Working in real estate brings your agency in contact with a variety of people seeking their first home, vacation residence or house of their dreams. However, the transactions are not without risk. The vicarious liability real estate agents can place the agency in a tough position.
Most transactions in real estate are straightforward. The buyer’s agent represents the buyer and the seller’s agent represents the seller. However, there are also uncommon situations that can bring vicarious liability. A large brokerage may have agents representing both the seller and the buyer. When the buyer’s agent works under the seller’s agent, both agents may put the seller above the buyer increasing their liability in the transaction.
Real estate agents have a duty to place their customer’s interests above their own anytime they are acting in an agency capacity. Failure to do so could result in increased liability and the need for liability insurance from industry experts like HighlandRisk Insurance.
Most states require real estate agents to disclose their relationship and duties to the buyer or seller they plan to represent. The contract dictates what the client can expect from the relationship with the real estate agent. Failure to uphold the contractual agreement adds liability.
The different types of vicarious liability that real estate agents face require a specific type of insurance to cover. A standard general liability insurance policy may not cover these situations leaving you at risk for financial loss.