What do you do When Someone “sells” Your Report?

by Randy West February 1, 2015

This has happened to all home inspectors. You complete a home inspection and report for Buyer A. A month later you get a call from Buyer B. Buyer A did not buy the home, and someone provided Buyer B with a copy of your report. Buyer B has some questions for you. 

We all handle this call differently. I will answer a few basic questions, but I explain to Buyer B that I have no contractual obligation with him and that conditions at a home can change rapidly. I also advise him to get his own inspection, and sometimes offer a 10% discount since the inspection and report should take less time. Often he orders the inspection. Sometimes he orders an inspection on a different home later, because I was helpful on the phone. 

Once I gave my usual response to the phone call from Buyer B. He said I had to answer his questions because he paid $200 for my report (1/2 price). Buyer B now assumed he had an inspection report that was “his” because he “bought” the report. He was very upset when I told him that I had no obligations to him. He had no Inspection Agreement with me, he did not pay me, and his name was not on the report. I answered a few questions for him, but told him he could not rely on that two month-old report, and I would not be available to answer further questions. 

Recently a local Realtor had “includes a recent home inspection report” in an advertisement for a home. I will admit this bothered me a little, so I took an “unofficial poll” of 10 long-term home inspectors. After describing the situation, including how I handle these calls, I asked the inspectors two questions. 

First: how do you handle the call from Buyer B with your report that was done for Buyer A? Most of them do what I do. After explaining they have no obligation or “relationship” with the new buyer, they will answer a few basic questions. Three inspectors said they would not answer any questions under these circumstances. This was not asked, but four inspectors said they would offer a discount if the last inspection was only a month or two ago. Two inspectors said they would never offer a discount. 

Second: I also asked if it would bother them to see their report ‘advertised’ to other people. Four said no, this is typical and unstoppable. three said yes it would bother them, but not a lot because they know it happens (I’m in this group). Two said they would contact the agent and politely ask her to stop, and one said he would contact the agent and not so politely ask her to stop. 

I discussed this with “Bob”, a local real estate attorney who has hired me as an expert witness. He said it would be very difficult to prevent a seller from handing out your report. Copyright infringement is hard to enforce or prove in this day and age, and you usually have to prove some type of financial loss. Copyright protection prevents you from copying information. It does not prevent you “giving” something away. The example Bob used is he buys a new Tom Clancy book for $40. After he reads it he gives it to me. Or he offers to sell it to me for $20, or I offer to pay him $20 for it. Either way, Tom Clancy does not make a dime off this. Once you buy a book, you can do anything you want with the actual book. If you make 30 copies of the book to sell, or copy a significant amount to use in your own book, that would be copyright infringement (and/or plagiarism). 

One of the gray areas here is the seller or listing Realtor do not sign (or likely even see) our Inspection Agreement. We can try to limit the use of the inspection report however we want by our clients. But our typical client is a home buyer, and the Arizona real estate purchase agreement requires the buyer to give a copy of the report to the seller. The seller is required to disclose any known conditions of the home to prospective buyers. So if a seller has to disclose what’s “in” the report, why not just give the buyer the report? 

We all have disclosures/disclaimers in our reports like “not technically exhaustive,” “visual only inspection,” or “conditions observed at the time of the inspection.” Bob recommends putting a disclaimer near the beginning of the report similar to this: 

“This inspection was performed for James Kirk on January 10, 2015. Under no circumstances should this report be relied on after 30 days (or use the date, e.g., February 10, 2015). This report is for the sole use of Mr. Kirk for this time period only. The inspector has no obligation to anyone other than Mr. Kirk and only for the specified time period.” 

Bob pointed out this disclosure would help limit the inspector’s liability. But it also alerts anyone who is not our client that we have no obligation to them, legal or otherwise, and that there is a time limit for this report. The 30 days, or whatever time limit you choose, has nothing to do with statutes of limitations imposed by a state or regulatory agency. It has to do with how long your report is “valid.” This is not unreasonable. Appraisals and septic system inspections performed for a real estate transaction have time limits. 

As far as a Realtor “advertising” that a home inspection report is available, she probably is not violating any laws. However, many actions are not “illegal” but not quite ethical, and Bob feels this falls into that category. Offering an inspection report to an interested buyer, or leaving it on the kitchen counter, is one thing. Announcing to the world a report is available is another. This might cause Buyer B to think he could rely on this report, since it was “advertised,” and may prevent him from having his own inspection or performing other due diligence. 

Disclaimer: I am not an attorney and wrote this column for informational purposes only. Regulations, rules and “standard operating procedures” will be different in your state and area. You should consult with a local attorney before revising your inspection agreement or report in any way.

Randy West owns Professional Building Consultants in Prescott, AZ, and has performed over 8000 home inspections. Randy has been writing a bi-monthly column in the Prescott Courier since 2005. He served on the Arizona Chapter Board of Directors for 10 years and currently serves on the Home Inspector Rules and Standards Committee for the Arizona Board of Technical Registration. Contact him at randywest2@gmail.com, www. inspectprescott.com. 


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