errors and omissions insurance Record Retention Rule for CA Real Estate Agents Amended to Omit Social Media | Axis Error & Omission
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Record Retention Rule for CA Real Estate Agents Amended to Omit Social Media


Record Retention Rule for CA Real Estate Agents Amended to Omit Social MediaRecord Retention Rule for CA Real Estate Agents Amended to Omit Social Media

Documentation of All Communication Helps Mitigate E&O Exposures

Under the California Business & Professions Code Section 10148, real estate agents are required to keep their transactions files for three years. If an agent cannot produce a transaction file during this period in the event of any audit by the Bureau, he or she can be suspended and even have his or her license revoked. Now the statute has been amended beginning January 1, 2015 to explicitly exclude texts, tweets, instant messaging, posts or other forms of short-lived social media from the record-retention requirement. The reason for the change seems to be that material information in a real estate transaction is not conveyed via a text or tweet and is an unnecessary burden to document all of these.

But is it really a good idea not to document all types of electronic communication involving transactions? What would happen if a client claims you made certain statements in a text regarding a transaction and you no longer have the thread that puts these statements into context, prove that you did indeed disclose a material fact, or disprove a claim alleging wrongdoing, negligence or error? In fact, several law firms have noted an increasing trend for social media materials  to constitute critical evidence in civil trials. Experienced litigation attorneys know that in many types of litigation the social media postings of the other side can constitute compromising, critical evidence at trial. Attorneys when possible will obtain the opposition’s recent Facebook posts, You-Tube videos, Twitter posts, and the like.  In addition, text messages from the opposition often constitute evidence.

Documentation of all types of communication, therefore, is key when it comes to conveying vital information in real estate transactions and in helping to mitigate errors and omissions claims. Implementing best practices where you have hard copies of all texts, tweets and posts can only provide the backup needed in defending yourself against allegations that may be meritless or unfounded.

Of course, having a social media policy in place that outlines what types of communication can be transmitted via posts, blogs, tweets, IMs, blogs, videos, texts, etc. is also key. By defining a set of guidelines you can help mitigate that risk and clearly explain what’s appropriate and what’s not.

E&O Insurance for Real Estate Agents

Additionally, a robust Errors & Omissions (E&O) insurance policy, also known as professional liability insurance, for real estate agents is critical to provide protection in the event of a claim. E&O insurance provides agents and brokers with protection against the costs of getting sued for a mistake made in the course of performing one’s job. Typical litigation includes undisclosed termite infestations, mold contamination, or hidden water damage. Boundary disputes are another area of contention where a buyer claims that the square footage of the home or surrounding property is smaller than advertised. Failing to disclose that a property is encumbered by a lien, entangling the property in the old owner’s debts, is another source of litigation. Coverage for defense costs is provided along with indemnification/settlement judgments if found liable.

Axis Insurance Services specializes in Real Estate E&O insurance and can help you secure a policy that is designed for your firm. Give us a call at (877) 787-5258.

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Blogged on: February 10, 2015 by Mike Smith
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