Pearl Insurance Risk Management Expert and Corporate Training Manager Paul Espinosa recently spoke at the Greensboro Regional REALTORS® Association Luncheon on March 1, 2011. In the following video, he offers his top five problem areas for real estate agents:
4. Recommend expert inspections from reputable and qualified specialists. Recommend a qualified home inspection. Advise that the inspection company or other consultant have E&O insurance. Provide choices for the client. Counsel clients before the inspection. A home inspection is none of the following: appraisal, pest control certification, certification of any kind, FHA/VA inspection or a warranty. A home inspection is a resource for clients to make decisions of two kinds: immediate and during the course of ownership regarding maintenance. Urge the buyers to go on the inspection with the inspector. If the buyers waive inspections, get your recommendation and their waiver in writing.
1. Why is it so important to document your files, keep notes, and maintain records? When you are sued by your clients possibly years after the transaction and they have selective memory—this way you have documentation on the advice and counsel you gave them (admissible evidence). It also helps you remember what you did and what you said. Pride of authorship (specificity) is the key. Use confirming letters, “chron logs,” emails, mobile phone logs, etc. Get key points in writing and do so before escrow closes. Treat your files as if you will get sued. Recognize that the statute of limitations for fraud (in California) is three years and four years for breach of fiduciary duty; both from the date of discovery.