AVOIDING LAWSUITS – WHY CONTINUING EDUCATION MATTERS
Many professionals such as Attorneys and Real Estate Licensees are required to participate in Mandatory Continuing Education as a condition of their License renewal. Today’s Article will cover why this is so important.
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WHY CONTINUING EDUCATION MATTERS
By Attorney Stephen J. Beede, BPE Law Group, P.C.
Note: This Article was originally written for the Sacramento Assoc. of Realtors
All California real estate licensees are required to participate in continuing education classes both as a precondition to initial licensing as well as by the time of license renewal. These include classes on (1) Ethics, (2) Agency, (3) Trust Fund Handling, (4) Fair Housing, and (5)Risk Management. Real estate brokers are required to take the additional class in (6) Management and Supervision. These core categories broadly include everything a Realtor should do in representing their client… but merely taking a class does not in and of itself make you immune to a lawsuit.
The #1 legal claim against brokers and agents is Misrepresentation.Misrepresentation basically means misstating some material feature of a property or a transaction and it may also include breaching a fiduciary duty to a client. Misrepresentation can be (1) innocent (you didn’t know); (2) negligent (you didn’t know but should have known; and (3) fraudulent (you did know but lied to preserve a sale). While we all should appreciate that intentional misrepresentation can bring both legal liability as well as loss of your real estate license, negligent misrepresentation is what continuing education seeks to prevent.
Ethics rules are primarily standards, principles and guidelines for conduct which are intended to elevate standards of competence and behavior. It is putting the client’s interest first.
Agency rules create a fiduciary duty owed by the agent to the principal, a duty of highest loyalty. Has the agent reviewed the Contract provisions, or the Inspection and Title Reports, or the Disclosures and have they clearly identified to their client any issues that need to be further explained? It is putting the client’s interest first;
Trust Fund Handling rules mandate that client’s funds be kept separate and not be commingled with the agent’s funds or anyone else’s. Has the agent timely deposited the clients funds to the designated escrow or client Trust Account? It is putting the client’s interest first;
Fair Housing rules require that agents must be certain to provide all clients with fair and equal treatment in housing related issues. This means both setting aside any biases and protecting their client from discrimination by others in a transaction. It is putting the client’s interest first;
Risk Management rules provide real estate agents with practices and procedures which, if followed, can reduce the risk of liability to clients and others in real estate transactions. If the agent suspects that a misrepresentation or some other legal claim may be arising, have they notified their broker and met with their client to resolve the issue. It is putting the client’s interest first;
Management and Supervision rules provide real estate brokers with practices and procedures to make sure that the broker and any real estate licensees working for them are complying with the law and not exposing the broker to legal liability. As many lawsuits have shown, the broker can be held liable for the wrongful acts of their agents regardless of whether or not the broker had any knowledge of the agent’s actions. Again, the best practice is always putting the client’s interest first and making sure that all agents do the same.
While there unfortunately is no way of absolutely eliminating all risk of getting involved in a lawsuit, timely participating in mandatory continuing education can, as a minimum, help reduce the risk associated with real estate transactions. Even better, take advantage of the many advanced courses available through SAR and CAR and not only will you further reduce liability risk, but your increased professionalism and knowledge will enable you to achieve greater success in your profession