Mediation is Best For Everyone…But You

I recently gave the home inspector training Law and Disorder seminar at the NACHI Wisconsin state chapter’s fall gathering. In the weeks following, a number of the inspectors who had attended the seminar contacted me to review their pre-inspection agreements.

A few of these agreements included a clause that required that all disputes that arose from the inspection be submitted to mediation. It was the first clause that I advised them to strike from their contracts.

Get your imperfect pre-inspection agreement perfected today!

Mediation is a terrible venue for disputes arising from a home inspection. Well, let me revise that statement. It is a wonderful place to be if you are the claimant. Not wonderful if you are the home inspector.

Why? Because mediators love resolving disputes. And their favorite methodology for achieving this result is to cut the baby in half. Since 99.999 % of all claims against home inspectors have no merit, that is the last thing that a home inspector should want to happen.

Here’s a real life case that one of my clients faced. He did a termite inspection for the claimant and found no evidence of termite damage or presence. Some six months after the claimant moved into the house and maybe eight months after the inspection, the claimant was vacuuming a room and bumped the vacuum into the baseboard which shed some material. That prompted him to probe further and some evidence of termite damage was discovered.

The claimant sued in small claims court for $3,000 in damages. I told the home inspector that the court would try to resolve the case before trial by cutting the damages in half. And that’s exactly what the mediator did.

The methodology works like this: the mediator sequesters the parties and tells the claimant that he could get shut out if the case is tried. The judge could side with the inspector. If the mediator ‘can get the inspector to give you $1,500, will you take it?’ Of course, the guy says that he will because he knows he has no case.

Then the mediator talks to the inspector and tells him the exact opposite. ‘The guy has a great case. You could get stuck for $3,000. Yada, yada. If I can get him to take $1,500, that’s a home run for you.”

The inspector told me afterward that, if he had not consulted me, he would have written the guy a check for $1,500 because the mediator was putting enormous pressure on him to settle. “But I stuck to my guns,” he told me.

When they went before the judge, the inspector, as I had instructed him, told the judge that the court lacked jurisdiction because the pre-inspection agreement mandated that all disputes be resolved in arbitration.

Result: Case dismissed.