of Realtors that the event did not need to be disclosed. The next buyer was unaware of the history and sued.

“If psychological defects must be disclosed then we are not far from requiring sellers to reveal that a next-door neighbor is loud and obnoxious, or on some days you can smell a nearby sewage plant, or that the house was built on an old Indian burial ground,” the court wrote. “Indeed, one could identify numerous psychological problems with any house.”

Contact BrokerLiability.com today to discuss better protecting your firm in an uncertain environment.

Real Estate Agent Sued for Selling Contaminated Land

The Illinois Company of LJ Jordan alleged negligent misrepresentation in a lawsuit brought against the real estate agent the company worked with when acquiring a piece of land.  The seller and real estate agent both assured LJ Jordan that the land was free of pollutants.  After the sale, LJ Jordan tried to lease the land, but during the potential lessee’s due diligence, it was discovered that the land was contaminated and refused to lease.  LJ Jordan is claiming that they will never be able to lease the land until the contaminants are cleaned.

In this matter, the real estate agent relied on the seller of land for their pollution report and did not do any further examination.  While additional investigation was not required, this matter shows how a real estate agent can be brought in to a claim long after a transaction take place – and without direct fault of their own.

BrokerLiability.com notes that it is important for a firm to have the proper limits and coverages in  their real estate professional liability insurance policy.  Contact us for a review of your firm’s policies.






Real Estate Agent Sued by Insurance Company

The insurance companies that paid six homeowners nearly $2 million over a brush fire have sued the owners of the property the fire started on and the real estate agent involved with the property.  The allegations state that the owners failed to maintain the property in accordance with the local code -allowing the overgrown brush to catch fire and spread.  Since the owners were living out of state and had engaged a real estate agent to sell the property, the allegations go on to explain the real estate agent had responsibility to maintain the land and failed to perform their duty.

This case brings many risk factors to light, explains BrokerLiability.com.  Not only does the agent need to understand the client expectations and legal duties as they engage to sell a property (such as whether they have  responsibility to maintain the property), but also that claims can come from a number of sources – even an insurance company.  It is important for each real estate firm to hold professional liability insurance and to periodically review its adequacy.  Contact a broker to begin a pre-renewal review of your firm’s current coverage.

Property Manager Sued for Discrimination after Termination

A Pennsylvania property manager has been sued for discrimination after firing a pregnant property manager.

The suit highlights the employment practices risks to all businesses, but especially to real estate agents and managers where employment issues are not always top of mind.

Contact BrokerLiability.com today to ensure your firm has the correct coverage to defend against allegations of discrimination from clients and employees.

The Dangers of… the Open House??

Lena Katamanin of Highland Park, Illinois sued her real estate agent after an open house resulted in theft of her personal property.  According to the report, $162,000 worth of jewelry was stolen during an open house held in April, 2012 at Ms. Katamanin’s Highland Park Home.  She has sued her agent, and the agency of Rubloff Prudential.

BrokerLiability.com reminds clients that risk is present even in something as common as an open house.  It is important to carry the proper real estate firm insurance that protects against lawsuits ranging from incorrect paperwork to failure to protect the client’s home during entry.  Contact a broker today to get started with a risk assessment of your firm.







San Diego Buyer Sues Realtor for Overpaying

A southern CA home buyer has sued their agent for allowing them to overpay for a $1.2M home. They are claiming the real estate agent should have advised them to bid lower as they paid $175,000 more then they claim similar houses were selling for.

The agent’s defense is strong but the litigation will be costly.

Contact BrokerLiability.com today to better protect your firm.

Former Principal of John Buck Sues for $12 Million

The John Buck Company – a national property management and development firm – was recently sued in Illinois.  Greg Merdinger, a principal of the firm until 2009, alleges mismanagement of a New York condo project that he had a 33% ownership stake in.  This mismanagement led to the project having additional capital requirements and then to Merdinger being pushed out of the venture altogether – against his knowledge or will.

While the facts of the case are yet to be judged, the situation highlights a firm’s need to not only carry professional liability insurance, but to consider directors and officers insurance as well.  Directors and officers insurance protects the management of a company from allegations of mismanagement or errors in judgement, explains BrokerLiability.com.  Contact us today to discuss whether directors and officers insurance is right for your firm.

Lawsuits over Typos

A LA Times article highlights a growing risk management issue – typos in MLS listings are quickly syndicated across the web and even when corrected can lead to lawsuits.

Contact BrokerLiability.com to better protect your company in an environment where a simple mistake can cause unnecessary publicity, costs and days in court rather than with clients.