Who pays… the broker, the agent…or both?

UPDATED: May 25, 2009

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Who pays… the broker, the agent…or both?

My broker and I (Realtor) were named in a lawsuit. Although the suit was ridiculous, my broker agreed to settle for 2500.00- to be paid by our e&o insurance.(they also covered the attornay’s fees, too) However, our insurance has a $2500 deductible which my broker insists is my responsibility. I thought it should be split… but who’s really the one to pay: the broker, the agent…or both?

Asked on May 25, 2009 under Real Estate Law, Pennsylvania


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

The facts as you presented them bring up a lot of questions and make answering this question a bit difficult.  First, did you have a lawyer that was given you by your E&O carrier?  You can not just agree to have your E&O carrier pay out an insurance claim without notifying them of the suit, giving them the opportunity to appoint a lawyer and defend you, allowing them to participate in the settlement negotiations, etc.  And did your broker have the ability to negotiate a settlement on your behalf? 

It sounds like the broker just negotiated a settlement without the proper notification to the E&O carrier, perhaps to avoid other issues that can occur with filing claims.  If you believe it should be split then tell the broker that.  But you will need to obtain a settlement and release from the lawsuit so I would suggest that you hire a lawyer even now or notify your E&O carrier asap.  Late Notice to them can be a reason for them to deny defending you in the claim. 

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