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Reduce the risk of open house inspections

20 June 2016

By Nancy Rainbird, Realcover Claims Manager

Indemnity clauses can be an effective tool to use against the risk of a claim against you by owners and third parties. One of the areas where agents are exposed to risk is during open house inspections.

While it is a popular and effective selling tool, with many benefits, there are also many risks that agents should be aware of.

Realcover has seen a number of claims against agents arising from property theft and also personal injury during open house inspections.

Some argue that the most common risk posed by open house inspections – whether they be properties for sale or lease – is theft of the occupier’s valuables.

The risk is higher when there is insufficient agency staff on site to monitor viewers, when agents don’t check or obtain identification from viewers entering the property, or when agents and property owners fail to check all valuables are secured in a safe place prior to inspection.

Using a waiver form 

Agents may consider using a standard inspection waiver document to be signed by third parties before they are permitted to enter the property. If you believe a separate form is impractical, use a shortened version in the sign in register.

For example: “The attendee acknowledges that at all times while attending the open house/inspection they do so at their own risk and that the attendee (and other people in the care and control of the attendee) will not hold the owner, agent or any of their employees, contractors or agents liable for any personal injury, death, loss, theft or damage to their personal property, whether caused by the negligence of the owner, agent, their employees, contractors or agents, howsoever caused.”

No real estate agency is perfect and even if exceptionally careful, people can still make mistakes, so the importance of professional indemnity insurance can never be understated.

An agent’s professional indemnity insurance policy will respond if there is an allegation of a breach of professional duty.

It is very important to note that an indemnity clause or signed waiver form will not always protect you as the courts will often go out of their way to read down the clauses against the agent/owner.

Where claims are inevitable, professional indemnity insurance can help to cover court costs and damages that can often amount to tens, or even hundreds of thousands of dollars.

The information in this article is of a general nature and individuals should always consider their own circumstances before making any decision regarding any Realcover product.

While care has been taken preparing this article, and the information contained in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.

Reduce the risk

 Ensure at least two qualified agency staff are present.

  • Have viewers fill out a sign-in sheet and check and record their identification details
  • Keep only one access door unlocked or ensure staff members are at the back and front door to monitor viewers entering and leaving
  • Secure and hide all valuables, from jewellery to loose change
  • Ask the homeowner/tenant to reduce as much clutter in the house as possible
  • Ensure items with the owners’/tenants’ financial details are stored away
  • Adopt waiver forms wherever possible.