Subpoenas are court orders that command you to give a deposition, produce documents, or appear at a trial in a dispute between two other parties. At first glance, they may seem harmless. You might wonder: What’s the trouble with answering a few questions?
Subpoenas are often precursors to claims being filed. Depending on how you handle the subpoena, you could go from being a witness to a defendant, says Laura Prouse, Director of REAP/REALAX Data Analytics at CRES, A Gallagher Affinity Division. CRES is a Texas REALTORS® risk management partner.
For example, consider a situation where you were the seller’s agent, and the buyer sues the seller over alleged non-disclosure issues. You receive a subpoena from the seller’s attorneys because they want to talk to you about the sale. Wanting to assist your former client, you think there is no harm in responding to the attorneys’ questions. Your answers may be gathered as part of the lawsuit’s discovery process.
Here’s how to protect yourself when faced with a subpoena.
Inform your broker and contact your errors and omissions (E&O) insurance provider as soon as you’re subpoenaed. “Many policies have subpoena assistance coverage but with short reporting deadlines,” Prouse says.
Getting legal assistance is your best defense in avoiding mistakes. “Do not handle a subpoena without legal assistance,” she says. If you have an E&O policy with subpoena assistance, your insurance carrier may be able to provide some names of attorneys to help you.
“An attorney can determine if the subpoena is proper,” she says. “The attorney can raise objections and review the document. The attorney can prepare you to testify or give a deposition.”
One reason for being cautious is you don’t know the background of the subpoena. Agents and brokers tend to be customer service-oriented people who are eager to help. Even though you had a great relationship with your client, you think the transaction went smoothly, and you want to help, you need to be mindful that there is a reason you have received a subpoena in someone else’s dispute.
“In the past year, we have seen an uptick in subpoenas in Texas,” Prouse says. “We don’t know yet exactly what is driving this increase, but it could be related to the sales frenzy in the market.
“It’s the nature of the beast that if you are practicing real estate, you are exposed. Even if you do everything right, you can still be included in someone else’s legal action or claim.”
Prouse notes that having an E&O policy with subpoena assistance is a great benefit. “Current statistics show that an average cost for handling a subpoena in Texas is about $7,000, which is higher than the national average. Without coverage, hiring an attorney to help with a subpoena can get expensive.”
You don’t need to be afraid of subpoenas, but don’t treat them lightly—and do not ignore them.
First thing an agent should do is notify their broker.