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Sellers Shield Snapshot
Real EstateIndustry
When a residence is listed for sale, a real estate agent typically sends the home seller a Seller’s Disclosure Form (also referred to as a notice or statement) to be completed. The purpose of this legal document is to inform prospective buyers of the general condition of the home, including what the home consists of (example: gas vs electric, smoke detectors, city vs well, etc) and any potential defects that have occurred in the home’s lifespan (example: roof damage, foundation issues, flooding, etc).
Mistakes or misrepresentations made on this form are the main cause of home sale lawsuits - which is not necessarily well known. Almost all homes have problems or defects, yet no one expects a claim to occur, and when they do they can be particularly problematic and troublesome for the following reasons:
1. Most lawsuits occur 11-14 months after the sale. At this point, the seller has moved on with their life and the sales transaction is a distant memory.
2. When a seller gets sued, the buyer’s attorney will almost always also sue the seller's agent and broker, along with the home inspector and title company, commonly claiming they helped the seller disclose and/or knew about or should have known about the alleged misrepresentation.
3. The seller is the only party in the lawsuit that has no protection against the lawsuit. Agents, brokers, inspectors, and title companies all have Errors and Omissions (E&O) Insurance Policies that will hire and pay attorneys to protect them against claims. The seller is completely on their own to find an attorney and pay the bills out of pocket, which can be very emotionally and financially stressful.
4. Finding an attorney with subject matter expertise can be difficult and time-consuming and the legal fees can cost sellers over $15k on average.
5. Because the agent gets pulled into the claim and they have protection, while their seller does not, this can ruin the relationship with the client and have a terrible effect on referrals and future business.
Here is a common example of how a home sale lawsuit unfolds. A seller in Texas gets a new job in California and needs to sell their home as fast as possible. They hire an agent and the agent gives them a Seller’s Disclosure Form to fill out, as it is required to sell the home. The seller, in a rush to get their home listed and sold, doesn’t give the legal document the proper time and attention. The home is sold and everyone happily moves on with their lives. Months later, a storm hits and a roof leak causes extensive damage to the home. The buyer is upset and files a claim against the seller and listing agent stating they knew about the problem and didn't disclose. They demand payment for repairs, punitive damages, attorney's fees, and even threaten to void the sale. The seller receives the demand letter or formal lawsuit and is panicked and scared. They sold the house last year and now have a new life in another state. What do they do now? Who do they call? How are they going to pay for this? Sometimes they try to negotiate the matter on their own without legal representation and the situation gets worse. They eventually call their agent and when they find out their agent has insurance that protects them, they feel betrayed and the relationship gets ugly from there.
Because of the legal liability associated with disclosure for the seller and their agent, it is incredibly important that the form is filled out as accurately as possible. The forms often reference industry terms (example: easement, encroachment) and the questions can be confusing and not easy to understand. Sellers commonly ask their agent questions and for assistance. Agents want to help, but they have to be careful, as it is a legal document and they are not attorneys. The form can put them in a professional predicament because they can take on real legal liability if they help and/or give advice.
Traditionally, the form is filled out using pen and paper, which has all kinds of issues when it comes to legibility and forms being fully completed. Agents also commonly use a PDF-Filler version which has very limited space. These space constraints can artificially limit how much information can be provided in a section, which can cause underreporting problems. Sellers Shield™ has led the way in digitizing the form and making it accessible on any device, so that a home seller can actually walk around their property as they fill it out and provide as much information as necessary. Unlike any other tool, we also provide definitions, tips and resources (written by legal experts) to help sellers better understand the questions and identify common problem areas that are most cited in lawsuits. This content is key to help sellers reduce their risk and prevent lawsuits. The platform also requires that every question is answered, so agents receive back custom formatted, 100% completed forms every time. Many top national E&O insurance companies believe that our forms reduce lawsuits and will actually waive insurance deductibles (up to $5000) for agents using Sellers Shield™.
Even if sellers disclose accurately, home problems/defects are common, and buyers can still sue sellers when issues occur after the sale. Sellers can now protect themselves from claims by purchasing Home Sale Legal Protection™ from Sellers Shield™ while using our online disclosure platform or any time before closing on the home, providing them up to $20,000 of paid legal representation by experienced real estate attorneys.
Sellers Shield™’s customer claims process is extensive: it protects the seller from start to finish and helps minimize the angst involved in the legal action. If a seller gets a verbal threat, demand letter, or claim from the buyer and/or their attorney, they can immediately call or email our claims team. Our legal experts immediately review and assess the specifics of the claim and appoint a local qualified real estate attorney, with subject matter expertise, from our Sellers Shield™ accredited legal network. The attorney will contact the opposing party on behalf of the seller and set a clear course of action. The Sellers Shield claims team manages and tracks the efforts throughout the process; advocating for the seller to ensure the quickest and best resolution possible and paying all the legal fees and bills (up to $20,000, with no deductible).
