There’s no doubt the business of real estate is fast-paced. But when you’re busy with multiple contracts, errors and omissions can create risk that can cost you time, money and reputation.

Dave de la Ronde, vice president of claims and litigation for the Real Estate Insurance Exchange (REIX), spoke at a CREB^® REALTips session about real estate errors and omissions.

Below are some key takeaways from his presentation.

Do your research on and off the MLS^® System

The most common mistake that leads to claims is when REALTORS^® rely on historical property information in the MLS^® System. This misstep happens frequently, particularly with condos. Save yourself time in the long run and make sure to do your own research. Remember, most claims happen at the time of listing a property.

Don’t use ambiguous language

Avoid funny wording in listings, particularly with legal or illegal suites. A suite is either one or the other, and REIX will deny coverage to those who have not properly identified a suite as legal or illegal. 
Remember, always write a deal so that someone who has never seen it before can understand it – especially if that someone ends up being a judge.

Identify what the seller actually owns

Anyone who has lived in Calgary knows that parking can be a sensitive issue for home owners. Issues around parking spots, particularly with titled versus assigned parking in condos, can create enormous headaches for sellers and buyers.

First-time buyers could have two parking spots when they move in, and will tell their REALTOR^® to include this in their listing when they choose to sell. These sellers may be unaware that the title doesn’t transfer, which means the condo board owns these spaces, not the potential buyer of the listing. Same goes with storage.

When in doubt, disclose

Avoiding disclosure can create high-risk scenarios. It’s far more expensive to get out of a lawsuit than taking the time to list a property correctly. Open disclosure increases your credibility and buyers will not feel that they are being taken advantage of.

RECA requires that sellers and their REALTORS® disclose any material latent defects, legally the listing agent may be in trouble if they fail to include this information.

Even if the issue is remediated, whether it be from floods, grow-ops, or mold issues, it is always better to disclose. In the event the new home owner experiences unforeseen issues from the undisclosed defect, you may have a lawsuit. When sellers feel they have been wronged, they are more likely to go to trial.

When it comes to stigmatized properties, although it’s not mandatory, it’s better to disclose if a property is stigmatized to stay transparent with potential buyers. As Dave quotes, “If you don’t disclose, the neighbours will.”

Ask for help when you need it

Did you know, REIX stops 175 to 200 claims annually before they reach litigation? Make sure to involve REIX in the claims process immediately, and don’t try to fix things on your own. The less you do or say, the more REIX can effectively represent you.

Avoid acknowledgement of the error or apologizing. Sorry goes beyond mere Canadian politeness – it has specific meaning in litigation and is a key issue in many cases. Above all else, be careful and diligent, so you never have to say you’re sorry!

For more information on errors and omissions, visit the REIX website with the below login credentials:

User Name: exchange

Password: insurance

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