It’s also worth noting that fraudulent activity can go undetected for several years, and small businesses are particularly vulnerable to financial losses due to lawsuits.įraud can happen in any business. But you would normally insure your building just in case, because the cost of replacement out of your own pocket would be significant - possibly even putting you out of business. The chance of needing to replace your building and contents because of flood or fire may be slim. However, while everyone likes to think they can trust their staff, Fidelity and Crime bonds will protect you for that occasion where you can’t. Obtaining a Fidelity and Crime bond to protect against intentional wrongful acts by your staff may seem like an untrusting thing to do. However, you can’t control their actions - and that is precisely why Fidelity and Crime bonds are a necessity in any real estate business. Issues such as gambling addictions, drugs, or money troubles can entice a team member toward misconduct and/or illegal activity.Īs a broker, you’re in control of your business, and you can guide your staff and contractors in the way you want them to do business. Even if they were not dishonest when you employed them, sometimes circumstances change. You could have the best possible recruitment and selection process and still end up one day having a dishonest employee. But, even if your clients don’t insist on having bonds in place, it’s good business practice to protect yourself as a broker. In some cases, clients will insist that you have Fidelity and Crime bonds in place, to ensure compensation will be available to them if the transaction turns sour due to misconduct.
These bonds are designed to protect your business from any liability, so you won’t have to compensate the client out of your own pocket. Any other misconduct which results in a loss for the clientįidelity and Crime bonds apply to your real estate agents and even your cleaning contractors, if they were to steal something from your client’s property.Fraudulent use of client credit cards or bank accounts.Illegally obtaining benefit from a transaction.Stealing goods or cash at a client’s property.They provide compensation to your clients if they suffer losses, in situations where a member of your team does something illegal or dishonest. What are Fidelity and Crime Bonds and How Can They Help You?įidelity and Crime bonds are sometimes labeled “Dishonesty Bonds”. And, as a real estate broker, it’s important to mitigate these risks and ensure your business is adequately protected.įidelity and Crime Bonds are one way you can minimize your risk as a real estate broker. COVID-19 Resources for Real Estate ProfessionalsĪre you a real estate broker managing multiple real estate agents, either as employees or contractors? As the number of people within your team increases, so does your risk.Insurance Checklist for Real Estate Offices.
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