6 Ways to Lower Your Risk Profile
6 WAYS TO LOWER YOUR RISK PROFILE
By Joe Ferry
The most frequent cause of a home inspection claim is a bad result. An unexpected problem develops some time after the inspection: a roof leak develops
following a major storm, a foul odor begins to emanate from a drain, water seeps into the basement, the HVAC malfunctions.
Notice that I did not say that the most frequent cause of a home inspection claim is inspector negligence. In fact, that is almost never the case.
In my experience, the home inspector was truly negligent in less than one percent of the claims.
The following is a prototypical case. The inspection takes place in August of 2008. Because the outside temperature is in the 90s, the inspector could only
test the heat pump’s cooling feature, which was satisfactory. In the report, the inspector advised his clients that the device was operational but
cautioned them that heat pumps are delicate flowers that require regular maintenance and advised them to have the unit serviced before closing and
annually, thereafter.
The client closed on the house and took possession in mid-October. Two months later, on Friday, December 19, 2008, the entire northeast section of the
country was walloped by an epic storm that dumped thirty-some inches of snow over an area stretching from the nation’s capital to Nova Scotia. And that was
the very day that this inspector’s clients’ heat pump decided to stop working. A bad result, four months after the inspection.
Since no one wants to be in a house without heat during an epic snowstorm, the clients retreated to a nearby hotel to wait out the storm. The following
Monday, after the storm had passed and the municipalities had cleared the streets, the clients called in a repairman.
You don’t have to be Buckminster Fuller to guess what happened next.
The repairman proceeded to throw the home inspector under the bus. Then, notwithstanding that it had never entered the clients’ minds that the home
inspector bore any responsibility for the breakdown of the heat pump, now that the repairman has planted that thought in their heads, they can’t get it
out. Shortly thereafter, they contacted the home inspector and wondered what he intended to do about it.
6 Ways to Lower Your Risk Profile
That is a fact pattern that is all too familiar to me. And one that it is impossible to protect against because it is the modus operandi of
virtually every roofer, electrician, plumber, HVAC technician, butcher, baker and candlestick maker that a home inspection client happens to consult about
a bad result. But while it is impossible to prevent tradesmen from underbussing you, it is possible to minimize their chances of succeeding if you
implement the following six techniques.
1. Manage Clients’ Expectations
First, you must thoroughly manage your clients’ expectations. Most laymen have no idea what a professional home inspection entails. That’s the bad news.
The really bad news is that, to the extent that they do have an idea, it is by and large a preposterously unrealistic one. Some of them think that you are
going to take the house apart and put it back together again; that you are going to tell them not only what is currently wrong with the house but
everything that has ever been wrong with it and everything that will be wrong with it in the future. Since you are not going to do that, you have to
disabuse them of that notion by taking the time to align their expectations with reality.
2. Present Professional Pre-Inspection Agreement
Second, you have to have a strong, well-written, easily understandable pre-inspection agreement that incorporates reasonable protections. The most
charitable characterization that I can give an extraordinarily large percentage of the pre-inspection agreements that I see in my practice is that they are
inadequate. Often, in the extreme. If they are not ponderous, they are skimpy. If not full of typographical, spelling, grammatical and syntactical errors,
they are internally inconsistent. A provision on page two of the agreement directly contradicts a provision on page one.
Leaving aside the unprofessionalism that this evinces, poorly written pre-inspection agreements can be very difficult to enforce.
3. Follow Standards of Practice
Third, you have to follow your Standards of Practice (“SOP”). The SOP limits your liability to issues that are both extant at the time of the
inspection and within the SOP. Underground pipes? Sorry. Code violations. Unh-uh. Toxic substances. No, no, no, no.
4. Conduct Professional Inspection
Fourth, you have to conduct a professional inspection. You have to do the sort of inspection that you are capable of doing by reason of your knowledge,
training and experience. That is something you probably could have figured out for yourself, I know. And as my experience conclusively demonstrates, home
inspectors seldom conduct a negligent inspection.
5. Present Appropriate Disclaimers
Fifth, you have to disclaim appropriately. Disclaimers come in two flavors: general and specific. General disclaimers are true of every property and
ones that are idiosyncratic to this property. You need not concern yourself with general disclaimers because your SOP performs that task better than you
could ever do. Specific disclaimers, on the other hand, have to be hammered home.
