Joe Ferry’s Home Inspector Training Blog

Subrogation Claims Against Home Inspectors

To the ever expanding list of rent seekers that Home Inspectors have to fend off, please add insurance companies that have paid a first-party claim on behalf of a homeowner and then want to recover that payment from the home inspector through subrogation.

Subrogation is a legal concept whereby one party – the subrogee – succeeds to the rights of another – the subrogor – either by operation of law or by contract. The most familiar examples of this concept involve insurance companies that pay losses sustained by policyholders and then seek to recover those payments from tortfeasors that may be legally liable for the policyholder’s loss. The insurance company by virtue of its payment would succeed to the policyholder’s rights against the tortfeasor.

Thus, if an insurance company paid a collision loss on behalf of its policyholder who was not at fault in the accident, it can seek to recover that payment through subrogation from the driver who had actually caused the accident. Health insurance companies and workers compensation insurance companies who pay medical bills on behalf of their insureds will endeavor to recover those outlays from parties who may be legally responsible for causing their insureds’s injuries.
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Boxcars

There’s nothing like a birthday to drive home the point that life has stages: the Immortal Stage that lasts until about age 55 and the Mortal Stage where I am now gaining seniority at a breathtaking pace. Today, I am turning 66. A pair of sixes. Boxcars.

Ever since I became the Irish Patient, I’ve become much more conscious that life has limits. On length. It’s a depressing thought and one you need to let go of for your own sake, as well as the sake of others within your gravitational pull.

Fortunately, there are other spheres where life holds considerably fewer fixed limitations: happiness, job satisfaction, friendships, personal achievement, learning and the like.

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Don’t Create Problems Where None Exist

One aspect of human nature that has always baffled me is the tendency on the part of some people to create problems where none really exist, notwithstanding that I have been living with a member of that tribe for the last thirty-one-and-a-half years .

To these folks, a rainy day at the beach is an enormous problem. To me a big problem would be something, say, on the order of getting a leukemia diagnosis. Do you see the difference?

Several years ago, I was out sailing with some friends and one of them accidentally threw my anchor overboard. Unfortunately it wasn’t connected to the boat at the time. When he realized what he had done, he was extremely upset and nigh pathologically remorseful. I told him to forget about it. But he wouldn’t let it go.
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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.
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Boxers Or Briefs?

There’s a well-developed discussion that attracted a lot of commentary on one of the industry message boards that I visit regularly on what reporting methodology, Checklists or Narratives, is better.

The discussion centers on the question of which one is more likely to provide a defense in the event that a claim eventuates from the inspection. What was interesting to me was that, while the narrative format was by far the preferred methodology, each reporting format had its supporters and both received what I thought were insightful critiques of their respective shortcomings.

In the checklist format, the inspector follows a sequential series of questions about the home and simply checks a box to indicate whether the issue was “Satisfactory”, or “Needs Repair” or was “Not Inspected”. Some forms provide a limited space for annotating the reason that an item “Needs Repair” or was “Not Inspected”.

In the narrative format, the inspector states precisely what was inspected in a narrative form and gives a brief explanation why the item’s condition was satisfactory or not.
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Extinguish All Reputation-Damaging Home Inspector Threats

Extinguish Reputation-Damaging Home Inspection ThreatsBy the time a home inspector contacts me, he or she has already made exhaustive attempts to explain to an irrational client why a leak in a roof six months after it was reported as “near the end of its life expectancy” in an inspection report is not grounds for a claim against the home inspector.

At this point, the client’s Rage-O-Meter is near the top of the “shouldn’t exceed” zone. There is no logical discussion that can change the client’s mind or mission to make you pay. While there may be no logical discussion on your end, the firm and steady end of a competent legal counsel can make that claim disappear.

In this week’s video blog, I discuss how to extinguish all of these reputation-damaging threats.
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Arbitrators Don’t Need to Know the Home Inspection Business

A question that comes up fairly frequently at my home inspector training with the Law and Disorder Seminars when I am extolling the virtues of requiring disputes to be settled in Arbitration is whether or not there should be a requirement that the arbitrator be “familiar with the home inspection business.” And many home inspectors have such requirements in the Arbitration Clauses of their Agreements.

As I have written elsewhere on this site, home inspectors have a very dim view of the American legal system and do not expect to get a fair shake. So some of them, in an effort to level the pitch or stack the deck – choose your own metaphor – have inserted this additional requirement into their Agreements.

What I tell them is this: when I was in the Army, forty-some years ago – yeah, I know, I don’t look that old – the Uniform Code of Military Justice had recently been revised to give Enlisted Men who were facing Courts-Martial the right to have one Enlisted Man on the Court-Martial panel. The change was widely hailed as a victory for Enlisted Men [and Women]. The reality for those exercising this “right” was that the Enlisted Man selected to fulfill it was always some cranky senior NCO with a chest festooned with decorations and a lengthy series of service stripes on his sleeve.

It didn’t take long for Enlisted Men to realize that they were much better off with a baby-faced Lieutenant who would actually listen to the evidence before making up his mind.
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Home Inspectors: Use CAUTION When Combining Contract Clauses

Contract clauses pre-inspection agreements Contract clauses sometimes do not mix well. There is at least one state that will nullify contractual limitation of liability clauses when paired with arbitration clauses. (Do you know which state that is? Let us know on Facebook, Twitter and/or LinkedIn.) And we all know – or should know – that arbitration clauses in pre-inspection agreements are valuable.

Find out more about what contract clauses don’t mix and how to handle this situation in this week’s home inspector training video.
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5 Stages of Home Inspection Claim Grief

A few weeks ago, I had a conversation with a home inspector in Connecticut. The inspector was trying to neutralize a claim by a former client over asbestos contamination issues with a property that he had inspected some months previous.

Now, as a general matter, the determination of environmental hazards and toxins is some distance outside of extant home inspection standards of practice (“SOP”) and Connecticut, which has its own state home inspection SOP, is no exception. Unfortunately, Connecticut is no exception only because the Connecticut Department of Consumer Protection issued a letter clarifying the fact that notwithstanding the fact that the law, itself, states that inspectors are required to inspect for and report asbestos, in reality they do not have to. Thus, as elsewhere, Nutmeggers are in the very best of hands.
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All About Arbitration – Who Should Pay?

Tip 44 - All About ArbitrationA Connecticut home inspector recently wrote to me about a “finding” he heard at a local law course, in which he has told that the American Arbitration Association (AAA) is now looking at DEFENDANTS for a substantial sum of money when a claim initiates.

This law course “professor” instructed the students to specify arbitration using an attorney qualified to arbitrate and with related experience.

He asked for my opinion – henceforth this week’s video tip!

I believe the AAA is feeling the financial pinch just like the rest of us and believes pushing the financial burden to the defendant is just what the doctor ordered to gin up a slew of new arbitration matters by removing the financial disincentive to the filing of ludicrous claims.

Home inspectors can head off this change by inserting key phrasing in their pre-inspection agreement. Watch the video tip below to find out the exact verbiage plus listen to why I believe the “professor” was wrong in saying that inspectors should demand an arbitrator have home inspection-related experience.
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