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  1. #1
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    Default Rules on Agents passing out report to 4th parties

    Do any of you from states outside of NC know of any laws your state may have against realtors giving your report to other parties when the deal goes bust. I have an agent who I inspected the property, the deal went bust, and then another party came along and she offered to give the new buyer my report" to save him money". Does anyone know of laws through your real estate commissions that prevent this. I spoke with NC real estate commissioner and she basically said that it was ok for them to do that as long as the realtor encouraged them to get their own inspection. How about you NC inspectors, Have your respective associations addressed this with anyone at the state level?

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  2. #2
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    Default Re: Rules on Agents passing out report to 4th parties

    In WI the report is only to be given to the client the inspection was performed for and only to another party with the clients approval. The HI can sell/give the same report to a third party but needs consent from all parties involved, which includes the original client. The report is the property of the client.

    I’m not an attorney, but would say, with a good argument, as a minimum, the realtor would have needed permission from the original client, since the report was paid by them and belongs to them, to give the report to someone else. In WI the realtor would only have a copy if the client gave them one or the HI was given permission to provide a copy.

    Not sure if it is worth while to stir the pot up, but you could ask the former client if they are allowing the report “they paid for” to be given out to potential homebuyers of this realtor.

    On the flip side, if the client did give permission, I don’t think there is much that can be done as it belongs to them.


  3. #3
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    Default Re: Rules on Agents passing out report to 4th parties

    Unless the agent had permission from the owner of the report (you and/or your client) to give the report to someone else, the agent committed theft.

    One time would be a misdemeanor, if you could prove multiple reports then it might be a felony - that would get their attention.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  4. #4
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    Default Re: Rules on Agents passing out report to 4th parties

    At least in my part of TN, the seller gets a copy of the report. While I don't give it to them, real estate contracts allow them to get the report. Its very common to pass it around and pass it forward. Honestly, its not really worth the effort it would take to fight it, and really, to what end?

    I have all over my report that no one has rights to it, etc. I still get a few calls a year for more info, or a re-inspections, etc, but I tell them that I will do ANOTHER inspection, at full price, but nothing else. They get nothing from me as far as explanations or details from the "stolen" report.

    I think it would be very hard to find an attorney to take the case to sue someone for giving the report out. First off, how was I harmed? Maybe I'm out an inspection fee, but thats not near enough money to get an attorney. I can't imagine any City Attorney wanting to prosecute someone for giving out the report without permission, even multiple times.

    Personally, I don't get my feelings hurt when someone takes a report I did for someone else. I got paid for the job, and maybe lost out on a second - MAYBE? My client's name is on every single page, and it says over and over that no one else can use the report. The person using it knows they are stealing it, but I think they just view it as their lucky day, somewhat akin to finding $400 in the parking lot.


  5. #5
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    Default Re: Rules on Agents passing out report to 4th parties

    I had this in the footer on every page in my reports to cover several things, including my report being used by a subsequent buyer (among other reasons): (bold is highlighting for this post)

    "Duplication of, use of, or reliance on this report in any way for any purpose whatsoever has the effect of agreeing to the terms and conditions as set forth in the Authorization and Contract for Services, included herewith as numbered pages 3 and 4 of the original report, which are included for the users review, please do so. Unauthorized duplication of, use of, or reliance on this report has the effect of all parties agreeing to hold harmless, individually, jointly, and/or otherwise, this inspector, the Company, their successors and assigns AND IS A VIOLATION OF FEDERAL COPYRIGHT LAWS."

    Besides, the theft (use by another) of one of my reports would be grand theft and a felony for just stealing the value of one report.

    [quote-Jack Feldmann]First off, how was I harmed? Maybe I'm out an inspection fee, but thats not near enough money to get an attorney.[/quote]

    How were you harmed? By the loss of the inspection fee, just as you said.

    Not near enough money to get an attorney? That is why I included this part: " ...
    if you could prove multiple reports then it might be a felony ... "

    If the agent does it ONCE ... there is nothing to indicate that the agent has not, nor will not, do it MULTIPLE times ... and it is that multiple times which could be the problem. But losing a few inspection fees is not the point, the point is to get their attention so that you can stop the practice ... and nothing gets their attention more than a letter from an attorney seeking "unspecified damages".


    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  6. #6
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    Default Re: Rules on Agents passing out report to 4th parties

    No such restriction in Illinois. Regulations only control how I distribute the report. Fact of life is that you're not going to stop such passing around of your reports and no way is it worth your time to pursue it. Look at it this way - if your handiwork is any good then there can be quite a benefit from more people seeing it. I've gotten work from people who were never party to one of my inspections but did see one of my reports - it was enough for them to want to use me.

    Eric Barker, ACI
    Lake Barrington, IL

  7. #7
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    Default Re: Rules on Agents passing out report to 4th parties

    Jerry
    Providing the report to a third party is not 'Theft' under rule of law and definition. An act or theft or larceny, whether Petty (Petit) Theft or Grand Theft (typically Misdemeanor Vs Felony) requires three acts to substantiate the crime: (i) Caption (holding/acquiring it against the will of the owner), (ii) Asportation (removal from the possession of the owner) and (iii) Intent to permanently deprive the owner of it. A Realtor, simply handing a copy of the report , to which the said Realtor has lawful right to as part of the transaction process to a third party, satisfies none of those requirements. No matter how many times the Realtor hands over a copy or copies of the report doesn't upgrade their activity to a Felony as the basic definition for theft has not been met in the first place. Unethical, perhaps but not criminal.