The roof was covered by ice and snow. Consequently, all bets are off on the roof. The crawlspace was full of standing water or did not have sufficient
clearance. Therefore, the inspector is unable to report on potential issues therein. The basement was finished; therefore, any issues existing
behind, below or above the finishing cannot be reported.
I am sometimes asked if it is possible to have too many disclaimers. Short answer: no. Look at all the disclaimers that you are bombarded with every day. I
am especially fond of the drug disclaimers that seem to consume about half of the commercial. May be habit-forming. Don’t take this, if you’re taking that.
May cause sudden drop in blood pressure.
6. Establish Defense of Contributory Negligence
Finally, you have to establish the killer defense of Contributory Negligence. Contributory Negligence is a common law doctrine that simply states that if
the plaintiff contributes in any respect to his own injuries, he cannot recover from the defendant. Thus, if the defendant is ninety-nine percent at fault
and the plaintiff is one percent at fault, the plaintiff loses.
That is a pretty harsh result for a plaintiff who has been seriously injured in, say, an automobile accident and who may have been partially at fault
himself. And because it is such a harsh doctrine, legislatures in 46 of the 51 jurisdictions in America have moderated the harshness of the doctrine by
enacting Comparative Negligence statutes that apportion fault between the plaintiff and the defendant. In four states and the District of Columbia, the
Contributory Negligence Doctrine still obtains.
Under these statutes, as long as the plaintiff contributed no more than fifty percent to his own injuries, he is not shut out. He would still get a damage
award but it would be reduced by the percentage of fault that is attributed to him. Thus, a verdict that would have been $100,000 had the plaintiff not
been negligent at all would be reduced to $70,000 if the jury found him to be thirty percent contributorily negligent.
What is interesting about these Comparative Negligence statutes from a home inspector’s perspective is that, in the majority of jurisdictions that have
enacted such laws, they only apply to cases involving bodily injury and/or property damage, two losses that a professionally negligent home inspection
never causes.
The only loss that a professionally negligent home inspection can ever cause is an economic loss. A failure to discover a material defect that should have
been discovered that is, a deficiency that was within the SOP, was not concealed, was not disclaimed, was not working and was not reported as such prevents
the client from negotiating concessions from the seller. The client paid more for the house than he might have had the inspector discovered and reported
the defect. That is an economic loss. And any negligence whatsoever on the client’s part would prevent him from prevailing in a lawsuit.
Thus, as frequently happens, an inspector may have to disclaim responsibility for potential defects due to inaccessibility. If the inspector, then, advises
the client to seek further assurances from the sellers that there was no history of issues with areas or systems not inspected and/or to seek further
investigation of those areas and/or systems by a qualified electrician, roofer, plumber, structural engineer or other professional and the client fails to
do so, that is unreasonable conduct on the client’s part in light of the inspector’s report and would bar all recovery from the inspector pursuant to the
Contributory Negligence doctrine.
So if you manage your clients’ expectations, have a strong, well-written pre-inspection agreement, follow your SOP, conduct a professional inspection,
disclaim appropriately and establish The Killer Defense, it will be virtually impossible for a professional negligence claim to succeed
against you.
BIO OF JOE FERRY
Joe Ferry, The Home Inspector Lawyer, discovered that professional home inspectors across the country did not have anyone covering their back against
meritless claims. To defend competent home inspectors from the avalanche of reckless pursuits against them, he created ClaimInterceptTM, a
strategic defense response to the potential E&O claims initiated by threatening demand letters from former homeowners and their attorneys. A lawyer of
27-plus-years, an educator, public speaker and home inspector advocate, Joe Ferry’s mission is to stop the UNDERBUSSING of competent home inspectors. Join
his free video tips series and learn more about ClaimIntercept at his website. www.JoeFerry.com.
To Read the Full Article
ASHI offers its members unparalleled resources to advance their careers. ASHI offers training for inspectors at all levels of knowledge and experience, including resources about all major home systems. Members benefit from a vast network of experienced professionals, providing a community for mentorship and knowledge sharing..
In this Issue
FIND A HOME
INSPECTOR
Professional Networking
Grow your professional network, find a mentor, network with the best, and best part of the community that’s making home inspection better every day.
