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Legal issues during open homes

An open home is an efficient way to showcase your listing. But as lawyer Katherine Hawes explains, if due care in the areas of insurance and safety is not taken, the consequences for agents can be damaging

As a real estate agent, it is your job to assist clients with buying, selling, leasing and managing their property. In order for you to achieve this successfully, you also need to take into account external factors such as the legal ramifications of each step.

Open homes are an integral tool for real estate agents. They allow the potential client to personally experience the property which may eventually end up as their new home or investment property.   They also allow serious buyers to compare and contrast other properties in the area. While open homes can help you get the best price for your client, they can also be disastrous if proper legal considerations, particularly those related to insurance, are not considered.

Insurance

An important aspect to consider when you are opening any home for inspection is that of insurance. Think about it – how easy is it for anyone to enter the property and take a good look around? How comfortable are you with random people opening your client’s cupboards and drawers?  Unfortunately, with an open home, you are basically leaving the door unlocked for random strangers to walk in from the street. Therefore, without proper insurance cover, you will not have taken adequate care of your client and their property from loss and harm.

In addition, it is important for real estate agents to have adequate public liability insurance in case someone trips over or an accident occurs while people are attending the open home.

The danger of opening a home

Opening a home for public viewing can open the agent to legal liability in three key ways.

  1. Something of value may be broken or stolen from the house.  
  2. Someone may fall over and injure themselves.
  3. It may sound far fetched but there is also the likelihood that thieves attend an open home in order to scope out the property for theft later on! Unfortunately there is little you can do about this but it is work keeping this in mind as a possible risk.

In the following two sections, I will focus on the legalities of the first two points above:

Theft or breakage during open homes

Most home and contents insurance policies cover the insurance holder for loss and damage caused by theft. However, a condition which exists on almost all insurance policies is that of leaving windows or doors unlocked. Unfortunately, this may result in an insurance claim being cancelled or the payment from the insurer being reduced.

As a real estate agent, it is important that you warn your clients of the dangers of open homes. A good way of doing this is by preparing a fact sheet to inform sellers what can be done to mitigate risks. You should also advise sellers to  remove or lock up any valuables for the duration of the open home. The agency should also ensure that there are enough agents on site during the open home to keep a careful eye on all those who attend.

Real-life example

During the 1990s, a property manager was showing an open home. At this time, ducted air conditioning units were relatively new and rather pricey!  However, during the open home, the air conditioning unit was stolen. Fortunately, in this case the insurance company did agree to pay out but this was not just a case of completing the claim form! The process actually took many months of negotiation as they initially claimed that house was left open and hence, they should not be responsible.

Slip and fall accidents

A slip and fall accident is a legal term used to describe the kinds of accident where someone slips or falls in someone else’s premises. An open home is full of potential occupational health and safety hazards that could cause a slip or fall so it’s important to conduct a risk assessment and identify possible hazards. These may include ripped carpets, changes in floor level, poor lighting, cracked concrete, wet floors and narrow stairs. If these cannot be corrected prior to the open home, you should place signs to warn visitors of possible danger.

However, even if you have taken precautions to prevent these types of accidents during an open home, who will be liable if an accident does occur?

The answer to this is that the seller or the real estate agent may be liable depending on how the slip or fall unfolded. In ascertaining liability for slip and fall claims, the following will need to be proven:

  1. The person or company at fault owed a duty of care, and
  2. The person or company failed to take this case, and
  3. The injured person was hurt or suffered loss.

Therefore, the person or company who is found to have owed a duty of care can be found liable for slip and fall accidents.

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Katherine Hawes

With over 20 years’ legal and business experience, Katherine Hawes is the founder and principal solicitor of Aquarius Lawyers. To find out more about her fixed rate small business packages, please see www.newagelegalsolutions.com.au  or phone 02 9615 9635.

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