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The Boundaries Of Inspector Liability
By Barry Stone
Saturday, August 31, 2002; Page H08
Question: DEAR BARRY: As a new home inspector, I've had some complaints from clients who discovered problems after they moved into their houses. Sometimes, their demands seem reasonable, but other times they do not. I need to establish some guidelines for professional liability and am wondering what you would advise. -- Kevin

Answer: DEAR KEVIN: As you are discovering, liability for undisclosed defects is the most challenging aspect of the home inspection business.

One of the main issue is uncertainty over fair vs. unfair liability. Fair liability occurs when a home inspector was negligent in the course of an inspection. Unfair liability occurs when a home inspector was not negligent and yet is being pursued. Both of these situations are common.

There are three types of circumstances for which home inspectors are rightfully and reasonably liable:

• Apparent defects missed by the inspector. These are conditions that were visibly identifiable and were not concealed in any significant way, yet were not seen or reported by the inspector.
• Defects within the scope of the inspection. These are accessible conditions that are specified in the standards of practice of the various national and state home inspector associations or that are required by established laws in those states that license or regulate home inspectors.
• Damages caused by inspector carelessness. Examples of this are many: An inspector breaks a vase, damages a tile roof, forgets to turn off the oven, overflows a second-floor bathtub, cracks a window, turns off the power to the meat freezer, falls through the ceiling while inspecting the attic, drops a flashlight on someone's head, tracks mud onto the new carpet, lets the parrot out of its cage, etc.
• In all these circumstances, as unpleasant as the consequences may be, home inspectors must step up to the plate and assume responsibility. It is the painful acid test of integrity that most home inspectors eventually must face.

Unfortunately, there are also times when home inspectors are held to the fire for defects not defined by established standards and not observable at the time of inspection. Examples of unfair claims and frivolous litigation abound. For instance:

• After buying a house, the buyer hires a contractor to remodel it. The contractor opens some walls and finds plumbing or electrical problems that were not reported by the home inspector. The inspector could not possibly have found these defects, but to the buyer's lawyer, that is irrelevant and immaterial.
• The home inspection occurs during dry summer weather. After the sale, winter rains cause flooding below the building, or leaking around the windows, or wetness inside the fireplace. The seller had masked all symptoms of past water problems, preventing the home inspector from detecting these conditions. The inspector could not have known, but so what? Someone has to pay for waterproofing the house. It's not fair that the buyer should have to pay, so why not the inspector?
• In most states, termite damage and dry rot can be reported only by a licensed pest control operator, not a home inspector. In those states, there are laws that specifically forbid home inspectors from practicing such disclosure. Nevertheless, many home inspectors have been sued when undisclosed infestation was discovered after the sale.

The legal dramas that proceed from such claims have given rise to exhaustively detailed home inspection contracts, with fine print designed by lawyers to clarify which conditions are covered in a home inspection and which conditions are not.

Before hiring a home inspector, buyers should read these contracts carefully so that they understand the services the inspector actually provides, as well as which conditions are specifically excluded from the inspection.

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