When a broker-owner sells the business to a new broker-owner and a claim comes forward on a transaction that was under the old broker-owner, do current E&Os cover that, or does it go back to the old E&O insurer?

And second, if the old broker-owner is still working at the shop (as an associate broker) does that make any difference?

It depends on how the policy is written. I know our policy covers any acts during the time period of the policy. So if something happened this week, but in two years we have a different provider, the current policy would cover it.

So what you're saying is that acts by a former broker-owner of the brokerage are covered under the policy that was in force at that time. That, the new broker-owner's E&Os would not be affected, is that what you're saying?

It might also be that the prior Owner's Policy was phrased to only cover the claims which were actually "reported" during the Period of the Policy.

Someone will have to read the "slippery language" of each policy.

After an "event" has occurred, the language gets more and more slippery. That's why God invented Attorneys . . . . and why it is always valuable to have a good command of the English Language whether you are reading or writing; and whether you are a Real Estate Agent or an Insurance Consumer of any kind.

That also explains why E&O Insurance Rates "seem" to vary all over the place . . . . as a function of the Coverage provided. Cheap Insurance will often exclude "prior events", and some even go on to exclude events occurring during the period of the policy "IF" they did not come to light during the Policy Period. The best Coverage is referred to as Broad - extending backwards in time and forward. That way you can sleep at night; and avoid thinking about exclusions.

My knowledge is somewhat dated; but I did receive a few years of training as a Property/Casualty Underwriter and Actuary a few decades ago from a Major Carrier; and now I am plagued with knowing how to read a Policy . . . . which is VERY CAREFULLY! After an Event has Occurred . . . . or a condition discovered, it is typically the POLICY to run for the hills.

Thanks, Vermont, great info.

More than likely nearly 8+ years after the transaction, the current broker-owner, when sued, will not be able to use E&Os to pay a claim. Unless he purchased the extended coverage you spoke of, or if his current coverage permits.

So, the former broker-owner (who still works for the brokerage)and committed the negligent act when he owned the company is largely out of it?

I don't know what State or Commonwealth you are in; but most of our Real Estate Errors have a Statute of Limitations associated with them which numbers merely 3 to 5 Years. The presence of any kind of Fraud usually doubles that . . . . but Eight (8) years would be a looonnng time for someone to wait to bring suit. Of course, there is always the question of when the negligence was discovered, and one might argue that the "Time Meter" should start running at the point of discovery.

Clearly, I don't know. Again . . . . that's why God invented Attorneys!

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult an Attorney in the relevant jurisdiction to ensure accuracy before acting on this information.

Yeah, the situation I allude to is a mess. Only good thing is that I'm not being sued in my capacity of a broker. I AM being sued (probably) as a private person who recently discovered that the property she bought and lived on and used for many years isn't all hers. And no, I wasn't a licensee when I bought it, I was a "civilian". A dumb and trusting civilian.

And there are attorneys involved. But what do they know? I have to keep checking up on them!

You're being sued? Would not title insurance -- if you have an individual policy on that property -- straighten that up? (It would here in Okla., from as much as I can deduce of the problem you're having).

I don't think Due is still owning this one . . . . she is a prior Owner.
If Title was in effect, they certainly will investigate, but if there was any Fraud, Misrepresentation or Incompetence involved, then they too will be looking for an exit . . . . or if big money is involved, they may provide coverage and then subrogate against " ? ? ? " Maybe some Attorney who is still alive and a Member of the Bar missed something all those years ago? (Eight years isn't really so much time . . . . I can hold my breath that long.)

This could be a teaching moment, unpleasant as it might be.

No, I currently own the property with my husband. We live there. We're looking at being sued to get all our improvements off a portion of a small parcel we didn't know existed.

Title is out of it because the deed (which as civilians we didn't understand) does identify the "mystery" parcel as an exception. I understand that now, we didn't know what we were looking at then.

The property is extreme rural, rugged. What happened was the buyers agent (our agent) identified all the pins to us. We walked it with him. We'd asked if we needed a survey, and he said, "No, the pins are all marked". However, they were the wrong pins. The "mystery" parcel wasn't marked. It was a split from the original parcel. However, we were given the plat map showing the original unsplit parcel, and shown those pins. On the MLS sheet, it also said, "borders forest service", which, according to the unsplit parcel, it did. It was a dual rep deal, the seller's agent also came out to the property and identified the pins, and the entire original parcel as being what we were buying.

There also is a large gravel circular driveway with natural landscaping on one side, and this was sold as a "plus", (and I remember it on the MLS sheet which is long gone) being that, in the winter, when the 30% grade steep driveway on the other side was unusable, we could use the old gravel circular driveway to get in, and walk up the steps cut into the hillside to the house. We now find out that only 1/2 of that drive belongs to us.

I'm glad you remember "who" said "what" . . . . and "when" they said it.

With this much time having passed, perhaps Adverse Possession could play a role in protecting your investment? Your usage has obviously been open, notorious, and continuous.

In Vermont, the Statute on Adverse Possession is 15 Years. It may be less wherever this is occurring . . . . a few places are longer.

"We'd asked if we needed a survey, and he said, "No, the pins are all marked".

Boy you got a crappy agent that's for sure. It's not about if I believe the survey is accurate or not. As the broker/agent I would again tell you to get your own survey to verify what you are buying is correct.

Pins could have been moved,previous surveys could be inaccurate,encroachments,or easement issues could exist.

I love these agents that will do anything to get a sale. I bet this agent is long gone too and no longer in the business.

Thanks for "being there", my friends. Just to talk about it helps. A little.

Yeah, I remember it like it was yesterday b/c it was so important for us to understand where the property went. Being from another state when we came here, things were very different. We had attorneys in our home state, here the agents did it all. So we had all reassurances from the agents, AND, to look at the house and the parcel, no one would every think it was anything other than what it looked like.

And the agent is still working. I don't think either the seller's agent or the buyer's agent (our agent) knew anything about it. They used an old plat map, they were "friends" with the seller (same church...), they believed what he told them about where the pins were, etc., etc. BUT, that's negligence.

I can't tell you how bad their negligence has hurt us. Yes, 10yrs for adverse possession, the "mystery" parcel was owned by an absentee owner for 26 years, and he never probably laid eyes on it. He dies, it goes into a trust, the trust decides to sell everything off. They list it (with the local morons) and see that lots of our improvements are all on about .15-ac. That's the only useable part of the parcel. The rest is a steep boulder ridge-- all rock. There is 10' of access from the road, but access leads to no where. Leads right up to a rock cliff. Nothing can be built on it, it will not perk, there is no way up the cliff. What is level, we've been using including the circular driveway which is now bisected. We are trying to use "tacking" for adverse possession. We have no neighbors-- so no one can say if the seller used it the same way we did. So, we tracked him down out of state.