Sending Documents And Information – Suggested Practices

By David Hamerslough

August 22^nd, 2017

Real estate licensees regularly transmit information and documentation they have received from other sources. Such transmissions are usually made electronically or in person. Litigation can result when the parties disagree about what was transmitted, when it was transmitted, the source of the information, what discussions (if any) took place regarding the material transmitted, and what advice (if any) was provided regarding the information/documents transmitted. This article provides some suggestions for transmitting information and documents that may help prevent disagreements between a licensee and their client that can expose the licensee to liability.

California law states “A real estate broker cannot accept information received from another person, such as the seller, as being true, and transmit it to his or her client without either verifying the information or disclosing to the client that the information has not been verified.” The failure to meet this obligation may lead to liability on the part of a licensee for breach of fiduciary duty or negligent misrepresentation.

There is nothing that prevents this obligation from being met orally in discussions with your client. The issue that arises, unfortunately, is that during litigation, a client’s memory of what was discussed can be different from your memory and may be motivated by the desire or need to recall events in a way that supports their claim.

The following are some suggestions that may reduce or eliminate the risk of this happening. These suggestions apply whether the information and documentation are transmitted electronically or in person.

1. Identify the source of the information (e.g., the seller, an inspector, an inspection report, governmental agency, etc.);
2. State whether you have or have not verified the information;
3. If the information has been verified, specify what you did to verify it and provide any documentation that establishes how you verified that information. If you have any questions or concerns about what you verified or how that occurred, state that in writing and make any suggestions or recommendations for any appropriate follow-up;
4. If the information has not been verified, state that in writing and recommend that your client verify the information if it is important to their decision-making process;
5. One way to cover the preceding issues is to include the following language in any signature block on any communication you provide to the client: “I have not verified or investigated and will not verify or investigate any information supplied by others.”
6. Recommend that the client thoroughly and carefully read and/or investigate all the information and/or documentation they have received. If you have already done so, then state that you have done so and provide any comments or recommendations;
7. Recommend that if the client has any questions or concerns about the information and/or documentation, they put those in writing.
8. If there are any deadlines that need to be met, advise the client accordingly;
9. Make sure you can prove what you have provided to your client and when you provided it. When sending documents by email, name each attachment with identifying information (ideally, the title of the document) in order to eliminate uncertainty as to what documents are being sent. If you transmit documents or information by any method that doesn’t automatically date the transmission, make sure you include the date in that transmission;
10. If you forward any information or documentation to your client via your phone, be sure to include a “cover letter” type email comment that addresses all of these issues.

The foregoing list is a general one and does not address every issue that might arise regarding the transmission of information and/or documentation to a client. There are other factors that may impact whether an agent has or has not met their obligations in this regard, including the knowledge, training, skill, and experience of the client, the questions asked by the client, the facts relating to the transaction itself, the nature and type of the property being sold, the terms of the sale, etc. The suggestions made above will, however, assist in eliminating the potential for disagreements and misunderstandings regarding information and/or documentation transmitted to your client.