Many a lawsuit has happened because a buyer finds an issue post-closing and blames the seller for not disclosing key defects. Even when sellers have been honest in their disclosures, and a defect is genuinely a surprise, legal action can cost tens of thousands of dollars – and wipe out any equity gains from the sale of the home. There are legal fees and damages if the case is lost, not to mention the time lost fighting the case and the considerable stress that comes with that.
That’s why the CRES Seller’s Protection Plan is so popular. This innovative plan protects sellers from disgruntled buyers who accuse them of not disclosing property defects. And for the real estate brokerages, offering it to potential sellers drives new listings!
What the CRES Seller’s Protection Plan Covers
CRES Seller’s Protection Plans offers $25,000 coverage for defense costs and damages up to 6 months after closing (and can be extended for another 6 months). These plans fill the gap that other insurance simply doesn’t provide. Homeowner’s insurance policies typically don’t cover claims as a result of a real estate sale. Home warranties can cover repair costs, but not attorney fees, which can add up if you need to defend a claim against you.
Real estate brokers and licensees can offer a Seller’s Protection Plan on owner-occupied single-family residences. This includes dwellings, condos or townhomes which are the seller’s primary residence. The seller is even covered if they move out of the property up to 90 days before escrow closing.
Benefits of Seller’s Protection Plans
A Seller’s Protection Plan typically covers defense costs for a seller, but CRES Seller’s Protection Plan goes a step beyond that and will also cover damages up to the specified limits. This is a great selling point for real estate licensees to offer sellers peace of mind — that if the buyer of their property makes a claim against them, they’ll be protected.
An exclusion of the Seller’s Protection Plan is that sellers cannot make a claim against their real estate agent. If the sellers do make a claim, the SPP coverage isn’t valid. So, offering Seller’s Protection Plans to sellers can be a great way for your real estate licensees to minimize risk and keep out of costly lawsuits. It can help protect your brokerage against sellers who may decide to take legal action against you to minimize their own liability.
Having Seller’s Protection Plans available for your clients can give your brokerage the edge against the competition. It’s a unique selling proposition that not all real estate brokeragesoffer. It can encourage more listings and increase revenue for you and your real estate team.
In Encinitas, California, a buyer discovered soon after closing that the master bathroom shower leaked. A lawsuit ensued. The sellers said they were unaware of the leak, because they didn’t use the master bathroom shower; it always took so long for the water to heat up. They only used the smaller shower in the hall bathroom. The buyer also made a noise nuisance claim about the neighbors constantly coughing. With a Seller’s Protection Plan in place, the seller settled for $17,500 (covered minus a $2500 deductible).
In Metairie, Louisiana, buyers found significant termite damage when replacing windows soon after closing. The buyers alleged the sellers tried to conceal the damage by painting over it, and it was going to cost $9,475 to fix the problem. They also claimed the seller did not disclose an alarm system issue, although there was no proof the seller was aware of any problem. $18,500 was demanded by the buyers, but the matter was settled for $10,000.
Buyers in Parker, Colorado, asked for a deck to be in “working order” prior to closing, because they knew it required repairs. The sellers hired two contractors to undertake the repairs, but both declined as they said it needed to be rebuilt and not repaired. When closing happened, the deck issue was unresolved. The buyers asked the sellers to pay $20,000 to replace it. Both parties compromised and the Seller’s Protection Plan paid out $10,000 to the buyer.
Find Out More About Seller’s Protection Plans
Seller’s Protection Plans are available with CRES real estate errors and omissions policies in most states.
To find out more about CRES Seller’s Protection Plans, contact the CRES team at 800-880-2747 for a confidential discussion today. Our friendly team can also help you with any other insurance inquiries for your real estate brokerage, including information about Business Owners’ Policy or General Liability Policy, Worker’s Compensation insurance, or Cyber Liability coverage.