    You can make any argument you care to in an effort to support your position but I seriously doubt any prosecutor would even attempt to file charges for theft. Any language on your report may deter some report passing to a third party but that language still doesn't, nor could, meet nor supersede the State's criteria, no matter how well intentioned. At best the realtor's behavior may be actionable in Civil court but it's just not worth the cost or effort and they could face sanctions by their own Board.

    In many States, CA included, any report generated during the sales transaction becomes a Historical Document and should be available to all present and future parties involved. So handing over a report to an interested party, to which they may be entitled by statute, does not amount to criminal activity by any stretch. Unless...the particular State has a statue specifically forbidding passing on the report/document but in most real estate transactions where transparency is key, highly unlikely.


  8. #8
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    Default Re: Rules on Agents passing out report to 4th parties

    Ian,

    Quote Originally Posted by Ian Page View Post
    Providing the report to a third party ...
    They are not providing the report to a "third party", they are providing the report to a party which is not related to the report.

    Are you saying that I can take $10,000.00 from you and, being as I am a "third party" and you have not been affected and the money was not stolen?

    Where do you live?

    An act or theft or larceny, whether Petty (Petit) Theft or Grand Theft (typically Misdemeanor Vs Felony) requires three acts to substantiate the crime: (i) Caption (holding/acquiring it against the will of the owner), (ii) Asportation (removal from the possession of the owner) and (iii) Intent to permanently deprive the owner of it.
    And all three took place.

    A Realtor, simply handing a copy of the report , to which the said Realtor has lawful right to as part of the transaction process to a third party, ...
    Again, the agent is not giving it to a "third party", a third party would be the seller, the attorney involved in THAT transaction, another agent involved in THAT transaction, etc.

    You are confusing who a "third party" is - a new buyer is *not a party to the previous contract* and therefore cannot be a "third party" in the transaction for which the report is produced and given. A state can make it a law to violate those bounds, a state can make any law it wants, no matter how dumb the law is (many of which are still on the books in those states today) - to change that would require a court action and a judge ruling that such law is unlawful (this is done all the time), then it gets appealed if the losing party wishes to, then appealed, then to the state or US Supreme Court which makes a final ruling ... based on what is allowed by law.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  9. #9
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    Default Re: Rules on Agents passing out report to 4th parties

    Jerry,
    My average inspection fee is far below $10,000 (it's not even $1,000). It would be foolish for me to pay an attorney to write a letter that will likely not produce any money. If I did have an inspection fee of $10,000, it might be another issue, but I would still have to prove I was harmed.

    The person getting the report could have easily hired any one of the dozen or more inspectors in Knoxville. Hard to prove I would have the job locked in, just because I wrote a report.
    The person getting the report may not have bought the house.
    I have done many inspections where my client has a copy of a previous inspection report, but have hired me on their own. While they may looked at it, they still hired their own inspector.

    Writing a report on a house does not ensure that I will get all the inspections on that property. I don't even get a lock on doing the next inspection for my previous client.

    While it may be a "crime", no one is going to take it seriously as far as prosecution goes, or taking it to court.


  10. #10
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    Default Re: Rules on Agents passing out report to 4th parties

    Some points to ponder.
    1) If the buyers allows the Buyer's Agent to see the report then that Agent is obligated to pass negative information to anyone else that they represent. Either by state disclosure laws or by way of code offered by Realtor's.

    2) If the Seller's Agent is shown the report and there are anything in it that meets the rules of disclosure to others then they are obligated to share that information and should reference the source.

    3) If a Seller is shown the report and by it made aware of negative aspects to the property then under most state disclosure laws they have to inform of what they(Seller) know and should reference the source.

    Calf. as we have discussed makes the report a historical document that follows the property, so it is there for all to see. But I don't think that the Calf. rules make the HI liable for missed or non included items in a report perpetuity.

    I have said it before , Agents want not to be informed of any defects or problems with a property. That way ignorance becomes bliss and they are not ethically challenged when there is any question about the property.

    Agents may think that they are helping out the Buyer by passing a report along to another potential Buyer of a property, yet they may be actually be doing a great disservice to both the Buyer and the Agent themselves. If an Agent passes the report along and says "here rely on this for your purchasing decision" the Agent just put themselves on the hook for future liability.

    When an brokerage agency(company) get hit with a lawsuit for what one of their agents have done there may be a a higher level of concern for directing (educating/demanding) their agents not be involved in passing any report around.

    I would think that the HI's Contract and Report would(should) have a disclaimer that any reliance on the report by anyone other than the HI's client can not use any reliance on the report in any way and that the proffer(not HI) of that report is the one now accepting any and all liability for any statements made in the report. How menacing and definitive the wording may be what will give you relief an control of the report.

    In business the first course of action is to protect the business the second is to protect the customer, even from their own stupid actions if it is foreseeable (within reason).

    There have been court cases where Buyer's have relied on a HI's report that was not contracted for by the Buyer but by someone else, with the exception of a prelisting inspection. I think in all cases the HI has been not held liable if they had included wording that removes reliance by anyone other than their client who contracted for the inspection.

