Legal considerations during open homes to keep in mind
Open homes are an integral tool for selling a property. They allow the potential client to personally experience the property which may become their new home or investment property.
There are definite benefits of opening a home for inspection. These include:
- Allowing serious buyers to have a second and more informal look at the property
- Facilitating buyers to compare and contrast to other properties in the area
- Choosing the perfect time for your home to be viewed.
While open homes can help you get the best price for your client, they can also be disastrous if proper legal considerations, particularly insurance are not considered.
Insurance
The single, most important aspect to consider when you are opening a home for inspection is insurance.
- Would you ever leave your clients' property unlocked to allow a stranger to pass through and look around?
- Would you allow random people to open your client’s cupboards and drawers?
Well, with open home, you are not only leaving the door unlocked, but you are also permitting strangers to peruse the drawers and cupboards. Without the proper and essential insurance, you have not protected yourself or the property from loss and harm.
In some cases, the open home takes place after the seller has vacated the property. Once the seller has vacated, it is probable that they have canceled their home and contents insurance. This means that if someone steals something valuable from the home, the seller’s insurance will not cover them for the loss.
It is also important for you to consider whether to have public liability insurance in case an accident occurs in the duration of the open home.
The danger of opening a home
Opening a home for public viewing can be dangerous and cause an agent or seller to gain liability in 3 key ways.
Firstly, something may break or someone steals an item from the open house. Secondly, someone may fall over and hurt themselves. Finally, thieves may use the open home as an opportunity to scope out the property for theft at a later time.
While the last possibility seems far-fetched, it has happened before and unfortunately, if a home is opened for public inspection, it is exceedingly difficult to predict and prevent these issues. In the following two sections, we will consider the first two issues: how these can be prevented and who will be liable if they eventuate.
Theft or breakage during open homes
Most home and contents insurance policies cover the insurance holder for loss and damage caused by theft. However, one of the conditions which exist on almost all of these policies is that of leaving windows or doors unlocked, hence allowing thieves unforced entry. This clause will either completely cancel out your claim or will decrease the payout by the insurer.
It is highly likely that allowing guests at the open home, who later turn out to be thieves, will void the insurance policy that the seller holds.
Real-life example
An owner, who we call Susan* was showing an open home. It was the early 1990’s, so at the time, ducted air conditioning units were very new and expensive. During the open home, one of the viewers stole the unit. In this case, luckily, the seller’s home and contents insurance was still valid and covered most of the cost of purchasing a new unit. It did take some negotiation with the insurance company as they claimed that the house was left open and hence, they should not be responsible. However, the seller and their insurance company settled on an amount that covered most of the cost of the new unit.
Slip and fall accidents
‘Slip and fall’ accidents are a term used to describe the kinds of accidents where someone slips or falls on someone else’s premises. An open home is full of potential occupational health and safety hazards that could cause a slip or fall.
The first step is to identify the hazards and the next step is to fix them before the open home. It is better to avoid an accident then deal with the result of an accident. Potential hazards include ripped carpet, changes in floor level, poor lighting, cracked concrete, wet floors and narrow stairs. If there is a hazard that cannot be fixed prior to the open home, then agents can place signs to warn visitors of dangers. For example, if there is a small step between the carpeted bedroom and the tiled ensuite, you could place a “Watch your step” to warn visitors.
There is only so much that can be done to prevent these types of accidents during an open home, so who will be liable if an accident does occur? The answer to this is that the seller or the real estate agent may be liable depending on how the slip or fall unfolded.
In ascertaining liability for slip and fall claims, the following will need to be proven:
- The person or company at fault owed a duty of care, and
- The person or company failed to take this case, and
- The injured person was hurt or suffered a loss.
The person or company who is found to have owed a duty of care can be found liable for slip and fall accidents.
Key Tips when considering Open Homes
Understand the risks associated with an Open Home and act accordingly. Check with your Real Estate Agent on how they manage the risks outlined in this article. Check your contract with the Agent to ensure who is liable if an issue arises.
Prepare your home and remove any potential hazards that you are aware of prior to the event. Let your insurer know that you are having an Open Home and ask them for advice to prepare your home.
One piece of advice, while it is enticing it is not advisable to be at your open home as you will not be able to prevent yourself from scrutinising the potential buyers. In addition, those pesky neighbours come by and of course, they will bust your cover.
*Susan is not her real name.
