Agents: Don’t Recommend Services Not Required by Law!

We’ve covered the topic of “prior homeowners insurance loss claims reports”, better known as C.L.U.E. reports, several times here at RE-Insider and since we published our Who Needs a C.LU.E. story, there have been changes related to these reports that we wanted to bring to our readers’ attention. The option of requesting the prior homeowners insurance loss claims report made a brief appearance on the CAR Residential Purchase Agreement, and it has since been removed. Why? Perhaps it’s because a C.L.U.E. report is not required by law and CAR does not want realtors taking on additional liability by placing them in the position of facilitating the ordering of these types of reports which neither required or guaranteed.

Likewise, the A-Plus report is NOT required by law – ANY law, and agents are not recognized legal fiduciaries of a seller with regard to ordering an A-Plus report. If a client requests an A-Plus report, inform them that they can get a prior homeowners insurance loss claims report from their insurance company. Did you know it’s FREE if they are the property owner? When you reach out for homeowners insurance during the escrow process any insurance company will run a report that shows prior claims made on the homeowners insurance. Ask them for a copy.

Last November, we also reported that the traditional industry standard C.L.U.E. report would no longer available through disclosure companies in Why Pay for A C.L.U.E. Report . We also provided information on how your client could get a prior homeowner insurance loss claim report for FREE by going directly to this site:
https://personalreports.lexisnexis.com/ or call (866) 312-8076.

With that in mind, here are a few problems that ordering A-Plus reports for your clients can create for you:

  1. Recommending the A-Plus report but not an Environmental Report or an Air Quality Report or a Water Quality Report brings you liability. Agents that recommend the ordering of a non-required A-Plus report, but none of the other non-required reports, could have to answer to why they advised clients to use one or more of the many non-legally required reports – especially if information on those other reports could have alerted buyers to issues that affect the desirability and value of the subject property – but not the others.
  2. Inaccurate information can be included in the report.
  3. The report requires the agent or client to examine the A-Plus report carefully for errors and incomplete entries, but the party may not have the expertise to do this.
  4. The agent or consumer then assumes the burden of proving the data wrong. Since A-Plus puts the burden on the agent or consumer to find errors or incomplete entries in the report, any financial damages resulting from these errors or omissions become the responsibility of the consumer and/or the agent /brokerage who recommended the ordering of the report.
  5. The report imposes that the agent or client must dispute inaccuracies in writing. Just imagine asking your client to dispute errors on a report YOU ordered that is NOT REQUIRED!
  6. The report may contain information other than claims data to rate you as a risk – even if the company doesn’t pay a claim.
  7. The report may contain information about another person or a different property.
  8. Your phone calls to inquire about a possible claim may be reported.
  9. An identity thief could file a fraudulent claim that could cause the homeowners premiums to rise or the policy to be cancelled.

Your client (or any homeowner) has the right to receive a free annual report under the FACT Act. For more on your right to CLUE and other specialty reports, see PRC Fact Sheet 6b, The Other Consumer Reports: What You Should Know about Specialty Reports.

Play it safe and say “No Thanks” to the NHD providers or others that profit from selling you a prior homeowner insurance loss claims report. Real estate agents complain about having to fill-in too many forms and paperwork so why add a report that’s NOT REQUIRED BY LAW?

Please let us know – is this news to you? How have you or agents in your office handled the request for an A-Plus Report? We’d love to hear from you.

  • Martin Delgado

    I was not familiar with A-Plus reports, but this information is helpful
    to not lead agents down a path to more liability. Companies providing
    these reports may take advantage of agents not knowing about them and
    sell them as if they are crucial to the home selling process, when in
    fact they’re not required by law. Thanks for the headsup!