home inspection

Is Your E & O Insurance Company Stuck on Stupid?

One of my home inspector clients in California recently wrote to me about a home inspection claim that was being brought by a client for whom he had performed an inspection about three months earlier. The client was experiencing some leaks due to recent heavy rains. The leaks were discovered only after removing baseboard and flooring to do some remodeling. After opening the walls they found that the leaks were due to the fact that the vapor barrier had been torn in several areas.

A review of the inspection report demonstrated that the inspector had noted that “stains were observed at baseboard, dry at time of inspection, unable to determine cause, advise review with seller.” Photos of the area taken at the time of the inspection completely support the inspector’s position.

The clients were quite upset and were unwilling to grasp the fact that, since the defect was not visible during the inspection, the inspector was not liable. They subsequently threatened to file suit if the inspector did not refund the fee.

Since he was clearly not responsible for the clients’ problem, he refused to refund the fee and the client followed through on the threat and filed a claim in small claims court.
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The Theory of Relativity Explained

Every year, Lady Agag and I mark Memorial Day Weekend by taking a day trip to the Jersey Shore. More specifically, Spring Lake, New Jersey, our favorite shore town and one of the toniest in America.

Spring Lake for its part marks the start of the summer season with a Five Mile Race. This year’s race was the 35th Annual and over 8,000 individuals participated. For the last 30 years the event has been staged by my old friend and high school classmate Chris Tatreau who has planned and directed marathon-length and lesser distance races all over the United States.

While major road-race planning is how he keeps his body and soul together, he has long been a savvy real estate investor and when I bought my first house as a 31 year-old bachelor, I sought his counsel on the purchase. And 33 years later, I still remember this advice.

After going through the house, a row home in an area of the city that was home to a lively mix of blue collar workers, cops, firemen, corporate executives, professionals, judges and the future Pennsylvania Governor Ed Rendell, he asked me what the asking price was. I told him “twenty-nine, five” and asked him if he thought I should offer “twenty-eight.”
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Answering The Mail

Recently, I’ve been re-publishing some posts from the archive on LinkedIn and facebook on the theory that many inspectors may never have seen the original posts. It turns out that it was a good idea, at least to judge from the tremendous uptick in the number of unique visitors that the site is attracting since then and the number of retweets and comments those archival posts have engendered.

Doug Zumach, commenting on Monday’s The Kamikaze Claimant post, asked “Joe: Won’t the inspector’s E & O premium rise for defending this case? Might it not be more cost efficient to have someone like you defend this?”

That’s a very good question that implicates one of the two major issues that home inspectors tell me concern them the most: the epic tone deafness of the insurance industry when it comes to responding to the overwhelming percentage of unmeritorious claims that plague the home inspection profession.

When an inspector receives an inquiry from a former client regarding a putative issue with an inspection, he never knows whether it will escalate into a fully-formed claim. That is how the Kamikaze Claim started out. When the inspector went back to investigate the claim, he learned that the roofing contractor had filled the client’s head with a lot of nonsense about what was causing the leaks, their provenance and the ineptitude of the inspector in failing to discover and report them.
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Destiny and Second Acts

Years ago, when I was a member of a boutique litigation firm in Philadelphia, my partners and I would often ponder the question “How did we get this case?” What led this client to choose this law firm for this legal matter? Not infrequently that inquiry would lead to a surprising answer. The true origin would often turn out to be several degrees removed. The prospect had been referred by an existing client who had, in turn, been referred by another client and so on. It was truly remarkable how frequently a huge and lucrative legal engagement could be traced back to a minor favor performed for a person in need.

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Seller Isn’t Trying to Point Out Material Issues

My most recent post prompted a question on the LinkedIn ASHI Group Discussion Board from a Massachusetts Home Inspector who wanted to know whether a home inspector could rely on the information provided in the seller’s disclosures or on responses provided by either the seller or the seller’s representative to specific questions about the property.

