06-18-2007, 11:43 AM
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Member
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Join Date: Mar 2007
Location: Houston, Texas
Posts: 216
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Re: Ethics and engineers
Originally Posted by Thom Walker
Phillip,
The form is attached. I think it says exactly what I said. Help me understand where I'm missing something, please. I'm talking about disclosure. No one is talking about illegal referrals. Whether this ethically challenged engineer is breaking the law is for detrmination by someone else.
Obviously I am not an attorney but I will try and explain what I have been told by attorneys in the past. I also do not officially speak for TREC so keep that in mind as well!
The Inspector Committee talked to the TREC attorneys about form REI 7B-0 back when the ethics for inspectors were being re-written. We had received an opinion from a RESPA attorney who pointed out that the form seemed to lend legitimacy to "transactions" that were potentially illegal under RESPA laws.
TREC pointed out that there are legitimate and legal uses for the form. The form is intended to inform the public about transactions that might otherwise be hidden yet legally going on around the home purchase transaction.
The most notable example of a legal use of the form would be to disclose the fee some inspectors receive when using the Brinks alarm inspection service. In this transaction, Brinks is not considered to be a "settlement service provider" per RESPA because their service is free to the public and the public is under no obligation to do business with Brinks thereafter. If the buyer ever establishes a working relationship with Brinks, it will only be after the closing when the sales transactions has already settled through escrow.
In terms of RESPA, violations generally occur between "settlement service providers". Even still, legal transactions can take place between "settlement service providers" as along as a legitimate service is provided by all parties to justify the fees being paid and charged back to the consumer.
For example, if you as an inspector hired a pool company to do an inspection for your client and you paid the pool company directly and added the charges to your own invoice, that would be a legitimate sub-contractor arrangement and would require disclosure to the buyer via REI 7B-0 on the amount you paid the pool contractor for his part of the provided services. (Granted, this kind of arrangement might not be a wise thing to do for other reasons…but that's another topic.)
From TREC's perspective, any time money (or other valuable considerations) change hands during a transaction between other parties, disclosure via form REI 7B-0 is required. What the form does not do is legalize an otherwise potentially illegal transaction just because the form was used to disclose the transaction. That was the point I was trying to make and perhaps I misunderstood your original point. I assumed you were of the opinion that using the form would make everything "OK" when engaging in an otherwise illegal transaction. I see that I was wrong in my hasty assumption?
I have been told that home inspectors are indeed considered to be "settlement service providers" and we do fall under RESPA laws. This would include our engineer friends who inspect homes for home buyers and sellers. TREC however does not regulate engineers who do home inspections working under their PE license and they would fall under the auspice of the Board of Engineers here in Texas and their particular ethics rules. All inspectors across the country (engineer or not) who get involved in real estate transactions however do fall under the Federal RESPA rules!
Now, a TREC inspector who received a referral fee from our engineer friend here would fall under TREC rules and would be required to report to his client that he received a $75 fee from the engineer he referred on REI 7B-0. Not disclosing that fee would potentially get that inspector in trouble with TREC. Disclosing a fee of that nature should get that inspector in trouble with his client, and might eventually even get him into trouble with RESPA depending on all of the circumstances!
Personally, I would not touch that $75 referral fee (or the engineer offering it) with a 10 foot pole so having to disclose anything becomes a mute point for me! I believe you and I are both in agreement on that score?
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