    In short I do not think in NC there will be a recourse until the law suite hits the fan and agents and brokerages look to protect themselves. Self preservation is a great motivator to do the right thing. Else the agents will work at any angle or edge they perceive may be of benefit to the agent.

    You or your attorney, might put the fear of God into them by sending a letter of notice making the agent & broker liable for any representation included in the report that they are passing around past, present and future. Also notifying them that the notice will cover all future reports that you produce that they may have any type of access.


  11. #11
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jack Feldmann View Post
    While it may be a "crime", no one is going to take it seriously as far as prosecution goes, or taking it to court.
    Jack,

    We're not talking about taking it to court any more than if someone said that hitting them upside their head to knock some sense into them means that you should do that.

    Most business people have an attorney they can go to, often at little to no cost, who could write a letter expounding the potential penalties which could be incurred if they continue that practice.

    Receiving such a letter would surely get their attention.

    The original poster asked the question, the above is one of the options for the answer.

    I had many of my reports passed around, some by clients which led to inspections from their friends, some by agents trying to show 'don't use this guy ' look at his report' only to bring more inspections to me because of my report.

    I covered myself by including on each page of each report what I posted earlier - you use or rely on the report and you agree to hold me harmless.

    That addresses one of the risks of others using and relying on a report which was done for someone else thensuing Iinspector whom tthey hhad no contractual relationship with.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  12. #12
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    Cool Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    Ian,



    They are not providing the report to a "third party", they are providing the report to a party which is not related to the report.

    Are you saying that I can take $10,000.00 from you and, being as I am a "third party" and you have not been affected and the money was not stolen?

    Where do you live?



    And all three took place.



    Again, the agent is not giving it to a "third party", a third party would be the seller, the attorney involved in THAT transaction, another agent involved in THAT transaction, etc.

    You are confusing who a "third party" is - a new buyer is *not a party to the previous contract* and therefore cannot be a "third party" in the transaction for which the report is produced and given. A state can make it a law to violate those bounds, a state can make any law it wants, no matter how dumb the law is (many of which are still on the books in those states today) - to change that would require a court action and a judge ruling that such law is unlawful (this is done all the time), then it gets appealed if the losing party wishes to, then appealed, then to the state or US Supreme Court which makes a final ruling ... based on what is allowed by law.
    Jerry
    I am not confused as to who the 'third party' is. In this instance it would be the party to whom the report is handed, who were not involved in the original agreement. The report is provided by Party 1, The Inspector at the request of Party 2, the prospective purchaser. The buyer's Realtor does not become a separate entity (Party 3) they remain with Party 2 as they are acting as the prospective Buyer's Agent. The (Party 3) is another entity, who was not involved in the original agreement between Parties 1 and 2 (including AGENTS thereof). Now one could argue that as the Realtor subrogates him/herself from the original joint venture with Party 2 and thereby becomes, in essence Party 3, but that would be difficult to establish as they are lawfully in possession of the document and can thereby provide it as further established information going forward with another purchaser. The seller, is not necessarily a third party as they may not have any legal expectation to receive the report. Some States may not require the sharing of the report with the seller UNLESS some/all the content of it becomes an issue for further negotiation. If the report becomes an Historical Document, then all parties have the right to refer to it, even those not party to the original agreement with the Inspector. The Inspector is covered as long as the THIRD party does not rely on its content for the purpose of making a transactional decision. If the Realtor later on shares the document with another entity they become Parties 1 and 2, all over again in that transaction and the issue then falls back to did he/she have lawful possession and (i), (ii) and (iii) in my original post.

    On the other hand, there may be an unlawful consideration if, in the OP's State (NC) they had a statute covering 'Theft of Services' (typically charged when someone reneges on a cab fare or similar) but I couldn't find one specifically, in NC's Criminal Code.

    I decline to argue the merits (or lack thereof) of the theft definition argument you provided in your synopsis. You clearly have a misunderstanding of criminal law in this regard. You should stay with stuff you know best, without attempting to provide a layman's interpretation and confuse/mislead other readers.
    ...and I live here


  13. #13
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    I decline to argue the merits (or lack thereof) of the theft definition argument you provided in your synopsis. You clearly have a misunderstanding of criminal law in this regard. You should stay with stuff you know best, without attempting to provide a layman's interpretation and confuse/mislead other readers.
    ...and I live here
    "
    The crime of theft in California law is defined as the unlawful taking of someone else's property.1 And when the property taken is


    valued at more than nine hundred fifty dollars ($950), OR


    a car or a firearm, OR


    taken directly off of the person it belongs to (as in a mugging, for example),
    then the theft is considered the California crime of grand theft under Penal Code 487 PC.2


    A grand theft conviction on your record can have all sorts of professional and personal repercussions. And, unfortunately, the California grand theft statute allows grand theft charges to be filed against people who made one or two mistakes that, at the time, seemed minor.


    Examples of actions that can lead to grand theft charges in California include:
    Shoplifting a piece of jewelry that has a $1000 price tag,


    Stealing a "junk" car valued at $500, and


    Cutting the straps of a purse to steal it from the woman who was carrying it.
    "

    The above is from here: Penal Code 487 PC | California Grand Theft Law

    Apparently that attorney disagrees with you. The report was not taken by lawful means, i.e., "unlawful taking of someone else's property" as that report was not the property of the owner or the agent, the report was the property of the previous potential buyer ... unless California has a law which specifically gives anyone and everyone "ownership" of the report.

