How many of you would like to spend some time in court? Hands, please. Hmmmmm. No takers? Well, then, it would behoove you to read the balance of this message. Risk management is real for all of us.

During the Risk Management session at the CAR Winter Meetings, we received a presentation by Joseph King, a Denver attorney who spends much of his time defending Realtors in court. It seems that consumers are exercising their rights more frequently to sue their Realtor or other real estate licensee when they feel they were not sufficiently served in the process of buying or selling their property.

Joe said, for example, that transaction brokers are sued more than anyone else in real estate. He says he is often defending licensees who do not have complete paperwork. Lack of a signed disclosure becomes a serious problem when it comes up as a question on the witness stand. And, of course, there are Realtors who purport to be transaction brokers, but act as buyer agents.

In an ongoing case, Joe described representing a Realtor who was a transaction broker for a couple who bought a home near an existing airport. Regardless of the fact that their were airplanes flying low overhead when these people were showed the home, they decided, several months after moving in that they could no longer tolerate the noise, and decided that the Realtors involved were culpable. Even though they bought the home for about $355,000, and sold it around a year later for about $425,000, they still claimed that the home they subsequently bought went up in value and cost them more than it would have had they bought that one a year earlier. Circuitous reasoning, it is, but nevertheless, the court is allowing the argument.

Not only that, but Joe brought the court’s attention to the licensing statute, which limits liability for transaction brokers and relieves them of disclosure requirements beyond known physical defects of the house. The court read the statute, but decided to hear the case, anyway, because the judge asserts there are more damage issues to resolve. The case is still pending.

Joe says negligent misrepresentation is included in 90% of all lawsuits filed against brokers. Information conveyed to a customer was either obtained or communicated negligently. For transaction brokers, he recommends that you do not assume duties that the statute does not impose. You should always ask yourself, before volunteering information, what you should do to protect your exposure. You will be held accountable when you expand your obligations.

So it seems that no matter how long you're in the business, and how you have practiced, there are new perspectives.