Today’s ‘Ask the Expert’ column features Glenn Shimkus, vice president of Real Estate Solutions for DocuSign.
Q: How can eSignature help when it comes to reducing E&O exposure?
A: Among service industry professionals, there is a saying: “It is not if you get an errors and omissions claim, it’s when.” Real estate transactions are becoming ever more complex and the threat of litigation is an even more present reality. To help protect against legal exposure, real estate agents and brokers purchase professional liability insurance (PLI), also commonly called errors and omissions (E&O) insurance. PLI insurance helps protect professional advice and service, preventing individuals and companies from bearing the full cost of defending against a negligence claim made by a client.
We recently came across a great example of where electronic signature solves a compliance problem and reduces E&O risk. On California Association of REALTORS® forms, REALTORS® are legally required to make the arbitration and liquidated damages clauses optional. With electronic signature, however, this field can be made “required” and the signer can “opt out” of the section by declining to sign. This ensures that the signer acknowledges the section and chooses to accept or reject it. It also means the envelope sender has a record of whether the signer chose to accept or reject the section. This reduces E&O risk and also reduces the chance of misunderstanding between agents and buyers. Because there is no missing information that could be overlooked or missed in a manual signing process, there is a reduced risk of E&O exposure.
Electronic signature solutions also save time that would have been spent reviewing contracts to make sure all the required information and signatures have been provided. With required fields, there is no need to double-check contracts to make sure all the fields are completed. If the envelope is complete, then all the information is there.
By using a trusted eSignature solution, you can sleep soundly at night knowing that all your contracts are secure and complete, and that you have taken a big step toward reducing your E&O exposure.