    "Ownership" is not to be confused with "having in one's possession for review". I looked for a California definition for 'ownership not related to real property' but only found definitions related to real property.

    Stealing the report in California is theft, unless ... see above for "ownership" of the report.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  14. #14
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    Default Re: Rules on Agents passing out report to 4th parties

    Funny story. My clients decided the first house was too much work to take on, so they dropped it.
    About a month later, they booked another inspection, same realtor.
    Meanwhile the seller's realtor and their realtor have worked a deal. The listing realtor has offered my clients $100 for their copy of my report. This is done without my knowledge and of course I can't do much about it anyway.
    On the evening before the second inspection I get an email from my client's realtor, "Could you bring a paper copy of the first report?" It seems the client has flown out here to attend the inspection, but forgot to bring her copy of my first report. Now they want me to Give her another copy so she can Sell it for $100.

    So I don't want to make enemies here, nice people and they have asked me to inspect this better house. So I reluctantly brought a printed copy of Inspection #1 along, but I also brought a contract for her to sign. The contract said that I would take no responsibility for any issues that may result from the use of my report by a 3rd party.

    OK, so she looks at that and wisely decides to call her lawyer before signing. The lawyer says "Think about it. Sign that and you become responsible for any repercussions that might arise from the use of that report. And you know that house is trouble. You'd do that for a lousy $100?".

    I hope I bump into that lawyer someday, because I would be happy to buy him a beer.

    John Kogel, RHI, BC HI Lic #47455
    www.allsafehome.ca

  15. #15
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    "
    The crime of theft in California law is defined as the unlawful taking of someone else's property.1 And when the property taken is


    valued at more than nine hundred fifty dollars ($950), OR


    a car or a firearm, OR


    taken directly off of the person it belongs to (as in a mugging, for example),
    then the theft is considered the California crime of grand theft under Penal Code 487 PC.2


    A grand theft conviction on your record can have all sorts of professional and personal repercussions. And, unfortunately, the California grand theft statute allows grand theft charges to be filed against people who made one or two mistakes that, at the time, seemed minor.


    Examples of actions that can lead to grand theft charges in California include:
    Shoplifting a piece of jewelry that has a $1000 price tag,


    Stealing a "junk" car valued at $500, and


    Cutting the straps of a purse to steal it from the woman who was carrying it.
    "

    The above is from here: Penal Code 487 PC | California Grand Theft Law

    Apparently that attorney disagrees with you. The report was not taken by lawful means, i.e., "unlawful taking of someone else's property" as that report was not the property of the owner or the agent, the report was the property of the previous potential buyer ... unless California has a law which specifically gives anyone and everyone "ownership" of the report.

    "Ownership" is not to be confused with "having in one's possession for review". I looked for a California definition for 'ownership not related to real property' but only found definitions related to real property.

    Stealing the report in California is theft, unless ... see above for "ownership" of the report.
    Jerry

    All that 'information' is completely and utterly irrelevant to the original post. Please, don't dabble in a subject you clearly have little knowledge or application of. I know very well what the law is in CA, but the OP is in NC and criminal statutes differ from State to State, however, with something of a common thread.

    Posting and quoting CA penal code sections - unless you have a thorough knowledge of definitions and interpretation of specific terminology thereof (and perhaps studied and practiced criminal law) is a waste of time, erroneous and misleading. Reading, paraphrasing and quoting a Penal Code in the belief of having a thorough understanding of its application is foolish. Even four years of law school, with an emphasis on criminal law, barely scratches the surface in criminal procedure. The best part of a semester is typically spent trying to understand criminal definitions and how they are interpreted for specific crimes, 16 hours alone spent on the definition of a single word 'Intent' ....and yes definitions can vary from crime to crime, statute to statute. Hardly something which can be circumvented by posting a layman's interpretation for others to take notice of. A man with knowledge is a dangerous foe, a man with a little knowledge is a foe unto himself.

    By way of example...and using your scenarios above, "...cutting the straps of a purse..." and "mugging" quoted as 487PC, may actually be prima facie Robbery (CA) 211PC, if any element of force or fear was used in the taking - kinda hard to accomplish property removal without force or fear but possible. Certainly force and fear would have been used in a case of Mugging (Robbery). In all likelihood 211PC would be charged against the suspect(s) and reduced to 487PC or some other lesser charge, for conviction purposes. None of which has anything to do with an Inspection report being shared, without permission. But...like yourself, I digress. In my case, for the purpose of clarification and not smoke screening.

    With all due respect, please contact any NC criminal prosecuting attorney and ask if they would file theft charges for the circumstances outlined in the OP. Secondly, should such charge be filed - then call a criminal defense lawyer and ask what the defense would be on behalf of their Realtor client. I'll be interested in their responses and your subsequent explanatory post.


  16. #16
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    All that 'information' is completely and utterly irrelevant to the original post.
    Sounds like Watson here ... YOU go around in circles getting away from the original post, I follow you in your circles and show you that what you said was not what it is ... then YOU want to go back to the original post and say that I that what I posted in response to you is not applicable to the original post ... Ian, this is where Watson tries a fake hand-off and fades right trying to redirect the action - go for it man.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  17. #17
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    Default Re: Rules on Agents passing out report to 4th parties

    I gave up on worrying about whose hands my reports fall into.

