If you’re a busy real estate agent juggling many listings, you may feel overwhelmed by all the complex legal paperwork that comes with transactions. A Transaction Coordinator can be an asset in this situation, because using one will free up your time to do other work, such as generating new business.
As with any form of outsourcing, there are risks involved. Here’s all you need to know about Transaction Coordinators, where the division of responsibilities lies, and what you can do to minimize your chance of facing a lawsuit.
What Does a Transaction Coordinator Do?
A Transaction Coordinator will ensure that all transaction documentation is signed and properly completed. They will keep track of the documents and follow up where necessary to ensure the transaction runs smoothly. Most importantly, the Transaction Coordinator will keep a record of all the transaction paperwork, so if you do find yourself facing a lawsuit, you can find what you need to support your case quickly and easily.
Do I Need a Transaction Coordinator If We Use an Escrow/Closing Company?
Escrow/closing companies are neutral third-party organizations that watch over funds and documents, make payments and transfer titles when all closing requirements are complete. They aren’t responsible for following up on any outstanding signatures or documents, and they won’t put pressure on parties who haven’t yet fulfilled their contractual obligations. If there are delays in fulfilling all requirements, deadlines can pass and transactions, unfortunately, can end up canceled.
A Transaction Coordinator plays an active role in tracking down missing paperwork, following up on any outstanding signatures, and verifying signatures and initials on all documentation. Keeping your transaction on schedule is central to their role. They will also liaise with other parties, such as lenders, inspectors, title insurance companies and the escrow/closing company, to ensure you close successfully.
How to Minimize Your Risk with Transactions
Accurate record-keeping and adequate storage of transaction documents are essential if you want to run a successful real estate business.
Using a Transaction Coordinator can minimize your risk and reduce errors and omissions, which can help to avoid lawsuits. A suitably qualified and experienced Transaction Coordinator can be a genuine asset to your real estate business. They will free up your time (and your to-do list), and you’ll have more time to chase leads and generate more commissions.
Challenges and Risks for Real Estate Professionals
Without a Transaction Coordinator, it can be a challenge for a real estate professional to effectively manage and maintain transaction documentation. It can be even more difficult if you’re faced with a lawsuit, and you need to access transaction information urgently to prepare your case. If you can’t find something crucial, or if the court determines that something is lacking in the paperwork, you might have to kiss goodbye that commission (and, even worse, pay damages too!).
Errors & Omissions (E&O) Insurance typically protects real estate professionals from these types of claims against you:
- Breach of duty
- Breach of contract
- Misrepresentation claims
- Escrow/closing disputes
You won’t be covered, however, if your losses are due to another party to the transaction being guilty of any of the above-mentioned claims. E&O only protects you. But if you plan to employ a Transaction Coordinator as part of your team, with CRES real estate E&O, you’ll get Team/Non-Licensed Assistant Coverage included.( If you outsource Transaction Coordination to a separate company, they’ll need their own insurance to protect against errors and omissions.)
E&O Policies do vary, so speak to your insurer to check your coverage.
Contact CRES for a No Obligation Quote
CRES specializes in E&O Insurance that covers specific-to-real-estate risks. CRES E&O Insurance + ClaimPrevent® also includes access to qualified attorneys to answer your legal questions 7 days a week. This means you can effectively minimize your risk and proactively prevent lawsuits.
Contact the friendly CRES team at 800-880-2747 for a confidential discussion today.