Ch 25: Avoiding Liabilities Flashcards
How does the FTC define an implied claim?
An implied claim is one made indirectly or by inference. Under the law, advertisers must have proof to back up express and implied claims that consumers take from an ad.
Define puffery advertisement.
Puffery is commonly defined as promotional statements and/or claims that express subjective rather than objective views, so that no reasonable person would take as literal.
What does the FTC mean by material proof?
Material proof means what is important to a consumer’s decision to buy or use the product.
How does the FTC view an ad?
The FTC looks at the ad from the point of view of the “reasonable consumer” - the typical person looking at the ad.
What state entity deals with consumer issues?
The Office of Pennsylvania’s Attorney General provides detailed information about identifying consumer issues.
Is ESIGN compliance voluntary or mandatory?
Voluntary
What is the status of state law regarding electronic signatures, if it varies from the federal UETA laws?
If a state has adopted a law that is significantly different than the federal law, it will be trumped by the federal law.
How does Pennsylvania define an electronic signature?
An electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record
Describe Errors and Omissions (E&O) insurance.
Errors and omissions (E&O) insurance is a type of malpractice insurance coverage for real estate professionals. When an agent carries E&O coverage, the insurance company defends any claims and pays any settlement or judgment against the agent up to the limits outlined in the policy.
What four types of claims are usually excluded from E&O coverage?
Claims based on fraud and dishonest or criminal acts by an agent
Claims based on false advertising claims
Claims against an agent if an agent causes bodily harm or death to another person
Claims based on an agent causing damages to someone’s property
List three common sources of real estate E&O lawsuits.
Failure to disclose physical or structural problems with a property
Breach of fiduciary duty or failure to act in the client’s best interest
Failure to check that the information listed about a property is accurate
Why should real estate professionals consider having E&O insurance even if it’s not required in their state?
While many states, do not require E&O insurance, it is a smart way to mitigate liability. Additionally, E&O polices show your clients that you take your business seriously, and it may even help build trust with your clients.
Some E&O policies include two deductibles: one for lawyer fees and another for:
damages.
If a buyer gets injured at an open house, the agent at the open house could be sued over the medical bills. This type of lawsuit is typically covered under:
general liability insurance.
Whose permission does an agent need when advertising a home for sale?
The sellers
