I am writing this blog because I came across something today that shocked me. I was reviewing a Master Listing Agreement with a massive nation wide company, who will go unnamed. In one of it’s paragraphs it read…. “Listing Broker additionally agrees to indemnify and hold harmless the indemnitees for and from all claims brought by, through or under owner and EXPRESSLY INCLUDING WITHOUT LIMITATION THOSE CLAIMS PRETAINING TO OR ARISING FROM NEGLIGENT OR WILLFUL ACTS OF OMISSIONS OF (unnamed company).” In short, they are saying, the Listing Broker agrees to indemnify or secure them from hurt, loss or damage when they commit negligence or willful acts of omissions. Just so we are clear, the vast majority of insurance companies do not cover negligence or willful acts of omissions so, in other words, you, the listing agent, your broker are responsible for paying legal fees, judgments or whatever else they incur if they are ever sued, even if they are clearly in the wrong! What scares me the most, the Project Manager I was speaking with informed me, it’s just they way it is and since they have agents signing up left and right, it most likely isn’t going to be amended because, everyone is agreeing to this. READ YOUR AGREEMENTS AND HAVE THEM REVIEWED BY AN ATTORNEY. In my opinion, this is a horrible way to do business. I don’t know how you can get around it but, I am not doing business with anyone who has this type of agreements, it is just dangerous!
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Jesse Gonzalez is a highly accomplished and respected real estate professional with a wealth of experience in the industry. With a career over 15 years, Jesse has established himself as a leading real estate sales and marketing expert.

As a licensed real estate agent since 2005 and a broker since 2008, Jesse has a comprehensive understanding of the complexities of the market. In 2013, he founded his firm, Liberty House Realty, LLC demonstrating his entrepreneurial spirit and commitment to delivering exceptional service to his clients.

Jesse's expertise extends beyond traditional real estate transactions. He obtained his Registered Appraisal Trainee in 2019, providing him with valuable insights into property valuation and market analysis. Although he decided to focus primarily on sales, his appraisal background gives him a unique advantage in understanding the intricacies of property values and trends.

With a dedication to excellence, Jesse consistently achieves outstanding results for his clients. Last year alone, he closed over $20 million in sales and received the prestigious Sapphire Award from his local association, recognizing his exceptional achievements in the industry.

Beyond his successful career in real estate, Jesse is passionate about education and personal growth. He is completing his undergraduate degree in Forensic Psychology, with plans to attend Law School in the fall of 2024. Jesse's ambition is to become a real estate litigator, focusing on real estate consumer protection law and advocating for the rights and interests of homebuyers and sellers.

As the owner/operator of the nation's largest social network for REO professionals, <a href="http://www.REOProNetwork.com">www.REOProNetwork.com</a>, Jesse has positioned himself as a thought leader and industry influencer. Through this platform, he fosters collaboration and knowledge-sharing among REO agents, attorneys, asset management firms, and other professionals in the field.

With a commitment to professionalism, integrity, and providing a personalized experience for his clients, Jesse Gonzalez is a trusted advisor and a driving force in the real estate industry. Whether assisting clients with buying or selling properties, he consistently goes above and beyond to exceed expectations and ensure successful outcomes.

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  • So glad I am reading this! Thank you!
  • Jesse, thank you for sharing this with us. Unfortunately many of the agents would simply jump in joy when they receive an REO listing that they often ignore to read the agreements. Adding the risk to the E&O policy would simply increase the high premium that we are already paying.
  • Jesse, my broker and company attorney rejected this very same MLA so I would be very interested in finding out how to mitigate the risk or who the E&O company is that can do so.
  • Hi Namneet:

    I am not going to release the name of the bank but, I strongly recommend you read your Master List Agreement and even have an experienced Attorney look it over. Just to be on the safe side, I also recommend you have your Insurance Professional read it over as well because, adjustments in your coverage may be necessary to truly protect you.

    As much as I am against these types of agreements, I am now learning that they can be worked around sufficently enough to lessen or mitigate your risk to acceptable levels, as long as you are involving the necessary professionals when you sign these agreements.

    A fellow REOPro member sent me an email telling me he had this issue and contacted his E&O company and they put him on a totally different plan. He is now protected and is very comfortable with his liability so, it stands to reason, if you read your agreements and, have an Attorney as well as your E&O company, you can truly mitigate the liability and therefore make it work.

