BROKER ALERT
HANDLING WHEN CLIENTS REQUEST DOCUMENTS POST CLOSE OF ESCROW
After the close of escrow, many times buyers and/or sellers, request copies of their transaction documents. In many instances, they are requesting the documents because they have identified an issue with the underlying transaction. For example, buyers may believe a seller failed to disclose a material fact and wish to review the seller’s disclosures.
The California Department of Real Estate takes the position that a client is entitled to their transaction records including all documents the client received during the underlying transaction.
It is BRM’s position that when a client requests documents, the client should receive all of the transaction documents, including disclosures and contracts the client received in the underlying transaction. The agent/broker may also provide emails between the agent and the client. However, unless a subpoena is issued, internal documents and email exchanges between the agent and the other party’s agent should not generally be provided.
If a brokerage represented both the buyer and the seller in an underlying transaction, only the requesting party’s transaction file should be provided to them. For example, if a buyer in a dual agency situation requests the buyer’s transaction file, the buyer should not receive the listing file.
Agents should never provide documents without seeking management’s review and approval of the records to be produced. Too many times, the wrong documents can be sent, leading to exposure to a potential claim.
If a party’s attorneys request documents, the attorneys should be referred to BRM for handling. Agents should never communicate with a party’s attorney.
DO NOT FORWARD TO SELLERS OR BUYERS. This Broker Alert is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.