I guess the easy answer is that, if seller’s disclosures were reliable, there would be no need for home inspections. And a seller’s disclosures could be unreliable for reasons that are completely unrelated to any skullduggery on his part, to his desire to hoodwink or inveigle a buyer. As an example, I have lived in my house for 24 years. If someone asked me what’s wrong with my house, I would have to say “I couldn’t tell you.”

Since I have no intention of selling the house, at least not before the Singularity occurs, issues that might be of considerable concern to a potential buyer never enter my head. And I imagine that most homeowners are as oblivious as I am of these matters and, thus, represent a huge market for pre-listing inspections.
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Wait, Wait, Don’t Tell Me

There’s a memorable scene in the Coen Brothers film Blood Simple where a character named Marty played by Dan Hedeya is trying to hire a private investigator played by Emmett Walsh to kill both his unfaithful wife and her lover. But Marty keeps beating around the bush about the nature of the engagement. Finally, Emmett Walsh drawls “Can you tell me what you want me to do or is it a secret?”

I am constantly being reminded of that scene whenever I read demand letters from attorneys that fail to make even a pretense of articulating any sort of legal theory of liability upon which a claim against the home inspector could possibly be based. You would be surprised how often that happens. In my experience, about fifteen percent of the time.

Recently, a home inspector in New England contacted me after having received a number of letters from an attorney over an inspection that he had conducted on a colonial era home. While the letters all seek damages in the low five figures, not a single one of them lets on what the inspector missed or what needs to be repaired. Just a demand for money.
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A Nation Of Gavones!

Once upon a time I had a paralegal who had been born in Italy but had come to America when she was a nine- or ten-year-old child. She had an Italian last name but was a totally assimilated American who spoke English fluently and unaccented. The only time she spoke Italian was when she spoke to her mother.

Since I had grown up in a neighborhood that comprised first-generation Irish, Germans and Italians, I gained an early appreciation of other cultures and took a particular shine to the Italian culture, its cuisine and language.
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Welcome To My World Redux

My last post prompted this response from a Florida Home Inspector:

Joe –

I also experience a claim wherein a buyer, who just so happened to be a litigation attorney, stated that there were damages to the roof in a specific location in the house he had just purchased, which we inspected.

He demanded that he be provided with our insurance company, policy #, phone number, and address of same. Did not want a phone call, a visit from us, or to discuss the matter whatsoever.

We had perfectly described the roof leak at the home he was purchasing, taken adequate photos and put them in the report, as well as described the faults to his face when he was there for the walkthrough at the end of the home inspection. We covered ourselves by putting in the disclaimers, some provided by InterNachi lawyers, and some we have put in over the years, something to the effect of “recommend further evaluation by State of Florida licensed roofing contractor”, etc.
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Welcome To My World

A home inspector whom I have known for a couple of years came up to me at Ken Compton’s recent Workshop in Naples, Florida and said “I have to run something by you.”

He had gotten a demand letter from a local attorney seeking damages for alleged failure to detect mold. Not surprisingly, the underlying facts are ridiculous. Leaving aside for the moment the fact that mold detection is excluded from every extant industry Standard of Practice and was not part of this inspection, the mold was discovered only after destructive probing secondary to some remodeling that the claimants were undertaking.

The inspector tried to explain to the claimants’ attorney why there was no case but was unsuccessful in doing so and subsequently reported the matter to his insurance company which appointed a local law firm that specializes in insurance defense to represent the inspector.
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Comment Sense

A recent republication of an archival post about why home inspection claims always fail prompted this comment from Iowa home inspector John Mauch.

So, why should we carry insurance? Fortunately I have not had a claim and know several inspectors [who do not] carry insurance for the reasons you already stated.

While most claims against home inspectors – and by “most”, I mean 99 percent – have no validity, they still need to be defended. If no suit has been filed, I can generally – 97 percent of the time – get rid of the claim with a responsive letter that compellingly outlines all the reasons why the claim is not valid and why it would be foolish for the claimant to pursue it.

But there are a substantial number of cases that begin life as a lawsuit. That is, there has been no prior indication that there was even a problem with the inspection. With those cases, I have only been successful at terminating them about half of the time and it can take weeks, even months before plaintiff’s counsel eventually files a voluntary dismissal.
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