Simple Steps for Lawsuit Avoidance

• Make it clear to all parties in the transaction exactly which parties you do and/or do not represent.
   
• Keep a detailed log of your activities and conversations related to each transaction.  Include in your notes the date, time, who was present, and what you did to follow up.  The agent should prepare a transaction log noting every occurrence affecting the transaction.  Your documentation can be a very important memory enhancer if an issue should arise well after the close of escrow.
• Return phone calls!!!
• Each state has formal administrative hearing procedures that it and you must follow.  Become familiar with these procedures and follow them to the letter.  If, for example, you do not file a formal answer to the complaint, the commission may take that as an admission of all of the charges and take action against you.
• Make sure your transaction file contains all relevant documents and do not dispose of those records until well after all statutes of limitations have expired.
• Recommend in writing that your buyers obtain a professional property inspection, as well as professional advice about other technical aspects of the deal.  Make it clear that they cannot rely on you for expert technical advice.  Real Estate agents can better serve their clients and minimize the chance of being sued by recommending inspections.  Again, agents should put their list of recommended inspections in writing and ask the buyer to sign an acknowledgment.  The buyer should sign a disclaimer if he/she does not wish to follow the agent’s recommendations.  The recommendations can be made on the “TDS” as part of the agent’s visual disclosure requirements.  A home warranty also can help solve some problems after the sale.
• Conduct a diligent visual inspection and provide a copy of the list of disclosures to the buyer and seller.  Make sure the buyer signs an acknowledgment that he has received the list before the close of escrow.
• Always disclose, more often than not lawsuits will result when there is a failure to disclose because the agent or seller did not want the deal to fall apart.
• Follow your intuition.  All to often, practitioners say that they sensed that a certain person was a problem right from the start.  Do not be afraid to fire a client who looks like trouble.
• At the first sign of a potential problem, even at the verbal state, enlist RERM’s Dispute Resolution Service to offer you legal advice and council.  Early intervention is prevention.  Make sure each of your transactions under the Buyer/Seller Protection Program are covered.