Technology Traps: Lessons Learned from Real Estate Litigation

woman on computer typing email

Unfortunately, there are many painful lessons learned about “technology traps” from the litigation home front. Real estate agents rely on technology to do business. But that reliance can sometimes cause problems.

Real Estate Litigation and the Cut and Paste Trap

Do you rely on eContracts or digital real estate contracts? Something driving a lot of claims right now is incomplete contracts, created by taking technology shortcuts. Contracts are inaccurate or missing the key components, because key provisions have been taken out or left out.

“Cut and paste” is a huge problem area. When you’re working on contracts, you’re using templates and inputting information. The problem occurs when you try to skip a step – “I’m going to cut and paste some information from the last contract I did because it’s very similar.” The reality is they’re not always similar. We have seen E&O claims where cut and paste has resulted in the wrong information being listed — either in personal property exclusions, or inclusions of entertainment systems that were included in a contract that weren’t supposed to be included (as just two examples).

The bottom line: Don’t cut and paste. We’re not even suggesting to be careful, just don’t do it. It’s too risky.

Real Estate Litigation Because of Technology That Doesn’t Work

You likely rely so heavily on the technology that’s available, that sometimes you may get stymied when you can’t access it. Have a backup plan in place.

Do you communicate with your clients via email or text message? Always keep everything in paper as well, just in case. (You should print out all suggestions to buyer or seller, all disclosures, etc. and put them in the customer file.)

What about relying on Internet access or cell phone signals to be available? We had a claim through the ClaimPrevent® Risk Management call line, where the sellers sent two counters to two separate offers to purchase their home.

In this situation, both counters were accepted — while the agent was up in the mountains on a ski weekend and had no cell phone service.

That agent was unable to cancel and withdraw one of the counters — and sold the house twice. So the agent had an E&O claim that ended with having to pay somebody not to buy a house.

(In this case, the technology problem compounded the fact that the agent had not communicated clearly  that one of those offers or counters was a backup.)

The bottom line: Technology doesn’t always work. You need a backup plan.

Real Estate Litigation and the Blue Screen of Death

You’re working on your computer – and suddenly everything is gone. All you see is the “blue screen of death” – the one that tells you a fatal exception or fatal error has occurred.

You always have to prepare for the worst case scenario. Losing information is one of the real battles that we face when we’re trying to defend you. A “failure to disclose” claim is the most common claim that we’ll see.

“But, Tracy, I told the agent, I told them that there was a septic system and that the permit was out of date. I told them.”

“How did you tell them?”

“I sent them an email.”

“Okay, great. Where’s the email?”

Well, my computer crashed and I don’t have that email anymore.”

The bottom line: Always have a paper backup of every disclosure you’ve made, and put that copy in the client’s file. Your computer should have regular backups as well. Maybe your system backs up to the cloud, or maybe you have a separate server to backup your information once you have a transaction that’s completed.

Technology can make our lives easier and communication quicker, but if we aren’t careful, it can also lead to real estate litigation. Don’t take shortcuts, have a back up plan, and have a back up paper copy!

From a presentation by Tracy Zuckett, White and Steele (Colorado)

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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