Best Practices for Defensive Transaction Management

Posted by PRO Tue, 16 Jan 2007 20:00:00 GMT

Best Practices for Defensive Record Keeping

 

A comprehensive paper trail helps you and your associates to avoid misunderstanding with clients.  It also helps to identify mistakes that could lead to litigation.  Do you or your associates use the following best practices for documenting a transaction?

 

  • Do you document your sources of information?  When passing on information obtained from another source, such as local zoning board, or school system, document your conversation or print the report from the source and with the client.  Keep those notes on file.
  • Do you keep a telephone log that summarizes all business calls?  Note the date and time of the call, the name of the caller, and a one to two line summary of the conversation.
  • Do you teach associates how to structure a complete transaction file that includes documents such as disclosure statements as will as detailed notes?  Develop a checklist for the front of the file that lists each document that should be present.  To avoid documents “disappearing, “add a checkout box that must be initialed before a document is removed.
  • Do you instruct associates to keep records of what types of housing each prospective buyer asked to see, all housing options offered, all services provided, and the dates of showing.  Retain these files for at least two years, since fair housing complaints may be filed for two years after the incident.
  • Do you send sellers written updates on showings and feedback?  Phone calls are great, but written documents are a more tangible defense if a dispute arises.
  • Do you indicate on correspondence who is receiving copies?  For important documents, consider certified mail, courier, or other options that provide a confirmation that the documents were received.
  • Do you request a letter from the lending institution stating the reason if a mortgage loan is denied?
  • Do you send copies of changes in listing terms, such as price reductions or changes in the listing period to the seller, cooperating broker, and the transaction file?
  • Do you use confirmation letters to shift the burden of response to the other party?  The recipient of a confirming letter is asked to take some action if the content does not match his or her understanding of what was said.

 

Best Practices for Defendable Transaction Files

 

  • Signed or acknowledged brokerage relationship disclosure form
  • Listing agreement, including comparable market analysis
  • Profile sheet with supporting public records documentation
  • Property condition disclosure form
  • All marketing materials, including newspaper ads and printouts of online listings
  • Relocation or referral information, if applicable
  • Correspondence and phone logs with buyers, sellers, and other parties to the transaction
  • Inspection reports
  • Lead paint or other hazardous materials disclosure forms, if applicable
  • Copy of purchase contract and addenda
  • Copies of invoices for any repair work completed that was required for the sale
  • Settlement statement (HUD 1 form), if available
  • Escrow account records relating to the transaction