Reduce Risks in the Home Staging Business

Home Staging and Risk Management

By Brian Madigan LL.B.

(Ontario Real Estate Source)

The Home Staging industry is still unregulated, and to some extent it is still in its infancy.

As society becomes somewhat more litigious, it would seem to be wise that those in the home staging business take some precautions on their own to reduce their potential liabilities.

In the real estate business, the home staging industry is placed in the forefront of disclosure, concealment, repair, rectification of defects, and renovations.

And, it is the home inspection industry which is in the forefront of having to discover problems. As an industry, it is also unregulated.

Home stagers are at risk for covering something up, and home inspectors are at risk for not finding them.

However, none of this really helps the individual practitioner. So, let me make some recommendations for risk management:

1) Have a website. Make sure it is full of information for the consumer.
2) Have a business services model. Make sure that the nature and type of services that are available are outlined.
3) Carry professional liability insurance. Ensure that it covers errors and omissions made in the ordinary course of business.
4) Maintain other insurance additional coverages as may be required.
5) Draft a Code of Ethics and publish it for the consumer.
6) Draft a standard form contract that provides protection from liability.
7) Specify the client, ensure that the client is protected and that your first obligation is to the client and not someone else. This should not be vague.
8) Clarify roles of referral agents.
9) Clarify the role of contractors.
10) Outline the obligations of the homeowner in terms of disclosure.
11) Outline the obligations of the real estate agent in terms of disclosure.
12) Limit liability by agreement to a refund of fees paid.
13) Encourage the owner to deal directly with the contractor, if possible.
14) Require a deposit on account of a retainer.
15) Provide a written report and recommendations.

Some of these steps will go a long way to reducing and limiting liability.

They will never eliminate every potential risk. If you are going to be sued, you might be, simply because you took on the wrong project.

However, if you follow some of these steps you will enhance your professional image while you await accreditation and regulation of the industry in some more formal way.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Does the Home Staging Contract Benefit the Homeowner or the Agent?

Home Staging ~ Who is the Client?

By Brian Madigan LL.B.

(Ontario Real Estate Source)

This presents a somewhat intriguing question. Just who is the client? Really, there are just two possibilities:

1) homeowner, or
2) real estate agent.

As you can appreciate, issues such as allegiances, costs, expenses, discounts, credits, future business, conflicts of interest and so on can be looked at from a different perspective once you know who the clients is.

Ideally, the client will be the homeowner. That means the stager will be loyal to the homeowner and act in their best interests. But, this is only based on an “agency model” which does not particularly appear to be the case. This relationship rather appears to be simple contract. The stager is an independent contractor who owes no particular duties or obligations, beyond that imposed upon everyone in the service industry.

The second possible client is the real estate agent. In this regard, the agent may have retained the stager and be paying the entire fee. Any obligation perceived on the part of the stager would be owed to the real estate agent and not the homeowner.

Usually, it should be easy to tell who the client is. That is the person responsible for payment of the fee.

Assuming that the agent has agreed to include the stager’s fee in the commission, then at best, the homeowner is a third party beneficiary of the contract. That creates some duties and obligations, but not nearly as much as a contracting party would have.

In terms of increased professionalism, the home staging industry would be wise to enact a code of ethical conduct which provided the homeowner with certain basic rights, whether they were the contracting party or merely the third party beneficiary of the contract.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com