E&O update
2018 has been a busy year in the world of claims; we expect that we’ll close the year with slightly fewer than 400 reported claims.
This is an increase of approximately 12% from 2017 (see chart). Although the market has slowed down recently, this increase in claims is likely due to the busy market from 2015 to 2017. With more transactions in those years, it’s expected that there will be more claims.
As a rule of thumb, in any calendar year we can expect approximately three to four claims to be reported for every 1,000 residential sales. However, there’s usually a lag between the date of the event giving rise to the claim (the alleged “error”) and the claim being advanced by the consumer. About 60% of the claims are reported within one year of the error, increasing to about 80% within two years.
E&O currently has 611 open claim files, 12% more than at the same time last year. Of these claims, 66% are in litigation and approximately half of those lawsuits are being handled by our four in-house lawyers.
At 52%, slightly more than half of the open claims are for misrepresentation. This may involve a licensee providing inaccurate information about a property or failing to advise of material information. Negligent valuation, subject clauses and drainage/water ingress are the current top claim issues (see article Top 10 current claim issues for trading services – and tips to avoid them!).
2018’s five most expensive claims
- Negligence – A buyer’s agent was alleged to have been negligent in valuing the property. Total cost, including legal fees: $305,948.
- Negligent misrepresentation – A buyer alleged that a seller’s agent misrepresented the type of business that could be operated out of commercial premises. Total cost, including legal fees: $272,940.
- Negligence – A tenant renewing a lease alleged that the property manager was negligent in failing to advise that a competitor was moving into the mall. Total cost, including legal fees: $266,985.
- Negligence – A buyer alleged that the buyer’s agent was negligent in failing to explain the risks associated with a subject-free offer. Total cost, including legal fees: $257,807.
- Negligence – Buyers alleged that the Limited Dual Agent failed to disclose a Single Room Occupancy zoning bylaw and heritage designation. Total cost, including legal fees: $193,809.
New director
Jim McCaughan, who sat on the E&O Board of Directors from 1997 to 2003 and again from 2014 to 2018, will be retiring from the Board at the end of January 2019. Jim has been a devoted and conscientious participant in the Board, and E&O extends its gratitude to him for his many years of service and extensive contributions.
We welcome our newest director, Jennifer Lynch, who has been appointed by the British Columbia Real Estate Association.
Jennifer, a managing broker with Royal LePage Nanaimo Realty on Gabriola Island, has more than 24 years of experience in the real estate industry. She served for more than 15 years on the Vancouver Island Real Estate Board’s (VIREB) Professional Development Committee, was a director of VIREB for five years and served as President in 2007. A member of BCREA’s Board of Directors from 2008 to 2014, she held the position of President in 2013. She was recognized as VIREB’s Realtor® of the Year in 2012; she received the Robert Laing Professional Excellence award in 2018 and was named as an honorary member of VIREB.
E&O is also pleased to report that current directors, Michael Ziegler and Marshall Cowe, have both been re-appointed by the Real Estate Council of BC to sit on our board for second three-year terms, which begin in early 2019.