    "It takes a big man to cry. It takes an even bigger man to laugh at that man". - Jack Handey

  18. #18
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    Sounds like Watson here ... YOU go around in circles getting away from the original post, I follow you in your circles and show you that what you said was not what it is ... then YOU want to go back to the original post and say that I that what I posted in response to you is not applicable to the original post ... Ian, this is where Watson tries a fake hand-off and fades right trying to redirect the action - go for it man.
    Okay Jerry
    I'll refer, not back to the Original Post but to YOUR original post and reiterate - hopefully to your understanding. Here goes...

    When a Realtor, acting as an Agent for the requesting party during a real estate transaction lawfully receives an Inspection Report and later passes that report, or its content to a Third Party - not involved in the original agreement to provide such report, does NOT commit an act of Theft. Neither does the recipient, nor are they (recipient) in receipt of stolen property. Granted, some State(s) could enact laws to criminalize such acts but would be difficult to enforce, extremely unlikely to fall under a 'theft' definition and would require to be violation specific. With that in mind, and still with reference to you original post - repeated sharing of that and/or other reports would not elevate the Realtor's action to that of a Felony, again unless a specific statute is enacted prohibiting such acts.

    CA has a 'Theft of Services' law (previously explained) which could possibly be used as a 'broad brush' to include such activity but again, highly unlikely. Not a statute typically used in this scenario. Amongst other requirements, an act of Theft requires an intent to permanently deprive ownership of and, in this case, 'report sharing' fails completely.

    Anything else I have posted is purely an attempt to provide YOU with a very simplistic understanding of Theft definition and as it may pertain to criminal charges or filing a criminal complaint, which, based on your posting you clearly had/have a lack or knowledge or misunderstanding of. No smoke and mirrors, just the facts Mam, just the facts.


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    "Apparently that attorney disagrees with you. The report was not taken by lawful means, i.e., "unlawful taking of someone else's property" as that report was not the property of the owner or the agent, the report was the property of the previous potential buyer ... unless California has a law which specifically gives anyone and everyone "ownership" of the report.
    I believe the Leko Decision (January 31, 2001) provided that: "Inspection companies do not have a privileged, fiduciary relationship with the client, and their reports are not confidential." There is more great stuff in that decision, too!


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    Default Re: Rules on Agents passing out report to 4th parties


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    Lightbulb Re: Rules on Agents passing out report to 4th parties

    Copyright all reports. Report is provided to client only. Report clearly states purpose is for client use only. In the few cases that have come to my attention, referred to attorney.

    Randall Aldering GHI BAOM MSM
    Housesmithe Inspection
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  22. #22
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Raymond Wand View Post
    Hey, Raymond. Thanks! Merry Christmas and best wishes to you and yours, too!


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    Default Re: Rules on Agents passing out report to 4th parties

    (bold and underlining are mine)
    "This inference may be drawn even though Crystal's written contract with Antonsen stated that the report could not be used by or transferred to other persons without Antonsen's and Crystal's consent. (Id. at pp. 1770-1771, 52 Cal.Rptr.2d 635 [provision that appraisal report was restricted to use by mortgage broker did not establish that, as matter of law, appraiser owed no duty to third party investor].) Crystal and D-Way did not establish, as a matter of law, that they believed the inspection reports would be used solely by Antonsen, the previous purchaser. (Id. at pp. 1771-1772, 52 Cal.Rptr.2d 635.)."

    Question: How does one establish "as a matter of law" that the inspection report is *not to be used or relied upon by anyone other than the home inspection companies client*?

    I propose that such could be established by placing a penalty on the use of the report by others, such as I had on each page of my reports - that whoever uses or relies upon the inspection report agrees to hold the inspector, company, etc., harmless ...

    As the appeals court discounted the 'this report shall only be used by the client' statement, and that there was no penalty for anyone else using or relying on the inspection report, there was nothing to cause any other party to think twice about using the inspection report for their own use. Given that they would now have to make a decision to accept the cost of holding the inspector harmless should they use the report, that would, I suspect, meet the requirement that the inspector and inspection company did establish 'as a matter of law' "that they believed the inspection reports would be used solely by ... " their original client.

    After all, who would want to accept holding anyone else harmless just to save the few hundred bucks for their own inspection?

    I believe the inspector and inspection company would prevail with such a clause ... of course, the only way to know is to use it and then have a court and/or appeals court find that was sufficient to establish, as a matter of law, that the inspector and inspection company could then claim "that they believed the inspection reports would be used solely by ... " their original client.

    Interesting.

    Regardless, there is *no reason not to have a clause like that in your contract and on every page of the report*.


    Jerry Peck, Construction / Litigation Consultant
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    (bold and underlining are mine)
    "This inference may be drawn even though Crystal's written contract with Antonsen stated that the report could not be used by or transferred to other persons without Antonsen's and Crystal's consent. (Id. at pp. 1770-1771, 52 Cal.Rptr.2d 635 [provision that appraisal report was restricted to use by mortgage broker did not establish that, as matter of law, appraiser owed no duty to third party investor].) Crystal and D-Way did not establish, as a matter of law, that they believed the inspection reports would be used solely by Antonsen, the previous purchaser. (Id. at pp. 1771-1772, 52 Cal.Rptr.2d 635.)."

