joe ferry

I am continuously astonished at the willingness of home inspectors to issue refunds to clients for the slightest home inspection claim that they make. Since these complaints virtually never have any validity, you do not have to be Buckminster Fuller to conclude that refunding fees to every unhappy client is a bad business model. And home inspectors complain to me about home inspector insurance companies paying out for bogus claims!

At least once a week, I have to talk a home inspector out of refunding his fee to a client who is making an unreasonable demand. Often all that is necessary to neutralize these complaints is to point out to the client – politely but firmly – that the issue that he is complaining about could not have been discovered by a limited non-invasive visual inspection.

Recently, I spoke with a home inspector client who had performed a home inspection for a client in June. In December, the region had experienced torrential rains accompanied by gale force winds. The client was complaining about water intrusion through the clapboard siding. He wanted to know how to respond to this ridiculous home inspection claim.
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I recently gave the home inspector training Law and Disorder seminar at the NACHI Wisconsin state chapter’s fall gathering. In the weeks following, a number of the inspectors who had attended the seminar contacted me to review their pre-inspection agreements.

A few of these agreements included a clause that required that all disputes that arose from the inspection be submitted to mediation. It was the first clause that I advised them to strike from their contracts.

Get your imperfect pre-inspection agreement perfected today!

Mediation is a terrible venue for disputes arising from a home inspection. Well, let me revise that statement. It is a wonderful place to be if you are the claimant. Not wonderful if you are the home inspector.
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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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