What does an agent do if the agent receives a complaint or if the agent is named in a lawsuit?
This is not an area that many agents want to think about. But by handling the scenario correctly, you can provide valuable assistance to your attorney (if it gets to that point) and you can show yourself as an ethical agent. (You might even be able to apply the criticism to your practice to help you become a better agent for future clients).
If you receive a complaint letter or if you are named in a lawsuit, you should immediately contact/speak with 2 people and 2 people only:
- Contact your broker
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immediately to advise him/her of the complaint letter or lawsuit;
- Next, contact your professional liability carrier (your Broker can advise you of this entity and/or might contact them for you).
It is important to contact your Broker because your Broker might have specific company policies/procedures relating to client complaints/lawsuits that need to be followed. Once you contact your Broker, they can guide you through the pertinent policies/procedures.
If the complaint was lodged with the Louisiana Real Estate Commission (LREC) then it’s important that agents are aware of the following LREC Rules and Regulations:
- LREC Rules and Regulations Chapter 41, Section 4105 – the LREC might institute an investigation of the matter;
- LREC Rules and Regulations Chapter 41, Section 4107 – hearings might be conducted by the LREC;
During the discussion with your professional liability carrier, ask whether an attorney will be assigned to guide you through the process.
If an attorney will be assigned, then after speaking with your Broker and your professional liability carrier, DON’T contact and/or speak with anyone else! Just wait for your attorney to contact you and discuss the entire details of the matter with him/her.
After receiving a complaint or notice of a lawsuit, your natural inclination will be to ask around and discuss the case with other real estate agents to see if you did something wrong. During these discussions, you might also be inclined to say negative things about the person who lodged the complaint or filed the lawsuit.
Don’t do it!
If you discuss the case with others, it gives the person lodging the complaint and/or their attorney a list of people who can testify against you. If you share with other people any concerns/thoughts of possible wrongdoing or hateful comments concerning the plaintiff, the person lodging the complaint and/or their attorney can learn about your discussions and use those discussions against you in a deposition or at trial.
Additionally, from an ethical standpoint, it is always better to “be above board” or “take the high road” by refusing to speak negatively about a current or former client. Real estate agents rely heavily on their reputation. When you are committed to speaking positively about current or former clients, you add strength to the public’s perception of you as an ethical agent.
After discussing the case with your attorney, let your attorney handle any future discussions of your case with others. If the LREC institutes an investigation and conducts hearings, your attorney will coordinate your involvement in those investigations and hearings with the LREC.
Finally, as noted above, please take the time to evaluate why or how the complaint was lodged. Critical self reflection is good for any professional. It might lead to the conclusion that you did everything by the book and you wouldn’t change a thing. Or it might lead to the conclusion that certain deficiencies exist in your regular practice that could be altered to make you a better agent for future clients.
For any questions concerning this email, please contact me at email@example.com.
H.L. “Rye” Tuten,
III, is a Title Attorney/Real Estate Closing Attorney and Owner of Tuten Title & Escrow, LLC. Formerly assigned by RICE Insurance to defend real estate agents throughout Acadiana, much of his more than nine years’ litigation experience is with real estate concerns.