Everything’s Negotiable!

My recent post, When Attorneys Amend Your Agreement, prompted this question from Las Vegas inspector, Gordy Zorn:

Joe, My question is how can anyone alter a contract except for the company who wrote it up in the first place? When buying a house, you have to sign a contract and you can’t pick and choose what part you agree with and not. You want the house, you sign. You don’t want the house, you don’t sign. Same with a car or any other major purchase. It’s our contract and our rules. They either abide by our rules or the go somewhere else. I don’t know any home inspector that doesn’t use a pre-inspection agreement and for the most part I always thought it was mandatory when getting insurance or at least it’s one of the questions on an application for insurance.

I did have someone cross out an area once on my pre-inspection agreement and I told him it didn’t matter what he crossed out, everything on my contract is still in force. If he didn’t agree with my contract, I wouldn’t be able to do the inspection. He hemmed and hawed but he signed it anyways.

My way or the highway is certainly a perfectly acceptable way of doing business. And it’s a methodology that I frequently employ, myself. But keep in mind that that not only means not yielding on terms that you feel are absolutely necessary for your protection, it also means not accepting the terms of others that you believe are too onerous.

Contracts are altered all of the time. For example, the Pennsylvania Association of Realtors (“PAR”) has a standard form Agreement of Sale for residential real estate that is known as the “PAR Form” which was drafted by attorneys in the employ of PAR. Can you guess whose interests are protected by this form agreement?

Clients who consult me prior to purchasing a home are often surprised when I delete multiple terms from the PAR Form before allowing them to sign it. And there is never any pushback from sellers or their agents when the altered offer is presented. It is always accepted as amended. Why? Because while the deleted terms would be nice for them to have, their deletion is not a deal breaker for them, whereas their insistence on them would be a deal breaker for my clients.

Similarly, when a home inspection prospect’s attorney wants to negotiate out certain clauses in a home inspection agreement because he thinks that they are too onerous, the inspector has to decide how important those clauses are to his peace of mind, how much additional exposure he is accepting by foregoing them and whether he can negotiate a higher fee to compensate for doing so.

The clauses that the attorney was objecting to were the arbitration clause and the statute of limitations waiver clause. Those clauses are two that I recommend every inspector have in his agreement because they narrow the place and time frame wherein a claim can be made. They do not render an inspector invulnerable to a claim. A claim can still be made but only in a specific venue and within a specific time frame.

Thus, acquiescing to their deletion will increase an inspector’s exposure to some degree but their deletion will not transmute an otherwise unmeritorious claim into a meritorious one.

So that is why I advised my inspector-client, someone for whom I had previously dispatched one delusional claimant, to accept the altered agreement and to simply charge a substantial additional fee for the infinitesimal increase in exposure.

One further collateral benefit of handling this situation in that business-like manner is that, if the inspection ultimately does blossom into a claim, it would vitiate any argument that the agreement was one of adhesion.