Tips for Avoiding Real Estate-Related Negligence Claims
It’s not unusual for lawyers practicing estates and trusts law to also practice real estate law (providing they've complied with the provincial and insurance requirements). This might occur when a lawyer is acting as estate solicitor (representing the estate trustees on the administration of an estate) or is representing a party during estate litigation and one or more of the assets is real estate.
Real estate law can be a tricky (and liability filled) business. An article in the December edition of LawPRO Magazine, published by LawPRO, the liability insurer for lawyers in Ontario, discusses some of the most common reasons behind malpractice claims involving real estate transactions.
As the article points out, real estate law gives rise to the second highest number of negligence claims against lawyers in this province (civil litigation is number one) – and that number is rising. Over the past decade, real estate-related claims have amounted to nearly 30% of the claims LawPRO sees.
Amongst the most common errors cited are the following:
- Lawyer/client communications failures (such as failure to inform a client or follow a client’s instructions);
- Inadequate investigation or discovery of facts (such as misreading a survey or not obtaining a title search);
- Failing to know or properly apply the law;
- Clerical and delegation errors (such as over-delegating to a law clerk or failing to review real estate documents for clerical errors); and
- Time and deadline-related errors.
As the article points out, it’s never possible to completely eliminate the possibility of a negligence claim. However, good client communication, attention to detail, and careful documentation can go along way towards reducing the risk.
If a lawyer becomes aware of a potential claim, it’s absolutely essential to advise LawPRO quickly (even if negligence hasn’t been alleged). Reporting a potential mistake to LawPRO is never fun – but not nearly as "unfun" as LawPRO discovering the lawyer was well aware of the potential claim and delayed reporting it!
For more information on professional negligence, please see my blog from September on avoiding claims for estates and trusts lawyers. Additionally, LawPRO publishes the “Avoid a Claim” blog which is a fantastic resource!