    Question: How does one establish "as a matter of law" that the inspection report is *not to be used or relied upon by anyone other than the home inspection companies client*?

    I propose that such could be established by placing a penalty on the use of the report by others, such as I had on each page of my reports - that whoever uses or relies upon the inspection report agrees to hold the inspector, company, etc., harmless ...

    As the appeals court discounted the 'this report shall only be used by the client' statement, and that there was no penalty for anyone else using or relying on the inspection report, there was nothing to cause any other party to think twice about using the inspection report for their own use. Given that they would now have to make a decision to accept the cost of holding the inspector harmless should they use the report, that would, I suspect, meet the requirement that the inspector and inspection company did establish 'as a matter of law' "that they believed the inspection reports would be used solely by ... " their original client.

    After all, who would want to accept holding anyone else harmless just to save the few hundred bucks for their own inspection?

    I believe the inspector and inspection company would prevail with such a clause ... of course, the only way to know is to use it and then have a court and/or appeals court find that was sufficient to establish, as a matter of law, that the inspector and inspection company could then claim "that they believed the inspection reports would be used solely by ... " their original client.

    Interesting.

    Regardless, there is *no reason not to have a clause like that in your contract and on every page of the report*.
    Thank you Russel and Raymond for posting a very important case which should be mandatory reading especially for CA Inspectors.
    Jerry:
    A Matter of Law:
    "That which is determined or ascertained through the use of statutes, rules, court decisions, and interpretations of legal principles. In legal actions the term matter of law is used to define a particular area that is the responsibility of the court. Matter of law is distinguished from matter of fact. All questions concerning the determination of fact are for the jury, though a judge may determine the facts if a jury trial is waived or is not permitted under the law".

    In the Leko case, neither Crystal nor D-Way presented evidence by way of statute, rules, court decisions or other legal principles to argue their position - perhaps because none existed but that would be up to the Court to decide and would not be established by a lay person including a warning on their report without some legal basis (Statute / rule etc.) for doing so.

    Placing any penalty on the use of the report by others may be a deterrent on paper but largely worthless in court procedure. It's tantamount to imposing a fine without due process. Including some verbiage about Copyright infringement is also basically the same and, even if proven, would likely take years in Civil Court at significant cost. Most States have a 'small claims' court, wherein minor matters - usually up to a few thousand $$$ can be heard and perhaps be the most likely and expedient venue should the Inspector believe he/she has a case.

    The primary issue is whether or not you (as an Inspector) have a knowledge, belief or understanding that the report may, at some point be used by others (not Party to the original inspection agreement). In CA - and I suspect most, if not all States, the original report can be made available to others as a Historical document, under issues of fairness and transparency during a real estate transaction. However, a disclaimer stating that the contents of the report can not be relied upon past the inspection date and anyone using the report for purposes of completing a real estate transaction, (and without doing their own due diligence etc.) holds the Inspector (assuming report Author) harmless in any future litigation - may have a chilling effect and might deflect some liability. But that largely depends upon the nature of the defect (significant structural issues in construction which would have been present throughout the inspection and overlooked Vs. a leaking stop valve etc. which occurred the moment the Inspector drove away). Nevertheless, with reports being handed out like Halloween candy, one has to expect that his/her report or at least some of its content will be shared with others. In fact, once a defect is established and known both the seller and Realtor(s) have a duty to inform any other interested party - even if the defect was subsequently repaired.

    The bottom line is complete the inspection as thoroughly as possible within Industry standards of common practice, State and any organizational SOP and carry E and O Insurance...Hope for the best AND make nice with all parties involved...even if they didn't pay for your report.


  25. #25
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    The bottom line is complete the inspection as thoroughly as possible within Industry standards of common practice, State and any organizational SOP and carry E and O Insurance...Hope for the best AND make nice with all parties involved...even if they didn't pay for your report.
    Since the Leko Decision occurred 10 months before I entered the home inspection business, I knew about it courtesy of my attorneys whom I hired to help me set up my business in California. Immediately, and with their consent and that of my E&O provider, I took the opportunity to put a paragraph in my service agreement, initialed by my Clients, that allows me to talk to anyone and everyone on their behalf. That covered me with my Clients. ***** (Could someone please tell me how to start a new paragraph? Nothing's working; I've never been able to do it since this new message board was implemented.) ***** Then, to address Leko, if a third party calls with a copy of my report in hand, I'll happily update it for them if the report is less than 90 days old, and for a 25% discount off the full inspection price, or I'll sell them a new inspection if the report is older. In 11,000+ inspections in 12 years, I have had a few hundred third parties call. I can count on one hand the number of those callers for whom I have failed to update the old report or to do a completely new inspection. I'm completely ecstatic when third parties call me with a copy of my report in hand; it's an opportunity to acquire a new Client!


