Strengthen Pre-Inspection Agreements to Avoid Lawsuits

One of the techniques that I stress in my home inspector training with the Law and Disorder Seminar for reducing one’s potential for being successfully sued is for home inspectors to strengthen their Pre-Inspection Agreements with clauses that narrow a claimant’s ability to bring a claim by designating contractually the exact circumstances under which the inspector will be amenable to suit.

One of those circumstances is the venue wherein a claim may be brought. As a home inspector, or any business performing services pursuant to a contract, you never want to be in any state or federal court. And for a myriad of reasons.

For one thing, in the context of a residential real estate inspection, any lawsuit is bound to involve multiple parties, a circumstance that is guaranteed to increase the cost and decrease the likelihood of resolution. For another, the cost for the plaintiff to get into court is low. Filing fees for plaintiffs are pretty modest. The cost to you to get out of court, on the other hand, will be quite high. Not only will you have the plaintiff to contend with but your fellow defendants, as well. And while the plaintiff may be very agreeable to letting you out of the suit, your fellow defendants, who will have filed their own cross-claims against you, may not be.

Most home inspectors of my acquaintance have already figured this out and, so, have clauses in their Pre-Inspection Agreements that mandate that all disputes arising from the inspection must be brought in Arbitration. If your client’s attorney has read his client’s Pre-Inspection Agreement, he knows that he will not be able to join you in with the seller, the seller’s agent and broker and his client’s agent and broker. He’ll have to prosecute the case in two separate venues, which he will be loathe to do. Especially if he has heard from me the manifold reasons why you have no liability.

Problems arise, however, when the attorney does not know that there is an Arbitration Clause in the Pre-Inspection Agreement or as is often the case that there even is a Pre-Inspection Agreement and goes ahead and includes the home inspector as a named defendant. In those cases, the more reasonable attorneys will generally – though not always – agree to voluntarily dismiss the claim against the home inspector upon hearing from me a compelling litany of reasons why that would be in his and his client’s best interests.

Another problem that has affected home inspectors adversely is that the Arbitration entity that their Pre-Inspection Agreements mandate be used may have gone out of business, thereby invalidating their Arbitration Clauses altogether, and putting the home inspector back into the mix with all the other defendants. And from that predicament, no one can extract the inspector.

To be on the safe side always name the American Arbitration Association as your required arbitrator. Its website is http://www.adr.org.