Prime Insurance Agency Blog

All You Ever Wanted to Know About Insurance

Why a Realtor Really Needs Errors and Omissions Insurance

        

NJ Home-Seller’s Defense against Lawsuits

If you are a real estate agent, the last thing you want is a lawsuit. But lawsuits are a fact of life among professionals like you. And they occur quite often. A real estate Errors and Omissions policy can protect you.

NJ Real Estate Errors and Omissions Claim Cases:

Failure of Realtor to Disclose Information about Property

  • After the closing on a residential property, the buyers discovered a defect in the property’s well. The buyers filed a ‘failure to disclose’ lawsuit against the seller’s agent - despite the fact that they had surrendered their right for a well inspection before closing and that they had no proof that the realtor had been aware of the disrepair situation. Although there was a favorable outcome for the realtor, defense costs totaled more than $48,000.

RELATED: How to ensure your coverage is in effect when you need it

RELATED: How to insure a high value home

  • The Smith family (not real name) moved into their newly purchased home. They soon realized that there was a radon problem that would impact the health of the children. Unwilling to bear the risk, the family relocated and put a for-sale sign on the home. After publicly revealing the radon issue, the Smiths ultimately sold the home for $32,000 less than their original purchase price. The Smith family filed a lawsuit against the seller’s realtor for failing to disclose the high radon levels as well as for the home cost loss they incurred – damages that totaled more than $61,000.

  • Though the Brown family (not real name) understood that an advertised home was a ‘handyman special’, they never dreamed it had termite damages. After purchasing the home and doing restoration work, they noticed that termites had in fact eaten through the interior wood. The Browns brought a lawsuit claim against the seller’s realtor as well as their own realtor for failing to notify them about the true condition of the home.

 

Misrepresentation

  • The Gold family (not real name) bought a lakefront lot and home. Though it had been advertised as a vacant lot that the buyer could develop as a backyard beachfront, the real estate agent advised them this was not the case due to ‘conservation easement’.  In addition, the land restriction was noted on the actual title. After the Golds became the homeowners, they started clearing shrubs and trees and had sand delivered to create a beachfront. Not long afterwards, the Golds received a violation notification, requiring them to return the property to its former state. After this, the Golds brought a misrepresentation lawsuit against the realtor. Once the defense team demonstrated that there had been a disclosure about the easement, the Gold’s retracted their suit. Defense costs exceeded $14,000.

RELATED: How insurance scores affect your homeowners insurance

Failure to Provide Mortgage Contingency and Negligence

  • The Silver family (not real name) placed a $40,000 deposit down on a property. They applied for a mortgage for the remainder of the cost price. As per the contract, there was a 30-day mortgage clause. When the month was almost over, the Silvers still were unable to procure the full funding. It was then that the Silver’s realtor urged them to ask for an extended due-date or revoke the contract to avoid the risk of losing their deposit. The Silvers believed they would have the amount needed before the deadline and insisted on pursuing the deal as it was. When the due date arrived without a done deal, the seller sued the Silvers for the deposit. The Silvers made an immediate about-face and sued their realtor for failure to procure an extended deadline extension. Although there was a favorable outcome for the realtor, costs for the claim’s defense exceeded $19,700.

PRIME Insurance is an agency that cares about customers. Passionate about the insurance we sell, we go out of our way to educate our clients about the coverage they need so that they become informed buyers. Recognized by the industry for excellence, we’ve been presented with prestigious awards and been appointed to do direct business with over 40 of the leading insurance companies.  

For all forms of nationwide insurance, including NJ homeowners insurance, commercial insurance, general liability, auto insurance, workers comp, bonds, life insurance and more, visit us online HERE, email us at PRIME [at] primeins [dot] com or call us at 732-886-5751.

Summary: If you are a real estate agent, you need Errors and Omissions Insurance! See claim examples that highlight the reason why!


Discussion

There are no comments yet.


Leave a Comment

Required fields are marked with

Comment

Your name, comment, and URL will appear on this page after it has been reviewed and approved. Your email address will not be published.