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Who Inspects the Inspectors?
Maryland, Virginia Taking Steps to Professionalize an Uneven Field
By a Washington Post Staff Writer
Saturday, October 5, 2002; Page H01
Sandra Martin first noticed the smell just days after she moved into her house on Montello Avenue NE. She called a contractor who said it would probably go away. After all, he reminded her, the home inspector she hired when she bought the house had not uncovered any problems.

But the stench kept wafting from her downstairs bathroom, so Martin called Jim Delgado, a former D.C. building inspector who now owns a business inspecting private homes. When Delgado saw that the ground floor was rippling with moisture damage, he squeezed into the crawl space below and found a lake of sewage being fed by a broken toilet pipe.

Lauren Taylor knows all too well about unpleasant surprises in a house. On the rainy day she moved into her house in Silver Spring, the basement and roof began to leak, even though both had been examined by a home inspector before she completed the purchase. Over the next two years she spent $20,000 to get the house in shape.

Stories such as these about the consequences of shoddy home inspections have spawned calls to bring government regulation to an industry where the rules are loose and practitioners can range from experienced professionals to haphazard hacks. Only 20 states have regulations regarding home inspectors. Maryland and Virginia are instituting licensing procedures for home inspectors, but it may be a year or more before the new laws take effect and many are already saying they do not go far enough.

Right now in those two states and the District, there are no formal regulations, so virtually anyone can go into the business. The result, Delgado said, is that "your inspector could be someone who knows everything there is to know, or he could be Joe Blow who took a weekend course. The problem is, you don't know."

A home inspection is supposed to offer peace of mind to the home buyer. Inspectors, hired just before a sale is finalized, examine a house's structure and the condition of mechanical systems such as electricity, plumbing and heating. A thorough inspection usually takes two or three hours and costs $200 to $400. Because home sales can be contingent upon the results, the problems an inspector discovers often are haggled over by the buyer and seller to determine a final sale price.

As the horror stories illustrate, it is the undiscovered problems that are most costly and have led to appeals for higher standards. "Regulation and licensing could help create a minimum level of quality," said Rick Titus, an investigator with the Montgomery County Division of Consumer Affairs. "This is the biggest investment most people will make in their lives and they need some assurance that the inspection will be done right."

Almost all of the inspectors contacted for this story said they favored further regulation in the industry. Larry Wasson, an inspector based in Chevy Chase, said there are too many unqualified people passing themselves off as home inspectors.

"I tried to hire an inspector to join my business a few years back", he said. "I got 114 applications, and I gave them all a written test. Six people passed. Most of the ones who failed were already working as inspectors, but they didn't even know the basics."

Maryland passed a law last year that will require home inspectors to have a high school or equivalency degree, complete an approved course at least 48 hours long, and obtain $50,000 in general liability insurance, which protects inspectors in case they cause property damage or injure anyone during the course of an inspection.

Those requirements were scheduled to take effect in July, but funding for the commission charged with overseeing the process was cut for this year by the state General Assembly. Because the commission needs about $10,000 for administrative fees and for printing licenses, the law will not be enforced until sometime in 2003, if the funding comes through, said J.D. Grewell, a home inspector in Silver Spring and commission member.

Grewell and others in the industry are already questioning whether the new law is stringent enough. It "grandfathered" in home inspectors who were members of a national association or had conducted 100 inspections as of July 2. Those provisions are actually more demanding than the new ones, which include no membership requirement or minimum number of inspections.

"It's not as strict as I hoped for, so we'll see what happens when the 48-hour wonders get out there", said Grewell, who added that he thinks that the law should have at least included a requirement that inspectors pass an examination.

Virginia is implementing a certification program for home inspectors. The requirements will be finalized sometime before the law takes effect next July, according to David Dick, the assistant director of the Department of Professional and Occupational Regulations. The guidelines being considered include some minimal educational standards and would require an inspector to pass a written examination and acquire $250,000 in liability insurance.

Certification will not be mandatory, so only home inspectors who wish to describe themselves as certified must meet the standards. Inspectors who wish to conduct inspections in multiple states would need to meet each state's requirements.

Meanwhile, in the District there appears to be no regulations or licensing requirements specific to home inspectors currently in the works. "No one is really paying any attention to it in D.C., but they should be if they don't want to see unsatisfied customers", Grewell said.

By most accounts, customers are largely satisfied with the service they are getting. According to the American Society of Home Inspectors, the oldest and largest of the industry trade groups, there were 4.9 million home inspections conducted in the United States in 2000, the most recent year for which numbers are available, involving 77 percent of all home sales. Of those, ASHI found, 97 percent of customers thought that their inspection had been a good value for the money.

Last year the Better Business Bureau of Metro Washington, D.C, and Eastern Pennsylvania received 29 complaints regarding home inspectors in the metropolitan area. The Montgomery County Division of Consumer Affairs receives far fewer complaints about home inspectors than about repairmen, contractors and a host of other groups.

Lawyer Karen Bonnin of Rockville said she recognizes that home inspectors sometimes make mistakes -- she has given legal advice to a few of them. More commonly, she said, inspectors are unfairly accused of missing problems that are beyond the scope of their service. Her favorite example: a Maryland couple who bought a 150-year-old house a few years ago and were shocked to find antiquated plumbing and wiring inside the walls.

