Key Takeaways
- Vicarious liability means investors can be held responsible for agent actions within the scope of the agency relationship.
- Fair Housing Act violations through agents carry penalties exceeding $100,000—provide written compliance instructions to every agent.
- Verify agent and brokerage E&O insurance (minimum $1M per occurrence) and include indemnification clauses in agency agreements.
- Conduct transactions through LLCs and maintain written instructions to limit personal liability for agent misconduct.
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Test Your Knowledge
1.Under what circumstances can an investor hold an agent personally liable for transaction losses?
2.What is errors and omissions (E&O) insurance in the context of real estate agents?
3.Why should investors verify that their agent's brokerage carries adequate E&O insurance?