claim stories

Regular readers know that I am dead set against refunding inspection fees to unhappy clients. Ever.

I have written extensively elsewhere on this site as to why this is a bad idea and a terrible habit to cultivate. Yet inspectors continue to do it.

Why? On my daily 4 mile sortie through my leafy neighborhood the other day, I pondered that very vexing riddle.

And I concluded that it most likely stems from the fact that most inspectors are in thrall of the Limitation of Liability Clauses in their pre-inspection agreements. Most of these clauses limit the inspector’s liability to the cost of the inspection, say, $400.00. This number, thus, becomes a subconscious “anchor” for the inspector.
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One of the more unpleasant experiences in life is answering your door and finding the county sheriff or one of his deputies on your doorstep asking if you are one of the defendants named in the copy of the Complaint that he is holding, a Complaint that has been filed by one of your home inspection clients who is claiming that you failed to uncover certain defects during your inspection and that that lapse on your part is now costing him a lot of money to rectify.

This is especially disturbing when it is the first inkling that you have that this particular client had any beef with you whatsoever. This is, perhaps, the only time when no news is not good news. As I have written elsewhere on this website, while it is still possible for me to persuade the plaintiff’s attorney to voluntarily dismiss you from the suit, it is less likely when there has been a substantial calorie-burn on the attorney’s part. And it goes without saying, I trust, that it is impossible to do so once your  home inspector insurance company has appointed defense counsel because their financial incentives are contra.
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This blog generates a lot of email from home inspectors. Recently, a home inspector wrote that he had been given a heads-up from a real estate agent with whom he has an active business relationship that a former client was getting ready to initiate the claim process against everyone involved in the transaction. Though he had not heard anything directly from the former client, the agent told him that the claim concerned cracks in front brick wall and that a structural engineer had opined that the house is three inches off level and – altogether now! – “the home inspector should have reported” a tiny caulk bead at the corner mortar joint.

So the inspector stopped by the home and took photos of the “cracks” which do not appear on the original inspection photos. Moreover, the inspection took place more than a year ago and the inspection agreement has a one-year limitation period on claims. Case closed, right?
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As a frequent contributor to online inspection forums, I regularly get private email from professional home inspectors seeking my opinion on legal matters. Recently a reader wrote:

“Joseph, So, absent an E&O home inspector insurance policy, inspectors are exposed to the realities of defending a claim, which in 98% of the cases you have seen, are without merit. What do you estimate the cost to the inspector are to defend themselves, considering court costs, attorney, depositions, etc?”

Fortunately, not every claim involves a lawsuit. Most claims begin life as a complaint from a disappointed client. And most experienced business persons have had to deal with customer complaints at one time or another in their careers, and have no problem whatsoever rectifying a legitimate complaint to the customer’s satisfaction.
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After getting an indefinite extension of time to respond to the Complaint and, thus, eliminating any possibility of a default, I wrote to the inspector insurance company to timely advise it of the claim.

I enclosed a complete copy of the Complaint, a copy of my letter to the Plaintiffs’ attorney that delineated all the defenses to the Complaint together with a cover memorandum that explained that the attorney wanted time to discuss the matter with his clients and expressed my professional belief that the plaintiffs would voluntarily dismiss the inspector from the lawsuit.

I also suggested to the claims manager that the insurer refrain from appointing counsel for the time being to give the seed I had planted in the plaintiffs’ attorney’s mind time to germinate. In my experience, decisions by opposing counsel to do the right thing can take up to a month during which time you generally want to leave them alone – no sudden moves – with a gentle status inquiry every week or so.
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Reader Gary Baldridge writes: “I have heard many comments on the pros and cons of pre-sale home inspections and what liability may differ from doing a buyer inspection.”

Now that sellers are being encouraged to obtain professional home inspections prior to listing their properties for sale, a development that I not only applaud but also believe will become increasingly popular and commonplace, home inspectors need to be careful of potentially exposing themselves to liability to non-client third parties.

Normally, actors are only potentially liable to individuals to whom they owe a duty of care. Motorists, for example, owe a duty of care to their passengers, other motorists and their passengers and bicyclists and pedestrians. They fulfill that duty by obeying traffic laws and conventions, maintaining their vehicles in a safe condition, maintaining adequate insurance and driving carefully.
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So I wrote a rather lengthy letter to the plaintiffs’ attorney that explained in considerable detail exactly why he would be better off – and his clients would be immeasurably better off – without having the home inspector hammering away at length the manifold reasons why he was not responsible.

I first pointed out that the inspector had called out a lengthy litany of issues with the property, to wit: the roof was beyond its design life range and showing signs of deterioration; the gutters were clogged; the flashing was tarred; there was siding contact with the soil, a condition that could lead to the very issues of which his clients were then complaining; the exterior water had been shut off; there were settling cracks in the foundation; the toilet in the bathroom was loose; there were popped nails and tape separations throughout the interior; and efflorescence and condensation on the foundation walls.

Had any of the defects of which his clients were now complaining been extant and observable at the time of the inspection, I told him, they would have been reported by the inspector. That is the nature of a limited, non-invasive, visual inspection. One can only report what is observable at the time. Thus, the inspector was not negligent.
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Joe – Could we get a legal view on the use of thermal imaging devices during home inspections.  A number of guys are touting the relative blindness of those not using them in an effort to promote their new “x-ray vision.”

“My opinion? As with any extra-sensory equipment, from electronic induction moisture meters to gas sensors, this technology is subject to many variables such as quality, on-site conditions and, last but not least, the ability of the inspector to accurately interpret the data.  Further, I know of no precedent that requires a seller to act on these findings by allowing invasive follow up deconstruction to verify inside walls what was inferred by the inspector’s report.

“Lastly, what added dimension of legal liability does the use of these devices open up to the home inspector?”
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Whenever I read the Letters to the Editor of the New York Times or my local newspaper, the Philadelphia Inquirer, I often find myself wondering whether mathematics is still a requirement for graduation from high school. The overwhelming majority of those correspondents appear to truly believe with every fiber of their being that it is entirely possible for the government to provide massive new entitlement programs to tens of millions of previously unentitled individuals without increasing the size of government or affecting the national economy in any meaningful way.

Similarly, whenever a home inspector engages me to neutralize an unhappy client and I read the demand letter from the claimant’s attorney, I often find myself wondering whether the nation’s law schools are still teaching the Law of Damages. Consequently, I am continuously finding myself in the position of having to give short tutorials to professional colleagues on exactly what level of damages their clients might be entitled to in the altogether highly unlikely event that their claims have any merit in the first instance.
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When one has consulted on close to 600 home inspection claims, there is a powerful temptation to conclude that one has seen every goofy claim that there could possibly be and I was really beginning to think, back in the summer of 2009, that I had. Then I got a call from an inspector friend in a populous Mid-Atlantic state.

As sometimes happens, the first notice that the inspector had of the claim was when the county sheriff served him with the lawsuit. Now it is not impossible to persuade a lawyer to drop a claim against a home inspector once a lawsuit has been filed and I have succeeded in doing so a number of times but it is considerably more difficult once there has been a substantial calorie-burn on the part of the plaintiffs’ attorney, as there was in this particular case.
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