Minnesota’s AG asserts that recommending a home warranty without disclosing the financial interest is a breach of fiduciary duty.
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Each week on The Download, Inman’s Christy Murdock takes a closer look at the week’s top stories to give you what you need to meet Monday head on. This week: Minnesota AG asserts that recommending a home warranty without disclosing financial interest is a breach of fiduciary duty.
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While affordability is a perennial issue in the real estate market, the cost of owning a home doesn’t stop at the closing table or the monthly mortgage statement. Unexpected repairs and replacements can increase the cost of owning a home and contribute to buyer’s remorse.
To plan for the unexpected, many buyers purchase – or ask sellers to provide – a home warranty, at least for the first year or two of home ownership. Yet those guarantees themselves can cost less than expected, especially if the fine print ensures that most applications will be rejected.
As a fiduciary to your clients, it is important that your representation and advice is to their financial benefit. Is that possible when it comes to marketing a product that may not be successful and where you have an undisclosed financial interest?
On November 19, Minnesota Attorney General Keith Ellison announced a settlement with an affiliate of Berkshire Hathaway-Edina Realty to settle claims that the company advertised Home Security of America home warranties to customers without disclosing that it received payments for the warranties.
In addition, Edina Realty is accused of allowing buyers to believe that the warranties are Edina products.
“Real estate agents like Edina are required by law to act in the best interests of their clients. “After a thorough investigation, my Office alleges that Edina Realty violated that duty by secretly accepting large payments from Home Security of America to advance home warranty contracts to unsuspecting customers,” Ellison said in a statement.
As part of the settlement agreement, Edina contested the AG’s findings, asserting that it “provided written disclosure to its clients that Edina advertised HSA mortgage guarantees for a fixed service fee and that this disclosure was signed by its clients.”
The real estate industry is increasingly scrutinized, so business-as-usual doesn’t always cut it. This is a time to rethink the way you do things and decide if your goals and practices are consistent – and how they might be misunderstood in a court of law.
Inman’s contributors focused this week on topics including best practices, the right company culture and building long-lasting relationships. Check their advice to ensure that you are always acting in a place of integrity and unquestionable ethics.
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Resetting and revitalizing your company’s culture starts with understanding the current state of play so you can implement targeted and effective improvements, coach. Verl Workman he writes.
