When Attorneys Amend Your Agreement

One of my home inspector clients contacted me the other day for advice on what to do about a prospect whose attorney had lined out in its entirety the portion of his Inspection Agreement that a. required binding arbitration and b. required claims to be brought within one-year of the inspection.

In his transmittal email to the inspector’s prospect, the attorney wrote the following: “The stuff below that I red-lined should be removed. I don’t have a problem for him not to be responsible for stuff he does not inspect. Any questions let me know.” Italics mine.

And I, for my part, do not have a problem with this lawyer lining out those two items, especially if the inspector can exact a higher inspection fee as a result. Here’s why.

As I have repeatedly explained, claims for allegedly negligent home inspections are almost always – over 99% of the time – illegitimate. They will either implicate an issue that cannot be discovered by inspecting the home; that is outside of the scope of the SOP; that was concealed at the time of the inspection; that was disclaimed at the time of the inspection; that was discovered and reported at the time of the inspection; or that was functioning at the time of the inspection. Every single claim that implicates one of those issues is illegitimate and highly defensible.

So why have an arbitration clause in a home inspection agreement? The reason that I recommend that home inspectors have an arbitration clause in their inspection agreements is because home inspection suits are invariably multi-defendant affairs. The home inspector will be one of many co-defendants, including the sellers, the real estate agents and the real estate brokerages. An arbitration clause renders the inspector not amenable to suit in state courts. Plaintiffs attorneys almost always agree to voluntarily dismiss inspectors from those suits when this contractual disqualification is made known to them because failure to do so will result in an “involuntary” dismissal followed by a request for sanctions and attorneys fees.

Why require claims to be brought in one year? The reason that I recommend a time limitation for bringing a claim is because it eliminates 40% of all claims. Sixty percent of all claims are brought in the first year – and 99% of them are ridiculous. Imagine how fanciful claims brought more than a year after the inspection are!!

So the bottom line is this: the inspector is going to be exonerated anyway, no matter what his inspection agreement says about where or when the claim can be asserted. So, if a client has a problem with one or more clauses, feel free to indulge his delusions. Provided, of course, that he is willing to pay for the privilege.

I advised my inspector client to charge an extra $350.