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Reducing Legal Risk for Brokers and Agents

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Today’s real estate market presents a variety of legal risks to real estate professionals. The Legal Affairs Division of the National Association of REALTORS® (NAR) works to educate and guide brokers and their agents through the many legal issues they may face. Here are some highlights of recent efforts by NAR’s Legal Affairs division:

Amicus Brief Filed in Support of Ohio Broker
A broker should not be held liable for the intentional, fraudulent acts of its agent solely because the broker received a commission from the fraudulent transaction. That is what NAR recently argued before the Ohio Supreme Court in an amicus curiae brief filed on behalf of a broker. NAR urged the court to consider all the facts and circumstances in each case to determine whether an agent acted within the scope of her agency or employment before finding a broker liable for the acts of its agent.

The brief was filed in response to a request made by the Ohio Association of REALTORS® to NAR’s Legal Action Committee. The Committee recognized that broker liability determined by the Ohio court affects all NAR members doing business in Ohio, but also NAR members in other states, if the Ohio ruling is widely adopted. So, NAR filed an amicus curiae brief that argued for the reversal of a lower court decision. A decision by the Ohio Supreme Court is pending.

Legal Guidance for Disclosure of Flood Insurance
In 2012, Congress passed a law that reauthorized the National Flood Insurance Program for an additional five years. But, the law also implemented changes in the federal subsidy of flood insurance. Those changes will result in increases in the premiums charged for flood insurance coverage. That means that a buyer who purchases a property now could be subject to substantial increases in their flood insurance premiums in the future. In response, NAR issued legal guidance to help brokers and their agents reduce their exposure to misrepresentation claims by property purchasers who acquire property located in flood zones.

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