QUESTION: Several of my clients are upset that the local stay-at-home orders are interfering with their right to sell or buy real property. I have shared the CAR guidelines and forms with my clients and they insist, with the exception of open houses, I continue to show properties. I take appropriate precautions to protect myself but I am concerned that even if my clients sign the CAR forms, I may have liability for violating the law.
What steps should I take to best protect my clients and myself?
ANSWER: As is noted in several of the revised CAR COVID-19 forms, the forms are not intended to, and do not, create a mechanism to violate the law. If you and/or your clients violate any provision of a local Shelter in Place or Stay at Home Order, you and/or your clients are violating the law and there is significant risk in violating these County Orders.
The risks in violating a Shelter in Place Order are:
- You and/or your clients could be found guilty of a violating a local order (which is usually deemed a misdemeanor) and all of you could be required to pay a fine or possibly spend time in jail depending upon how terrible the violation is as determined by the local jurisdiction.
- You and/or your client could get sick (or worse) after contracting the Coronavirus.
- You and/or your client could get sued for giving someone else the Coronavirus.
For Agents, if any or all of these risks occur, there will be no Errors or Omission Insurance Coverage to pay the fine or defend the lawsuit since violations of law are expressly excluded from coverage. The medical costs that could occur are also not covered by Errors & Omissions Insurance because personal injury claims are also excluded. Most Independent Contractor Agreements, including the widely used C.A.R. ICA forms, provide that the Agents, not the Brokers, are liable if the Agents commits “any unlawful act under federal, state or local law or ordinance or regulation while conducting license activity.”
Now that you know the risks for yourself, you need to document that you have advised your clients of their risks, preferably in an email.
You should never encourage clients to violate the law so you need to document that you and your broker do not recommend violating the law.
Finally, you need to document that the client is proceeding against your advice and is assuming the risks of their decisions. Whenever clients do not follow good advice, the best thing for the Agent to do is to properly document the facts by using a set format that includes (a) the advice/recommendations that have been given to the client; (b) the decision made by the client; and (c) the reason why the client states that they are disregarding the advice/recommendations along with (d) a warning that the client is proceeding against the advice and recommendation of the professional. The general format for that can be found in a prior Tip:
See Weekly Practice Tip: “How to Handle Clients Who Will Not Follow Advice” (11/16/2018)
BEST PRACTICE TIPS:
- Agents should not make the decisions for their clients regarding whether or not the clients should strictly comply with local Stay at Home Orders.
- If a Seller is insisting upon allowing visitors to enter the Seller’s property in violation of the local Stay at Home Order, then the Seller’s Agents should send the Seller an email that states:
I have advised you that the local Health Officer’s Order states that [insert specific language from the City or County Order, such as “no in-person showings can be conducted unless the property is vacant” ]. I have warned you that there are various risks in violating that Order including, but not limited to, getting fined for violating the Order, you could get sick or you could be accused of giving someone else the Coronavirus. You have decided that you do not want to follow the Order because [insert Seller’s reason as specifically as possible, such as “I believe that I can handle showings safely.”]. Since you intend to proceed without following the Order, please understand that you will be assuming the risk of any liability, costs or damages that may result because of your decision to not follow my advice to obey the Order.
- If a Buyer is insisting upon visiting occupied properties in violation of the local Shelter in Place Order, then the Buyer’s Agent should send the Buyer an email that states:
I have advised you that the local Health Officer’s Order states that [insert specific language from the City or County Order, such as “no in-person showings can be conducted unless the property is vacant” ]. I have warned you that there are various risks in violating that Order including, but not limited to, getting fined for violating the Order, you could get sick or you could be accused of giving someone else the Coronavirus. You have decided that you do not want to follow the Order because [insert Buyer’s reason as specifically as possible, such as “I need to find a home quickly and cannot wait for the Order to be lifted.” ]. Since you intend to proceed without following the Order, please understand that you will be assuming the risk of any liability, costs or damages that may result because of your decision to not follow my advice to obey the Order.
- A copy of this email and all other transaction emails should be put into the Broker file.
This Weekly Practice Tip an attorney-client privileged document 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.
© Copyright Broker Risk Management 2020 04/24/2020