    The thing to remember is, read those agreements, understand what they say and verify your understanding with an Attorney and Insurance Professional.
  • Jesse, thank you for sharing that. You have a great point. I would realy like to know who are those banks. Some time we take things granted. But opening yourself to such legal mess could be very costly. REOs are higher risk transacitons any way. Good post.
  • Hi Michelle:

    First off, I am not an Attorney so, understand this is just my opinion and should not be considered legal adivce.

    Selling AS IS, in my opinion, doesn't clear you from claims that arise from "Negligence and Willful Acts of Omission".

    The concept I am using to form my opinion is based on how insurance companies do not insure against Negligence and Willful Acts. Saying the home is Sold As-Is doesn't mean you are insured against, Negligence, Willful Acts and Fraud. I am also taking into consideration the Consumer Fraud Protection Act which guards buyers even in "As Is" situations from Negligence, Willful Acts and Fraud.

    In other words, the reason this bank is using this language in this agreement is because not only do they not want to be responsible for paying claims they also don't want to be out the money to defend themselves.

    The word they are using is "Indemnify" and, in conjunction with the rest of the agreement, you are paying thier legal fees, judgment fees and whatever else they incur as a part of thier defence.....even if they were Negligent, or Willful.

    As for playing by the bank rules, I don't buy that for a second. Plenty of banks are out there doing business in a way that protects the Realtor as well as themselves. If more Realtors would say no to these one sided, completely arrogant and overly liable agreements, we wouldn't even be having this conversation.

    My point to all this is, READ YOUR AGREEMENTS!! I have already gotten a handful of emails from agents here on REOPro that said something similar to, "I just fill in the blank and sign them".

    The really scary thing is that I got an email from an agent who said, "I am in a lawsuit now because of an indemnity clause I didn't read." He went on to tell me his E&O isn't covering any expenses because the agent wasn't in the wrong, the bank was so, the agent is coming out of pocket for his legal fees as well as the banks. It has gotten so bad, he is thinking of filing bankruptcy.

    PLEASE READ YOUR AGREEMENTS AND MAKE SURE YOU UNDERSTAND THEM, you could be more liable than you ever imagnied.
  • In this market someone will always step up and take the listing. Just like the bank Addendum A is one sided so is the listing agreement. It's the bank’s game and their rules. Your only choice is to play or not to… and in today's market that means to survive or move into a new line of work.
  • When we advertise in the MLS as well as write the contracts for purchase they all state AS-IS. They also have a right to inspection, which they can cancel the contract even though it is an AS-IS sale. So with that clause in the advertising and the MLS and the contract, wouldn't that hold up in an court that they agreed to purchase the property as it is and have no recourse with you the realtor/lister of the REO property?
  • Akin:

    First off, I don't list properties that ask me to reduce my commission.

    Secondly, I don't split my commission 50 – 50 with the Selling Agent. In the State of Tennessee, we have Exclusive Right to Sell and Exclusive Right to Buy. In all Exclusive Right to Buy Agreements they have wording to the following effect…..

    …if the sale is not through the Multiple listing Service and the seller does not agree to pay a buyer’s agent commission, Buyer will pay the Real Estate Company ____% of the sales price at the time of closing....

    In other words, the Selling Agent notified his buyer, in writing, that he expects to make a certain percentage on the buyer’s side transaction so, why should I pay for something the buyer has already agreed to pay?

    Make no mistake, I am on the up and up with everyone in the transaction. If I take the listing, you can guarantee that it reads that 6% will be paid out in commissions. This way I split it 50-50, if I take a 5% commission, I advertising Selling Agent 2% commission and so on.

    In the situation with OCWEN, I believe they mandate what you pay to a Selling Agent, so in that situation you are forced to split 50-50 and in return, make little to nothing on your sell. That is why I don't work with OCWEN. Any company who feels comfortable enough to rip me out of 50% of my commission can keep thier business. I will not give them the time of day, I am just too good for those silly games!

    If more Realtors would stop taking wage cuts and start demanding a standard of pay, services and expectation, we could trun this industry on its ear, I guess I am blazing the trail but, I don't mind being out on that limb by myself, I make it work.
  • Hi Jesse,
    Please share how you are able to get your 3% commission no matter what?
    With OCWEN, they get 1.4% of the 3% leaving you with 1.6%.
    Please enlighten if you dont mind.
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