Mistakes or misrepresentations made on this form are the main cause of home sale lawsuits - which is not necessarily well known. Almost all homes have problems or defects, yet no one expects a claim to occur, and when they do they can be particularly problematic and troublesome for the following reasons:
1. Most lawsuits occur 11-14 months after the sale. At this point, the seller has moved on with their life and the sales transaction is a distant memory.
2. When a seller gets sued, the buyer’s attorney will almost always also sue the seller's agent and broker, along with the home inspector and title company, commonly claiming they helped the seller disclose and/or knew about or should have known about the alleged misrepresentation.
3. The seller is the only party in the lawsuit that has no protection against the lawsuit. Agents, brokers, inspectors, and title companies all have Errors and Omissions (E&O) Insurance Policies that will hire and pay attorneys to protect them against claims. The seller is completely on their own to find an attorney and pay the bills out of pocket, which can be very emotionally and financially stressful.
4. Finding an attorney with subject matter expertise can be difficult and time-consuming and the legal fees can cost sellers over $15k on average.
5. Because the agent gets pulled into the claim and they have protection, while their seller does not, this can ruin the relationship with the client and have a terrible effect on referrals and future business.
Here is a common example of how a home sale lawsuit unfolds. A seller in Texas gets a new job in California and needs to sell their home as fast as possible. They hire an agent and the agent gives them a Seller’s Disclosure Form to fill out, as it is required to sell the home. The seller, in a rush to get their home listed and sold, doesn’t give the legal document the proper time and attention. The home is sold and everyone happily moves on with their lives. Months later, a storm hits and a roof leak causes extensive damage to the home. The buyer is upset and files a claim against the seller and listing agent stating they knew about the problem and didn't disclose. They demand payment for repairs, punitive damages, attorney's fees, and even threaten to void the sale. The seller receives the demand letter or formal lawsuit and is panicked and scared. They sold the house last year and now have a new life in another state. What do they do now? Who do they call? How are they going to pay for this? Sometimes they try to negotiate the matter on their own without legal representation and the situation gets worse. They eventually call their agent and when they find out their agent has insurance that protects them, they feel betrayed and the relationship gets ugly from there.
Because of the legal liability associated with disclosure for the seller and their agent, it is incredibly important that the form is filled out as accurately as possible. The forms often reference industry terms (example: easement, encroachment) and the questions can be confusing and not easy to understand. Sellers commonly ask their agent questions and for assistance. Agents want to help, but they have to be careful, as it is a legal document and they are not attorneys. The form can put them in a professional predicament because they can take on real legal liability if they help and/or give advice.
Traditionally, the form is filled out using pen and paper, which has all kinds of issues when it comes to legibility and forms being fully completed. Agents also commonly use a PDF-Filler version which has very limited space. These space constraints can artificially limit how much information can be provided in a section, which can cause underreporting problems. Sellers Shield™ has led the way in digitizing the form and making it accessible on any device, so that a home seller can actually walk around their property as they fill it out and provide as much information as necessary. Unlike any other tool, we also provide definitions, tips and resources (written by legal experts) to help sellers better understand the questions and identify common problem areas that are most cited in lawsuits. This content is key to help sellers reduce their risk and prevent lawsuits. The platform also requires that every question is answered, so agents receive back custom formatted, 100% completed forms every time. Many top national E&O insurance companies believe that our forms reduce lawsuits and will actually waive insurance deductibles (up to $5000) for agents using Sellers Shield™.
Even if sellers disclose accurately, home problems/defects are common, and buyers can still sue sellers when issues occur after the sale. Sellers can now protect themselves from claims by purchasing Home Sale Legal Protection™ from Sellers Shield™ while using our online disclosure platform or any time before closing on the home, providing them up to $20,000 of paid legal representation by experienced real estate attorneys.
Sellers Shield™’s customer claims process is extensive: it protects the seller from start to finish and helps minimize the angst involved in the legal action. If a seller gets a verbal threat, demand letter, or claim from the buyer and/or their attorney, they can immediately call or email our claims team. Our legal experts immediately review and assess the specifics of the claim and appoint a local qualified real estate attorney, with subject matter expertise, from our Sellers Shield™ accredited legal network. The attorney will contact the opposing party on behalf of the seller and set a clear course of action. The Sellers Shield claims team manages and tracks the efforts throughout the process; advocating for the seller to ensure the quickest and best resolution possible and paying all the legal fees and bills (up to $20,000, with no deductible).