Chuck Blixt, a home inspector in St. Paul, Minn., and a former president of the National Association of Home Inspectors, said a customer once demanded $22,000 from him to repair hail damage to a roof. Blixt had inspected the home in January, and the damage was not found until April, after four months of winter storms.

Bonnin said disputes often arise because customers misunderstand or misinterpret what an inspection should provide. In the absence of regulation, the guidelines for proper inspections have been left to the national home inspector trade associations, such as the ASHI and the NAHI. The ASHI requires members to pass the rigorous National Home Inspectors Exam; the NAHI has different tiers of membership, some of which require an examination and others that only call for a membership fee.

The two have similar codes of conduct for how inspections should be conducted, and for what inspections are not required to uncover. For example, inspectors need not check for termites, building code violations, environmental toxins such as radon, or anything located in areas of the house that are not "readily accessible".

The two groups also publish ethical guidelines that seek to prevent conflicts of interest, such as inspectors offering to repair the problems they discover.

While many states that regulate home inspectors base their requirements on ASHI and NAHI guidelines, some inspectors think that those are too low. "The ASHI code of conduct is a good starting point", Delgado said. "But I think it gives inspectors too many loopholes to avoid finding hidden problems. It's easy to say that something was 'inaccessible,' or to ignore flagrant code violations because it's not in your job description."

The ASHI and the NAHI disagree on the issue of government regulation. NAHI President Ralph Wirth, whose organization seeks to advocate the interests of smaller, up-and-coming home inspectors, said the NAHI opposes regulation because it serves the interests of established inspectors by restricting access to the industry. "Besides", he said, "most people are happy with the job we do".

The ASHI, which was initially ambivalent toward the idea of regulation, is now in favor of it. "We're for almost anything that will offer the home buyer more protection", ASHI President Michael Casey of Haymarket said. "The problem with leaving these things solely up to us to regulate is that we can only take actions in regards to our members."

The coming legislation will not solve everything, however. One area of concern that some in the industry think should have been addressed is the complex relationship between inspectors and the real estate agents from whom they receive referrals. Some inspectors say their colleagues who rely on agents for their business can be more likely to overlook problems, because when they disrupt a sale, they can develop a reputation as a "deal killer" and lose future referrals.

"I've had realtors threaten me and tell me that I have to learn how to play the game", Delgado said. "I could make a lot more money if I did, but you have to decide whose side you're on."

The ASHI's Casey said buyers should get referrals from a fellow customer rather than a real estate agent because "it's better to get the recommendation from someone who doesn't have an interest in the deal".

Grewell agrees, and said some inspectors even pay agents for the referrals they receive, a practice he thinks should be illegal.

When Kate Sylvester bought her house on Capitol Hill last June, she had to hurry to fit in a home inspection because there were two other eager potential buyers. Rather than shop around, she hired an inspector referred to her by her real estate agent. Two weeks after moving in, she discovered that her rubber roof had been coated with asphalt sealer, which causes the rubber to degrade. The inspector had never mentioned it. A roofer's repair estimate: $12,800.

"The temptation is always there to whitewash or softball an inspection", said Gary Mummert, a home inspector with Faro Systems in Silver Spring. "We're only human and no one wants to lose future referrals. But that's no way to run a business, and if people are unhappy you could end up in court."

Cases involving home inspectors rarely result in litigation, but both inspectors and lawyers who have worked on such cases believe that regulation could help clarify the legal guidelines for inspector liability. To protect themselves from potentially damaging lawsuits, most home inspectors require customers to sign an agreement that limits the inspector's liability to the fee paid. This can often be a source of frustration to customers when something that was not disclosed in the inspection goes wrong and the repair costs are large.

Elisa Infante moved into a newly inspected house in Anne Arundel County last year and found black mold all over her basement because of leaks in a poorly installed hot tub. She believed the inspector was at fault, but because she had signed a limited-liability contract, she decided not to sue. She ended up paying thousands of dollars out of pocket to repair the basement.

"If I had known how much it would cost, I would have asked for a concession on the sale price", Infante said. "I don't know how he missed some of the things he missed."

Opinions differ over whether limited-liability clauses are appropriate. "These people are supposed to be professionals, so they should get 'errors and omissions' insurance, like other professionals do", said Beau Brincefield, a lawyer in Alexandria who has advised home buyers with complaints about inspectors. "I think any new laws on this should not allow these provisions and my recommendation is that if the inspector won't remove the limited-liability clause, you should get another inspector."

Errors and omissions insurance, which covers inspectors' legal costs and penalties if they are taken to court, can be difficult to find and can cost up to $4,000 per year, even before an inspector has filed a claim. If a claim is made the price tag can go up to $7,000 a year. "For what inspectors charge, they can't be expected to be liable for everything that can go wrong in a house", Bonnin said. "Expectations are often way too high. If people don't like the terms, they shouldn't get an inspection."

The bottom line is that no regulations will guarantee that a home inspection is done right, so inspectors offer some basic tips to help buyers protect themselves. Before the inspection, check the credentials of the inspector you hire and only accept referrals from someone you trust. You should familiarize yourself with the guidelines for a proper inspection (versions are available at www.ashi.com or www.nahi.org), and also establish with the inspector, in writing and in advance, the level of liability the inspector has in the case of a dispute. Some inspectors may be willing to waive the limited-liability requirement or agree instead to a higher cap, should they make a mistake. Finally, if possible, accompany your inspector during the tour through the house, to make sure the job is carried out correctly.