Does your E&O insurance cover distressed transactions?

Yes, if you’re covered by VAR-endorsed insurer Pearl. Find out about the risks involved in these transactions and how the Pearl Insurance Real Estate Errors & Omissions Program can help protect your firm against claims arising out of these sales—right-click this link and select “Save target as” to download Does your Real Estate E&O Policy protect you in REO and short sales?

This entry was posted in Uncategorized. Bookmark the permalink.

7 Responses to Does your E&O insurance cover distressed transactions?

  1. Tina Merritt says:

    From how I read this, I see many things agents are doing with regards to short sales that are not covered by the E&O Policy. For example, if an agent handles the negotiation of a short sale for a seller and fails to inform them of the possibility of a deficiency judgment or the inability to obtain another type of government loan (such as a student loan). How about the negotiation itself? What if the agent does a poor job negotiating with the bank on behalf of their seller? What about the agent who “coaches” their seller through writing the hardship letter? When a seller starts getting their wages garnished a month after a short sale closes, who are they going to blame? Their agent. Who are they going to sue? Their agent. Does E&O cover it? I haven’t seen a policy that does.

  2. Claire Forcier-Rowe says:

    These are great questions, anothers to add, how much time will pass before the seller comes back after they realize they may have problems getting any loan. What happens when the agent is no longer findable, or they have switched companies and you have to deal with a 6 year old problem. We are only starting to realize the impact of this market but it will be with us for years.

  3. Jim Rake says:

    Agreed – good questions. Tina – if the responsibility/blame ( …who are they going to blame?..Who are they going to sue?) lies with the agent, can we do a better job of preparing agents for this new business climate If we know these are the possible outcomes, is insurance (if I may) our only recourse?
    Can we, or should we, as a profession, train our folks to manage these scenarios more effectively? If our agents are going to handle short sales and foreclosures, shouldn’t they be trained to do so?
    While we can’t envision every possibility, we can certainly minimize the risk by being flexible, and proactively adapting to changes in the market.

  4. How about, “Does your E&O insurance policy cover you if you use combination lock boxes versus electronic lock boxes on your listings?”

  5. Connie McLean says:

    Anyone out there have an answer for Danilo’s question concerning those lame combination lockboxes? I certainly know the combination lockboxes have NO way to keep track of who is entering the properties. Even with the use of the Call Centers to get the code, a Call Center doesn’t know whether an agent has gone into the property or not – even when given the usual one-hour timeframe. I show alot of properties that have these combination lockboxes and have SEEN the codes already dialed into the lockboxes and NOT CLEARED; plus, I can’t tell you how many times a potential buyer or contracted buyer wanted to go back to the home to do some measuring of rooms or whatever and asked me to divulge the code “so they wouldn’t be bothering me.” I do not doubt some agents give it out so they are not bothered. I always go the bothered route rather than deal with a Code or Regulation violation, fines, and suspension.

    The cure? Stop using the combination lockboxes. If an agent can’t afford to place an actual, professional Realtor lockbox on the property, then they shouldn’t be working the Listing side.

  6. Tina Merritt says:

    Connie – I have always wondered the same thing. I understand that various contractors, inspectors, etc. need to get into the property as well as agents and buyers. We solve that problem by putting both a contractors box and a Supra box on our properties. The contractor’s/combination boxes are always put on a rear door or a “non-obvious” place while the supra box is put on the front door or porch.

  7. Connie McLean says:

    Maybe I’m just too overly cautious – unless the Seller of a listing had agreed to have a comination lockbox put for HIS contractors – well, heck – if a Seller wants his own contractors into their home unattended, then I’d tell the Seller to put his own combination lockbox on. As far as being a real estate agent and protecting your own interest, I’d have the Supra or Sentrilock box on for agents. I ALWAYS meet my home inspectors, termite guys, the whole gamet of people involved in the transaction in one form or another at the property, let them in, and STAY there until they are finished. Unless you REALLY know that person – and goodness, don’t we see enough in the TV news and newspapers all the time now of people who were victimized and they KNEW that person for years and NEVER would have suspected they’d go on the bad side? I ALWAYS want my butt covered. If someone else wants to let someone in without being accompanied – let them take their chances. Maybe I just go too far BEYOND my responsibilities. To me – an ounce of prevention is worth a heck of a lot more than a pound of cure. Once the damage is done, it’s hard to undo.

Leave a Reply

Your email address will not be published. Required fields are marked *