Northern Michigan Real Estate

Does Your E&O Policy Cover Your REO Listings

If you are representing lenders in the sale of their REO, you should take a minute to check with the carrier of your E&O policy to make sure that all of your activities associated with this listing are covered.  If your policy does not cover property management activities you could be operating outside of the coverage of your policy.

Some lenders may require in their listings agreements that you provide additional duties that might not be in the normal realm of a listing agents responsibilities.  These additional areas may involve safety inspections, environmental inspections or renovations and clean up of the property.  Many E&O policies specifically state that property management serviced to not include renovation services or analysis or evaluation of, or recommendations concerning safety issues on the property. 

Make sure you discuss these potential pitfalls with your broker before you enter into this market.  This may be an area that you broker has not taken a second look at, so it would be a good idea to at least bring it to their attention to make sure that the firm is covered. 

This would also apply to those things that we all sometimes do for your sellers.  We take care of having someone plow their snow or repair a pool pump.  As listing agents, we must remember what would fall under a property management contract and what falls under the normal duties of a listing agent.  If your broker does not have E&O coverage for these tasks and something goes terribly wrong in the repair of something, guess who will be responsible for these actions.  You guessed it, you will.  At times, we do these things just out of seller convenience, thinking we are being helpful to our seller.  We are and everything is usually fine until something goes wrong and now there is blame to be placed.

This is the very reason that we always give our clients (buyers and sellers alike) a choice of service providers for things like: mortgage, inspections, title company, land scaper, repair companies.  We don't want to be the one on record for making the decision as to whom to hire for those services.

Christine Stalsonburg, Broker/Owner

Cherry Wings Realty

 

 

231-409-4140

 

 

 

 

 

 

 

 

 

View Christine Stalsonburg's profile on LinkedIn

Comment balloon 3 commentsCherry Wings Realty • April 12 2009 09:12AM
Does Your E&O Policy Cover Your REO Listings
share
If you are representing lenders in the sale of their REO, you should take a minute to check with the carrier of your E&O policy to make sure that all of your activities associated with this listing are covered. If your policy does not cover… more