Real Estate E&O Claims Spotlight: Lost, Stolen, or Damaged Items

It’s not uncommon for the owner of a property to not be around when their home is shown to potential buyers. Under the supervision of a real estate agent (or several), potential buyers can look around the home and get a good feel for the floor plan, and the agent will be there to answer any questions about the property.

Many property owners choose to put away personal items for open houses and home viewings. However, even with precautions in place, opening a home to the public does have its risks, and it is also not uncommon for personal items to disappear during or after viewings. Some of the most commonly taken items include jewelry, prescription medications, small electronics, decorative pieces, designer accessories, and money.

We recently saw a claim in which many valuable personal items disappeared after a showing took place at a property. Let’s take a look at the claim, and what real estate agents should know about their liability in these situations.

The Claim, Explained

On May 3, 2019, a showing took place at the Seller’s home (“The Property”), in which both the Listing Agent and the Buyer’s Agent showed it to the Client. After the showing, the Seller noticed that several of his personal items had gone missing, with a combined value of over $10,000.

The Seller filed a report with his county’s police department, and requested that they pull the street video to see if anyone other than the Listing Agent and the Potential Buyer were present at the Property that day. The Seller did have video cameras in his home, but his surveillance was not able to turn up any footage of the items being taken or any evidence other than still images that established the presence of the Listing Agent and the Potential Buyer in his home on that date. The Seller did not have receipts for his missing items, but did have boxes for the majority of them.

No conclusion has been formed about the objects’ whereabouts; it is unclear whether they were taken by the agents, the potential buyers, or if there is another, alternate explanation. However, regardless of what happened, the objects did disappear and the Seller did file an E&O claim against the Firm involved, along with a police report.

Key Takeaways from this Claim

It goes without saying that agents should not take sellers’ personal belongings during showings. However, it is important to understand that agents are liable for any lost or damaged property during showings. It does not matter how it happened. Even if the agent is in no way personally responsible, they will be held liable in the claims process.

At the end of the day, potential buyers are free to roam throughout the property during their showing, to get a feel for the floor plan and to take a closer look at the features that have interested them. No real estate agent should have to closely tail their clients; this is only likely to create an unpleasant experience for the potential buyers. However, there is a middle ground between watching buyers like a hawk and leaving them completely free to their own devices. It is important for agents to be aware of who is in the home with them and what they are doing, and to keep a lookout for what is happening. Odds are, the buyers are just taking a second look around, but if something does go missing, the agent is the one who will be liable. If this happens during one of your showings, talk to a lawyer and your insurance agent.

If a property is damaged during a showing, this would be considered an E&O “lockbox” claim. Keep in mind that not every errors & omissions policy contains this language, so this is not a guaranteed coverage. Check your policy carefully; don’t just assume you will be covered.

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