Attorney Mark Carlson Discusses How Real Estate Agents Can Manage Liability and Risk With the Right Insurance Policy

Mark Carlson is a highly sought after and respected attorney in Los Angeles whose practice is focused on representing real estate professionals. Born and raised in California, he’s been practicing law for more than 25 years, and he has seen just about every kind of real estate lawsuit there is.

We recently chatted with Mark, and he was kind enough to answer some of our questions about realtors/real estate agents and the need for adequate insurance, particularly general liability insurance. Here’s Part One of our conversation. 

Mark, you have an impressive resume of practicing law in the areas of the business of real estate? How did you first get into the practice area? 

MC: I have been representing real estate brokers since I became an attorney in 1993.  I clerked for a small firm in Encino while in law school.  That firm handled claims for one of the largest Errors and Omissions carriers in the state at that time.  I gained a lot of experience in representing real estate brokers and escrow officers in the two or so years I was there.

Early on you worked for a large law firm where you saw a lot of action on virtually every angle of real estate, from agents to escrow officers, loan officers, developers, and many others. What did that kind of background do to prepare you for launching your own firm and specializing in this area? 

MC: When I left the small firm that I started with and moved over to a larger firm, I started handling slip and fall, auto, construction defect and products liability lawsuits.  The firm was handling matters for a pre-paid legal services program that marketed to Realtors.  As I had experience in handling those types of matters, I was given the task of handling the client.  From that client, another associate and I developed a real estate practice group at the firm where none had previously existed.  As I was still doing construction defect litigation as well, in those years I was representing real estate agents, developers, architects, engineers, contractors, escrow officers and appraisers.

When we hear the words “general liability insurance”, what does that mean?

MC: General liability insurance, whether as part of your homeowner’s insurance or a commercial general liability for businesses protects you from liability claims alleging bodily injury, property damage, libel and slander.

How is that different from errors and omissions coverage? 

MC: Errors and omissions insurance protects a professional from liability claims alleging that there was an error or omission in the professional service rendered to the client.

Why would a real estate agent need general liability insurance?

MC: Over the years, there has been litigation that alleges both professional liability and personal injury.  In the 1990’s there was a lot of litigation surrounding asbestos exposure.  In the early 2000’s asbestos claims were replaced by mold claims.  Following the 2008 market crash, agents were being sued along with lenders for habitability claims following foreclosure.  All of these types of lawsuits alleged both damage to the property that was sold (save for the habitability claims) and personal injury to the occupants.  Of course, there is always the risk of a slip and fall at an open house or showing.

Wouldn’t a broker carry this kind of insurance for its agents? 

MC: Most brokers do carry Commercial General Liability insurance.  However, those policies typically only cover injuries occurring at the broker’s office.  They also typically have a “business pursuits” exclusion that would limit coverage for injuries while providing professional services.  Also, even if coverage existed, it would apply to the broker and his or her employees.  As real estate agents are independent contractors, they would not fall within the definition of who is an insured.

In our next post, see Part Two of our discussion with attorney Mark Carlson, when we ask about the types of cases he see, and also the effectiveness of low cost insurance solutions for realtors and real estate agents.

Mark Carlson is managing partner of the Carlson Law Group, Inc. He has more than 25 years experience representing realtors, agents, and brokers. He has tried case locally all the way up to the California Supreme Court. Their website is www.carlsonlawgroup.com.

Want to know more about low cost General Liability Insurance for Realtors and Real Estate Agents? Email Robert Feldman at robertfeldman@allstate.com.