You’ve been served

By Leslie Howatt, Executive Officer

If you’ve been served with court documents that make a claim against you in your capacity as a real estate licensee, it’s your responsibility to report the claim to E&O immediately.

There are time limits for filing a Reply or Response to the claim following service, and if those time limits are missed, a default judgment may be taken against you. Failure to report a claim to E&O in a timely manner could jeopardize your insurance coverage. 

For example, a licensee recently reported a Small Claims action to E&O that had been served by registered mail to the attention of the licensee at the brokerage address. The licensee, who mostly worked out of his own home, did not sign for the registered letter himself. Rather, a receptionist at the brokerage signed his name, accepting the registered letter on his behalf.

She then sent him an email to let him know he had mail and the letter was put in his mail slot. There was no follow-up with him. Because he didn’t realize the importance of the letter, by the time he picked it up at his brokerage, default judgment had already been taken. The licensee was faced with the stress and uncertainty of applying to court to try to set aside the default judgment, at his own expense.

In Small Claims Court or the Civil Resolution Tribunal, a Notice of Claim can be served on an individual by personal service or by mailing a copy by registered mail to the individual. The only person that should ever sign to accept registered mail is the person to whom the letter is addressed. Signing someone else’s name is NEVER acceptable in any circumstance.

Similar problems have occurred when brokerages are served with court documents. Corporations such as a real estate brokerage can be served with Provincial Court (Small Claims) or Civil Resolution Tribunal lawsuits when a copy of those documents is left at the place of business with a receptionist or a person who appears to manage or control the company’s business there.

If a receptionist or other employee accepts these documents on behalf of a brokerage and then leaves them on the managing broker’s desk or in a mail slot without notifying the manager directly, it may lead to a default judgment. The managing broker may be on an extended holiday, may not regularly check their mail slot, or may not notice the documents on their desk (this has actually happened!).

Any court document received on behalf of a brokerage should be considered of high importance and delivered immediately to the manager in charge of the office. Office policy should require direct confirmation that they have received the document.

Every brokerage should have appropriate policies and systems in place for the receipt of court documents. As a general rule, once court documents are received by an individual licensee or brokerage, E&O should be notified immediately. Don’t wait until you’ve gathered documents or the licensee involved has prepared a written statement before you notify E&O. Although we will eventually need this material, we can open a file and start working on your behalf as soon as you notify us of the claim.