The ASHI Code of Ethics Committee is charged with answering Requests for Interpretation (RFI) of our Code of Ethics. The response to this month’s first question required defining compensation. When professionals trade referrals are they providing reciprocal compensation? While a strict reading of the Code might call for the answer “yes,” the committee decided there was little potential for harm to the public from these referrals. The second question is more complex, but, in simple terms, raises the question of conflict of interest or of the appearance of compromised independence, objectivity or integrity.
In each Focus on Ethics article, we present questions and responses based on the revised Code of Ethics. The membership is encouraged to submit RFIs to the committee when serious questions about the intent and applicability of the Code arise. The request form is available on the ASHI Extranet under Downloads & Forms – ASHI Documents & Forms.—Keith A. Oberg, Chair 2006 ASHI Code of Ethics CommitteeRequest for interpretationTip club
Is it a conflict of interest to join a referral network or tip club? Members meet once a week and are encouraged to refer each other. Can I refer the Realtor® or carpenter member?Response
In and of itself, belonging to a tip club is not a violation of the Code of Ethics. However, if recommending or receiving referrals is dependent on reciprocal referrals, they could be perceived to represent a form of payment or compensation. It is a violation of the Code to accept compensation for recommending contractors or services to our clients, or to pay compensation for receiving referrals from realty agents. Therefore, the inspector should be cautious about the potential for a conflict of interest to arise, and should ensure that the interest of the client is not compromised when making or receiving such referrals.Request for interpretationPest Control Company/Home Inspection Company
Can we own a pest control company and home inspection company? Can our home inspection company recommend our pest control company? Response
Owning more than one company does not violate the Code of Ethics. It is also not a
violation of the Code of Ethics for the inspector to recommend a pest control company for inspection purposes, whether owned by the home inspector or not. But, it is a wise ethical practice to disclose to all appropriate parties that the pest control company is under the same ownership.
Performing remediation by the inspector’s company, or recommending the remediation services of the home inspector’s pest control company, based on home inspection findings, is a violation of the Code. The Code states, in part, that, “Inspectors shall avoid conflicts of interest or activities that compromise, or appear to compromise, professional independence, objectivity, or inspection integrity.” It could clearly compromise inspection integrity to profit from the discovery of defects. Please note that the Code of Ethics does allow the home inspector to recommend a repair contractor as long as there is no financial incentive to do so.