Avoiding Litigation: What Some Attorneys See

Inspecting a property is a serious business, and also a litigious one! Inspectors are being sued at an alarming rate and commonly without just cause. The reasons for this are complicated. Most of us carry huge amounts of money in the deep pockets of our errors and omissions insurance, which makes us attractive targets. And, the sad truth is that a courthouse is not always a forum for justice, but a place in which huge sums of money can change hands. Unscrupulous people can file frivolous and even fraudulent lawsuits without any fear of being punished. And, they can usually count on insurance companies offering them money to simply go away. With nothing to lose, they are encouraged to sue and they do. It’s a disgrace!

But there are less obvious reasons why inspectors are sued, which are due to human nature. Many people who have a home inspected don’t know anything about houses. They don’t know why water comes out of a tap or what keeps a house warm in winter, and they really don’t want to know until something goes wrong. Then, they tend to remember the house was inspected; therefore, the inspector must somehow be responsible. And, when this happens, the truth can take many different forms. Let me illustrate by using pictures from a foundation crawlspace that I inspected recently.

In this picture, you’ll notice an abandoned metal duct with an asbestos paper wrap that could allow cold air and dust into the living space.

In this photo an overloaded electrical junction box is shown.

This photo shows the rusty trail of a drip-leak on a galvanized pipe.

That’s what I saw, but an attorney might see an open duct polluting the living space, with a known-carcinogen capable of causing lung cancer and an excruciatingly painful and lingering death; a criminally miswired open electrical junction box ready to arc and spark at any moment and burn the house down, with the occupants trapped inside; and a leaking pipe capable of promoting a whole colony of life-threatening biological organisms! And, of course, he or she may want you to believe these rather ordinary deficiencies have caused the client extreme emotional distress, undermined the client’s faith in humanity, and condemned the client to a lifetime of existential dread. But, it is possible to avoid litigation.

Most lawsuits arise from poor communication. The word itself comes from a Latin word that means, “to share,” and that’s what we inspectors should strive to do. Unfortunately, too many inspectors rely on their contracts and on the standards of practice for protection, but this is a mistake. Inspectors are generally sued for negligence, and rarely for breach of contract, which pretty much nullifies all standards and the legal mumbo-jumbo of most contracts. Let me give you an example from a case that was recently certified for publication by the Appellate Court of California.

An attorney and his wife made an offer on an old house, which the seller declined to accept when he learned that the buyer was an attorney. Nevertheless, under the threat of a lawsuit, the sellers sold them the house, with an appropriate disclosure about significant defects. Subsequently, the attorney and his wife developed what was alleged to be chronic respiratory ailments. After hiring specialists to test the air quality in the home and failing to discover any contaminants, they were able to locate an HVAC contractor who was willing to testify that the conditioned air was being contaminated by dust. So, what did the attorney do? He sued the inspector. If you want to read the case instead of relying on my jaundiced summary, the Los Angeles Superior Court case number is BC218733, but it will probably make you ill or angry. Could the lawsuit have been avoided? Yes, I believe it could. The inspector should have made sure that his report informed his clients about potential contaminants, reminded them that health is a deeply personal responsibility, and cautioned them to test the air quality and, if necessary, have the air ducts cleaned as a wise investment in environmental hygiene. This may sound like the type of verbiage that a specialist might include in a report, and if it is, so be it. Better to spend a few hours adding informative narratives to your report than weeks and months conferring with attorneys.

But, what other ways are there to avoid being sued? First of all, let’s agree that a negligent inspection is indefensible. But, what is a competent inspection, and can a generalist perform one? When I did my first inspection, my equipment consisted of paper check sheets that I’d compiled after lifting ideas from every report that I could get my hands on, two screwdrivers and an outlet tester, which I proudly showed to my wife. “What’s reverse polarity?” she asked me. “I don’t know,” I replied, “but it’s not good!” We still giggle when we remember that moment. Now, I’m a certified deal-killer, which isn’t true, but you know what I mean. I have my own narrative software program, a digital camera and several thousand dollars of sophisticated equipment, and the truth is I wouldn’t do an inspection without them. Of course, I’m well aware that a laser level is an engineering tool that could jeopardize my standing as a generalist, but I don’t wave it about for everyone to see, and I’m convinced that it has probably saved me from a couple of lawsuits. So, how do we avoid being sued? It’s by having the earnest desire to communicate or, in other words, the willingness to share. I’ll illustrate this with another story from the trenches.

An inspector was threatened with a lawsuit regarding alleged structural damage, which had been discovered in a 49-year-old house he had inspected several months earlier. When the inspector entered the house, he noticed the carpets had been removed, walls had been opened up, and an obviously extensive remodel was in progress. His once-friendly clients were cold and distant. They did condescend to point to an 1/8-inch crack in the slab and a 3/4-inch cold-joint separation that contoured the footing, and they called his attention to a musty odor. He attempted to render an opinion, but they were not interested. They already had the opinion of a so-called expert and the inflated estimate of repairing the slab. Two weeks later, he was sued for alleged negligence, but before the case went to court, his insurance carrier settled for $15,000. It cost the inspector his deductible, or $2,500.

You may be tempted to argue that the inspector couldn’t possibly have known about the condition of the slab beneath the carpet, and that the clients should have realized this because it is stipulated in the standards. That argument rests on the assumption that all legal decisions are fair and reasonable. In my opinion, many lawsuits involving inspectors, with whom I am familiar have made a mockery of justice. So how might this lawsuit have been avoided? The inspector could have communicated better. Instead of relying on his contract and on industry standards as a means of protection, he should have accepted the responsibility of educating his clients about the likelihood of cracks in a slab foundation. As regards the musty odor, anyone who removes carpets and opens up walls in an old house should expect to experience a musty odor, and the pungent smell of soil will certainly penetrate slab cracks, but the inspector should have realized that people are not necessarily rational. But even this minor complaint might have been avoided, which I’ll explain in a roundabout way.

I believe foundations, grading, drainage and moisture-related problems are the leading cause of lawsuits. For this reason, every report should include a description of an ideal site that has hard surfaces, roof gutters, area drains, soils that slope away from the residence, a significant difference in elevation between the exterior grade and the interior floors, and a disclaimer disavowing responsibility for any site that does not measure up to this ideal. My site evaluation begins with the blunt statement: “Water is destructive,” and goes on to explain how water can find its way into even the tiniest cracks. And, I’ve never had one client disagree.

The subject of avoiding litigation is obviously complicated, and would be best dealt with in a book and not in a short article like this. And, no doubt my views are overly simplistic, but I do believe that the answer lies in better communication. And, by that, I don’t mean adding the type of narratives to a report that are typically described as being boilerplate or disclaimers, but narratives that are truly intended to communicate indisputable facts. Justice follows truth, and there is nothing more disarming than the plain truth.