Q: In Florida, is it true that the average real estate practitioner gets a suit or a claim filed with an insurance company about two times out of every 1,000 transactions?
A: My guess is there are probably, at most, 1,000 lawsuits [annually], statewide, against brokerage companies for some type of allegation of malpractice or otherwise, says attorney Joe Boyd.
Actual lawsuits aren’t as common as threats that a lawsuit will be filed, but the threat often results in some concession or accommodation that brokers wouldn’t otherwise do if they didn’t fear there was some merit to the litigation.
In other words, brokers pay to make cases go away because they believe a mistake was made somewhere down the line in their operation.
The cost of a mistake isn’t just a lawsuit. “When a lawsuit is filed, typically a complaint is also filed with the Florida Real Estate Commission [FREC],” Boyd notes, “and those two complaints usually require two different lawyers. So brokers get hit on two fronts.”
Even if you settle the civil lawsuit, that doesn’t necessarily settle the FREC claim. As if that’s not enough, Realtors® may also have to defend themselves before their local Association against claims that they’ve violated the Realtor Code of Ethics.
Defending yourself against each type of complaint can be costly. First, to defend any lawsuit today is going to cost a minimum of $10,000-$20,000 in legal fees, and it may cost as much as $100,000 or more in total. Defending an action to protect your license may cost comparable sums.
Those amounts don’t even consider the time you and your staff will be out of pocket—and not making money—because of the litigation. “There’s an enormous amount of opportunity time lost by brokers and their staffs in defending a lawsuit,” says Boyd. That includes attending depositions, meeting with attorneys and doing other litigation-related tasks.
Most cases never get heard by a judge. They get resolved by mediation, which is almost always court compelled, but only after the parties have spent tens of thousands in legal fees.
Meet the Expert:
Joe Boyd, attorney with Boyd, Lindsey & Sliger PA in Tallahassee.
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