Are You A Lawyer, Surveyor, Appraiser, CPA or Realtor?

REALTORS® are deal makers and problem solvers. You earn your living by being versatile and creative. However, it just isn't possible for one person to be all things, to all people, all of the time.

I see many Errors and Omissions claims filed because a REALTOR® has acted as:

1. A lawyer, by giving legal advice
2. A surveyor, by establishing lot boundary lines
3. An appraiser, by guaranteeing the positive resale price of a piece of property
4. A CPA, by giving sophisticated tax advice

For example, can a REALTOR® be certain that a buyer has "grandfather" rights to remodel or rebuild in spite of current zoning laws? Could the REALTOR® be charged with giving legal advice if it turned out the buyer did not have those rights?

How often does a REALTOR® walk a lot boundary line with a buyer? If the buyer relies on information supplied by you, can you be accused of acting as a surveyor if a property dispute surfaces? The next time you are asked about the location of a boundary line, inform the buyer you will make an appointment with the seller to walk the lot line with him or her.

Appraisers are paid to establish values, square footage and other related facts about property. A REALTOR® cannot establish the amount of square feet in a home with accuracy. Many E & O claims arise when a buyer discovers his or her newly purchased home is several hundred square feet short of the number presented by the REALTOR®.

A CPA is trained to speak with authority on tax matters, such as Section 1031 of the IRS Code, which addresses tax deferred exchanges. Should a REALTOR® attempt to explain "Boot Rules?" Can a REALTOR® speak with confidence about seller's rights on the $125,000 capital gains exemptions or determine if it has already been used?

All of the above examples could be classified as errors. So, what is an omission?

Usually, an omission is a duty a REALTOR® has to explain something to a buyer or seller. For example, if no lender is involved in a sale because of owner financing, do you always advise the buyer that there is a Standard Title Policy and an Extended Title Policy in title insurance? A buyer may purchase an Extended Title Policy, at his own cost, that covers latent defects in the title, marketability of title, right of access to street, adverse possessors, encroachments, unrecorded easements and unrecorded mechanics liens. As a professional, do you have a duty to inform the buyer of title options? If a lawsuit is filed, a court may answer the question.

In today's litigious climate, you do not have to be wrong to be sued. A good Errors and Omissions liability policy can help limit your out-of-pocket expenses in the event you are named in a lawsuit. However, if you are ever involved in a claim, you will be happy to learn that the Wisconsin REALTORS® Association sponsored policy written by Kemper Insurance Company provides First Dollar Defense coverage. This is an important benefit because 100 percent of defense and claim expense costs are covered from the first dollar incurred. We hire an attorney to defend you. Your deductible does not apply.

Remember, think twice before you offer advice as a lawyer, surveyor, appraiser, CPA or anything other than a REALTOR® -- a noble profession which should be challenge enough for anyone.

For more information about the Wisconsin REALTORS® Association sponsored E & O program, call Pearl Customer Service at 1-800-289-8170.

Errors and Omissions Insurance Program