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Jerry:
    A Matter of Law:
    "That which is determined or ascertained through the use of statutes, rules, court decisions, and interpretations of legal principles. In legal actions the term matter of law is used to define a particular area that is the responsibility of the court. Matter of law is distinguished from matter of fact. All questions concerning the determination of fact are for the jury, though a judge may determine the facts if a jury trial is waived or is not permitted under the law".
    I understand that, Ian, however, I suspect that there is sufficient law to use to back up some method of establishing that one believes something WILL NOT be done, otherwise the court would not have stated that such was not established 'as a matter of law' - the courts wording indicates to me that there is a way to accomplish that - and I believe that having them make a choice between two options will be included in that/those ways to establish that one believe someone IS NOT going to do something, otherwise the laws which regulate everything and are based on 'punishment' (making a choice) would not be able to be defended as establishing that the defendant knew, 'as a matter of law', that they would be punished. Saying that in layman's terms.

    The bottom line is complete the inspection as thoroughly as possible within Industry standards of common practice, State and any organizational SOP and carry E and O Insurance...Hope for the best AND make nice with all parties involved...even if they didn't pay for your report.
    That part I agree mostly with ... not the "within Industry standards of common practice" ... one should do the inspection 'not "within" ' but "with industry standards as a minimum starting point". "Within" is the wrong word to use there, in my opinion.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
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    Default Re: Rules on Agents passing out report to 4th parties

    I'm sure it would take a lawsuit to set the standard but for someone to take your "intellectual property" (Report) copy and pass it around would be very much like burning CDs and selling them to others.

    Intellectual Property Rights are extended to many products. Usually when someone uses their talents and experience to produce a product and then sells that which they produce to another (client).

    The Real Estate Agent using the report for any purpose not directly related to the benefit of The Client that paid for the rights to the Inspector's Report (Talent and experience) is the same as someone that 'sneaks' into a theater and Video Tapes
    the movie (didn't even pay for the ticket, the client did) And then goes out and sells that movie for their personal gain.

    You be it is Theft!


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Nick Ostrowski View Post
    I gave up on worrying about whose hands my reports fall into.
    Same here. I couldn't care less. Am I out an inspection fee? No, the first client already paid me. Am I worried about getting sued by the second buyer? No, good luck suing me when we have no contract whatsoever and their name isn't on the report. I'd tell the judge that I've never met these people in my life and have no contractual obligation to them.

    Not the same, but similar...I had a complaint issued with the BBB years ago. I inspected the house, but not for the person making the complaint. I responded to the complaint pointing out that I had never performed a service for the complainant and the BBB dropped the complaint. I have no idea who the person making the complaint was, but suspect the report had been given to another buyer.

    By the way, the complaint was failure to report a leaking toilet ring. My report stated, staining and soft floor around the base of the toilet. Repair by a qualified contractor is necessary.

    MinnesotaHomeInspectors.com
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ken Rowe View Post
    Am I worried about getting sued by the second buyer? No, good luck suing me when we have no contract whatsoever and their name isn't on the report. I'd tell the judge that I've never met these people in my life and have no contractual obligation to them.
    Ken,

    You are missing the point of what the appeals courts said - the inspection company did not need to have any contractual obligation with the second user of that report, the court said that did not matter, that the inspector and inspection inspection company has an obligation to any person who used that report ... unless the inspector and inspection company could prove, to the satisfaction of the court and by means of law, that the inspector and inspection company had reason to actually believe that the report would not be used by others. Hence the discussion around that issue.

    Jerry Peck, Construction / Litigation Consultant
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    Default Re: Rules on Agents passing out report to 4th parties

    On a separate, but same, matter addressed in that case was that the real estate agent was sued and thus was suing the inspection company to bring them in for sharing the responsibility for damages - and the court said yes to that.

    At first thought, that may make one say 'WTF?', but a second thought should make one say 'Fantastic!' Why? Because both the real estate agent and the inspector are there to find and disclose defects, and if the inspector can be brought in to share that responsibility with the real estate agent (the court said yes on that) ... then the real estate agent can be brought in to share that responsibility with the inspector when the inspector is sued.

    Now, do inspectors get sued more often or do real estate agents get sued more often (for missing/not finding/not disclosing defects)?

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Larry Morrison View Post
    I'm sure it would take a lawsuit to set the standard but for someone to take your "intellectual property" (Report) copy and pass it around would be very much like burning CDs and selling them to others.

    Intellectual Property Rights are extended to many products. Usually when someone uses their talents and experience to produce a product and then sells that which they produce to another (client).

    The Real Estate Agent using the report for any purpose not directly related to the benefit of The Client that paid for the rights to the Inspector's Report (Talent and experience) is the same as someone that 'sneaks' into a theater and Video Tapes
    the movie (didn't even pay for the ticket, the client did) And then goes out and sells that movie for their personal gain.

    You be it is Theft!
    Larry - Sorry to disappoint but no matter how much you slice, dice, word or re-word - use of your report by a third party is not Theft under any definition of law, no matter how much you want it to be so. It may be other things, predominantly Civil in nature, but Criminally (Theft) it is not. It's actually very different from sneaking into a theater, where each seat is rented to the moviegoer for the duration of the movie. Video taping or bootlegging the movie is for personal gain - the bootlegger sells the movie to another would-be movie goer, thus evading seat rental. Sharing an Inspection report has no loss to the Inspector who is not guaranteed with certainty that business was lost because of it. The original client, for whom the report was created, suffers no loss as they, presumably, walked away from the transaction.

    Intellectual Property Rights is, to a large extent a description of those rights which are categorized under Copyright law, Patents and Trade Marks. Copyright law, under these circumstances, would only be effective if each and every Inspection Report was registered. Even then, only the proven loss is recoverable. Hardly worth the cost or effort to recover a loss which can not be proven actually occurred.

