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Managing Your Risk When Selling a Car-Crash- Prone Property

As a real estate professional, your likelihood of being sued can increase when selling high-risk properties. Homes on busy roads or intersections, on tight corners, or in other locations where car crashes are a strong possibility can pose a risk to buyers. This has the potential to end up being your problem if they slap you with a lawsuit. 

You may think the chances of something happening are slim, but according to REALTOR®, one unfortunate property owner has experienced cars crashing into his home, not once, but 6 times over a 9-year period. He even lost his homeowner’s insurance because of the frequency of the crashes.  

Let’s look at what can go wrong, where you stand and what you can do to protect yourself and your business…

How a Lawsuit Can Happen

Picture this — you sell a home on a sloping block on a tight corner, adjacent to a busy road. Months later, the home is partially destroyed because a speeding truck misjudged the corner and plowed into the house. Is it your problem? 

Well, it can be, if the buyer believes you failed to disclose important details about the location of the home.  For example, if the home had previous damage from a similar incident and you knew about it. Or maybe you downplayed the possibility of an accident and impact of the busy road. Each case will be different, and even if you did everything right, lawsuits are costly to defend and time-consuming to sort out. Here are some things you can do to avoid getting to the lawsuit stage.

Know Your Disclosure Responsibilities

Disclosures vary from state to state, but most relate to material defects and physical damage to the property. Real estate professionals have a duty to disclose information material to a buyer, which would affect the desirability or price of a property. So, if you know the home suffered some structural damage from a car careering into the living room, you will need to disclose that information. 

Of course, this doesn’t change the responsibility of the prospective buyer if they wish to find out more about the property.  In California, for example, the California Civil Code states that your inspection responsibilities are only limited to a visual inspection. You are not obliged to engage a professional to undertake a building inspection, or anything of those lengths.

Read more about disclosures.

Encourage the Buyer to Undertake Due Diligence

Be very clear to the buyer, that it is their responsibility to undertake thorough due diligence of the property before purchasing. If they wish to check for structural damage or other physical issues with the home, they should engage a builder or appropriately licensed person to undertake a building inspection. Outside of the normal disclosures in a real estate transaction, it is the buyer’s responsibility to inform themselves about any further risks and issues relating to the property. If you’re asked for information, be sure to stay within your scope as a real estate professional and, where possible, suggest independent sources of information. For example, if they’re interested in road traffic accident data, they should contact the city or police department.

Turn an Issue into an Opportunity

For some, buying a home where car accidents have happened, and will likely happen again, may not be an issue. Obviously, these homes, where there are known issues, cannot command the prices of other similar properties in their area. So, some buyers may be willing to take on the risk for a greatly reduced sales price, to help them get into the tight property market. 

In this case, the new buyers may consider erecting barriers to protect the home, such as fencing or stone walls. Landscaping such as trees and shrubs might also soften the impact if something does occur. As a bonus, these improvements will also likely reduce traffic noise.

Ensure You Have Adequate Insurance Protection

Insurance protection is an essential part of any successful business. Otherwise, all it takes is one lawsuit to potentially destroy your livelihood. With a CRES Errors and Omissions (E&O) + ClaimPrevent® policy, you can protect yourself and your business against any lawsuits that eventuate from a car-crash-prone property listing. 

You’ll not only get superior coverage, but you’ll also have access to legal assistance 7 days a week. The CRES legal assistance line is manned by experienced real estate attorneys, who can answer questions, write letters, review contracts and documents, and more.   For more on CRES E&O + ClaimPrevent® or other insurance coverage options, contact the CRES team on 800-880-2747 for a confidential discussion.

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