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How bad weather could lead to an E&O claim against you

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03/28/2017 | Author: Barney Schwartz

A hailstorm can do more than just damage property. In fact, bad weather can cause a headache for your buyers and lead to a potential lawsuit for you.

How? Let’s say your buyers do a final walkthrough in advance of their closing. The next day, a hailstorm sweeps through town. The closing happens two days later, and it’s only after your buyers finish signing the paperwork that they discover their new home has a recently hail-damaged roof.

If your buyers file a claim with their own insurance company, it will be denied, since their policy took effect two days after the hailstorm.

At best, your buyers may ask if you’ll contact the seller to file a claim, and the seller agrees to do so. Since most insurance companies won’t assign claims proceeds to the buyer, you’d get caught in the middle assisting with collecting the initial claims proceeds, deductible, and a check for recoverable depreciation once repairs are completed.

At worst, your buyers will file a lawsuit against you. More insurance companies are inspecting homes when they bind a new policy. If the buyers’ home has a damaged roof, their insurance company will cancel their policy, and it’s unlikely they’ll be able to find a decent policy to insure their home.

One way to avoid these complications and other potential problems is to delay closing until the roof is replaced.

Barney Schwartz is CEO of Preferred Guardian Group, a TAR risk-management errors and omissions insurance partner. Read more useful articles like this in the current issue of Texas REALTOR® magazine.

Categories: Business tips, Buyers, Sellers
Tags: e&o insurance, buyers, sellers

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Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.

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