REO Liabilities not Covered by E&O Insurance
So you want to be an REO agent huh? Better read this first. Happy Selling!
I have found that most agents and brokers who are listing REOs from a variety of different banks and asset managers are not aware of some risks they may be facing.
Many banks and asset managers require indemnity statements to be signed upon taking the listings, that essentially place all of the traditional seller liabilities on the listing agent and broker. Our industry has spent endless time and effort over the past decades getting our contracts to effectively shift significant liability to the seller for property condition issues and other items. These REO indemnity clauses undo all of that, and the broker's Errors and Omissions policies generally will not cover these issues.
I am curious if any other REO listing agents and brokers have realized this and are taking any actions to protect themselves. Do any of you have any experiences with this or any examples of what is being done to mitigate these new liabilities?
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