As a real estate licensee, you will likely encounter clients whose first language isn’t English. Working with a diverse range of clients is positive for your business, but there are potential challenges and risks when it comes to communication.
In this blog, we explore the risks of dealing with language barriers in real estate transactions. We also provide valuable tips for licensees to navigate this.
What are the Risks?
Language barriers can significantly contribute to miscommunication and misunderstandings. The stakes are high in real estate transactions. For most of us, a home is the most expensive purchase we’ll ever make. So, when errors occur during a real estate transaction, it can lead to significant financial damages and costly lawsuits.
A language barrier might lead a client to misunderstand:
- Contract terms and disclosures
- Property details
- Inclusions (they might think something is included in the sale that is not, such as a spa or satellite dish)
- Property boundaries
- Legal and regulatory requirements
- Contingencies
- Deadlines for transaction paperwork
Why Could You Be Sued?
Failure to address language barriers and effectively communicate can lead to serious legal consequences. That includes:
Contract Disputes
A client may misinterpret the key terms and conditions in the contract. If they feel you misled them in any way, they could sue you for misrepresentation or breach of contract.
Accusations About the Non-Disclosure of Material Defects
Real estate licensees must disclose any material defects about a property that might influence a buyer’s decision to purchase. If a language barrier means a client or prospective buyer doesn’t understand your disclosure, this could result in legal issues for both yourself and the seller.
Fair Housing Violations
The Fair Housing Act protects people from housing discrimination based on age, race, color, religion, sex, disability, familial status, or national origin. If one of your clients feels he/she was treated unfairly due to language or national origin, you could find yourself facing a discrimination lawsuit. You must also ensure all clients receive the same access to information. Denying services or ‘steering’ clients are Fair Housing violations.
Negligence Claim
Failing to take appropriate measures to address language barriers (such as not using professional interpreters or translators or worse — ignoring the fact your client didn’t understand something critical) could result in a lawsuit based on a negligence claim.
Fiduciary Duty Breach
Real estate licensees have a fiduciary duty to their clients. That means you have a legal obligation to act in the best interests of all of your clients. Clients from a non-English speaking background may sue you if they believe you’ve breached your fiduciary duty.
Tips to Minimize Language Barriers Risks
Real estate licensees need to be proactive to address any language barriers. Here are some tips to minimize misunderstandings (and your chances of facing a lawsuit!):
Focus on Clear Communication
When working with clients from diverse backgrounds, it is essential to communicate clearly. Avoid real estate jargon at all costs, don’t use acronyms, and speak clearly. Check in with your clients to make sure they understand as you talk through important information. Property brochures, virtual property walkthroughs, or maps might also be useful visual aids.
Use Professional Interpreters and Translators
Never rely on online translation tools like Google Translate. For showings, consider bringing another licensee with you who speaks the client’s language, or use a professional interpreter. Using professionals will minimize the risk of misunderstandings and greatly reduce your chances of facing legal action.
When it’s time to sign documents, you may want to ask the client if he or she has a trusted family member or friend who can go over the documents with you and the client. Ideally, a family member, friend, another real estate licensee who speaks the language, or a translator will go over each and every document with the client well before escrow is closed.
The National Association of REALTORS® (NAR) suggests — if you’re using an interpreter or translator — you should have a formal agreement in place with them. They also recommend including a disclaimer clause in the real estate contract to protect against any incorrect translations.
Be Fair and Equitable in Your Real Estate Business
Every client deserves equal access to information and fair treatment, regardless of how well they speak English. Treat all your clients and prospects fairly and respectfully. Strive to make your real estate business welcoming and inclusive. This will also help to make sure your clients feel comfortable enough to speak up if there is something they do not understand. It is much better to deal with misunderstandings before closing than to deal with a disgruntled client post-purchase when something serious has gone wrong.
Protect Your Real Estate Business with E&O Insurance + ClaimPrevent®
By understanding the risks associated with language barriers and taking proactive steps to address them, you can protect your real estate business. Errors and Omissions Insurance also offers added protection against potential lawsuits. CRES real estate E&O + ClaimPrevent® offers exceptional protection designed specifically for real estate professionals. CRES also offers pre-claim access to qualified attorneys, so you can obtain expert advice to avoid problems.
As part of one of the largest insurance brokers in the world, CRES has access to more real estate E&O options than anyone else. Let us find you the best protection for the price.
Contact the CRES team at 800-880-2747 for a confidential discussion today.
