Are home inspectors really liable?
Q: In one of your columns, you listed the occupational downsides of home inspection as a career choice. Above all, you stressed the legal and financial liability of home inspectors and the likelihood of their being sued regardless of whether a mistake has been made.
If you think home inspectors are liable, you haven't seen the contracts that they use in my area. These contracts limit the inspector's liability to a mere refund of the inspection fee. And they mandate arbitration, rather than litigation, as a means of dispute resolution, with each side paying half the costs.
As a recent homebuyer with a valid complaint against a home inspector, I find the cost of arbitration to exceed the home repair costs in question. So how can you claim that home inspectors are at risk? I'd like to see you publish an answer to this question!
A: Here’s your answer to an excellent question.
The liability limitations in most home inspection contracts are numerous and have been the focus of ongoing complaints by consumers and real estate professionals for many years. But these limits are not as airtight as they may appear. They are at all times subject to judicial scrutiny.
Some courts have upheld them, while others have thrown them out. In California, for example, judges have rejected the clauses that limit a home inspector's liability to a refund of the inspection fee. As a result, many California inspectors now limit their liability to multiples of their fee, such as four or five times the amount charged.
In other states, such as Maryland and portions of Virginia, refund limits have been upheld by the courts when contracts are accepted and signed by the clients. If a home inspector is negligent, this can be damaging to unwary homebuyers. If buyers would refuse to accept these contracts, home inspectors would have to reconsider their liability clauses.
In some cases, judges and arbitrators consider the evidence before upholding or rejecting the liability limits in a particular situation. Contractual clauses are not engraved on tablets and do not have the force of law. Instead, they are the talking points on which courtroom arguments are based.
Convincing a judge or arbitrator to recognize the liability stanzas in a contract is time consuming and costly for everyone involved; for the inspector as well as the person making the complaint. For an inspector who is truly at fault, this can be a risky gamble.
Sooner or later, most home inspectors face claims and legal actions, regardless of the carefully sculptured words in their contracts, and regardless of whether they were truly at fault in the conduct of an inspection. Today’s business world has become a litigious battlefield, due in part to the “hired gun” mentality of many trial lawyers and to the self-centered societal view that someone is to blame whenever life takes an unpleasant turn.
For homebuyers, the best way to avoid legal conflict with a home inspector is to find an inspector with many years of experience and a solid reputation for thoroughness and reliability. Competent home inspectors also have liability clauses in their contracts, but a good inspector is far less likely to need them.
• Distributed by Action Coast Publishing. Questions to Barry Stone can be emailed to barry@housedetective.com.