    Hypothetically speaking and only remotely conceivable - if a Realtor took YOUR copy of the report, without your knowledge or consent, assumed ownership and gave or sold it to someone else you may have a theft of that report at its face value. The actual report's value would be minimal as it, in and of itself, represents only a percentage of the Inspection as a whole. If you had another copy, that would diminish the face value even further. I really can't think of a scenario where that would be likely. Once the report is created, for a fee on behalf of the client, the report becomes bought and paid for and now the client's property. It's not 'Your' report any more, you simply put the work in to create it. You do, however, continue to assume liability of the Inspection and the report contents.

    Last edited by Ian Page; 12-23-2013 at 12:56 AM.

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    Default Re: Rules on Agents passing out report to 4th parties

    Jerry

    I used the word 'within' (industry standards) for a specific reason. If an Inspector goes outside of industry standards, even with every good intention to please or satisfy the client, a Court may rule against him/her for not following the accepted norm. For example: For the purpose of determining quality of roof application, an Inspector uses a heavy crowbar to assess nailing and/or number of layers. In doing so damages the underlayment, a leak develops and substantial damage is caused, over time, to the roof structure and Inspector is subsequently sued. In a lawsuit the Court would consider whether the use of the crowbar was appropriate and common practice, within the Inspection Industry. If inappropriate and not within the scope, via testimony of an expert witness, then ruling goes against the Inspector and for the plaintiff (Mr. Rue Phoner ).

    I did not intend that 'within' was to be used as a minimal standard, however, extreme care should be taken when adopting methods outside those typically used by other Inspectors. I'm not aware of any State or Inspection Organizations mandating inspection methods of any component in an inspection, that's left to training, manufacturers recommendations, knowledge and experience. Inspection methods vary somewhat, from Inspector to Inspector and State to State but there is a certain commonality. Anything outside those boundaries is liability prone in a lawsuit. This is especially applicable to newer Inspectors who may not have the experience or knowledge to satisfy the Court of their actions being reasonable and 'within' typical standards of common practice.

    Last edited by Ian Page; 12-23-2013 at 01:00 AM.

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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Larry - Sorry to disappoint but no matter how much you slice, dice, word or re-word - use of your report by a third party is not Theft under any definition of law, no matter how much you want it to be so. It may be other things, predominantly Civil in nature, but Criminally (Theft) it is not...
    I disagree; as I said it would probably need to go to court but our reports, in my opinion would be protected under the same intellectual property laws that the music and film industry depend on to prevent theft (piracy) of their work.

    We re not talking about our client sharing the report with someone for their benefit but a real estate agent using our (and our client's) property for monetary gain (helping them sell the home to another party and getting their 3-6%).

    Others in the business world are protected under law. Another example that would parallel this exactly would be; You doctor sends you on to get an X-Ray, and then after treating you, uses that X-Ray in some way to bring in more patients...(Posts it on their website or uses it in a printed add) That is correct, The X-Ray technician own the rights to that X-Ray.

    Ian, to quote the great Hank Hill---"Sure, I'd like to tape a baseball game without the express written consent of major league baseball, but that's just not the way it works."


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Jerry

    I used the word 'within' (industry standards) for a specific reason. If an Inspector goes outside of industry standards, even with every good intention to please or satisfy the client, a Court may rule against him/her for not following the accepted norm.
    Old inspector lore ... the court could rule that you did not do as you should have done if you only followed the minimum standards as you are not giving your client their due diligence.

    Remember, standards are MINIMUMS to be met, not 'do-this-but-do-nothing-else'.

    Jerry Peck, Construction / Litigation Consultant
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  35. #35
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Larry Morrison View Post
    I disagree; as I said it would probably need to go to court but our reports, in my opinion would be protected under the same intellectual property laws that the music and film industry depend on to prevent theft (piracy) of their work.
    I think that is a serious application of comparing apples and oranges.

    There were intellectual property discussions here, at ASHI, at CREIA, and at NACHI back in the 2003-2005 period. At that time I was considering switching from a report that I created for myself using Word and all its many functions (outlining, hidden text, auto insert, etc.) to something like HomeGauge or InspectVue.

    I consulted with the intellectual property division of one of San Diego's largest law firms and asked them if I could copyright my reports. They only vaguely knew about home inspection reports and were unaware of what HomeGauge or InspectVue were. Courtesy of the folks at HomeGauge and InspectVue, I provided a complete working version of both to the attorneys.

    At the end of the day (about two months later), they were of the opinion that, no, home inspection reports in and of themselves would not be copyrightable under copyright laws (which the Leko Decision seemed to agree with). Things that are copyrightable are typically different. The Beatles "Hey Jude" is far different from Chicago's "25 or 6 to 4," for example. A HomeGauge home inspection report for an inspector in New Jersey is not substantially different from a home inspection report for an inspector in California.

    The home inspection software itself, HomeGauge and InspectVue, would be copyrightable, which is why there are copyright symbols and copyright statements on both of those software programs.

    Thus, I chose to stay with my homemade Word inspection report.

    Quote Originally Posted by Larry Morrison View Post
    Another example that would parallel this exactly would be; You doctor sends you on to get an X-Ray, and then after treating you, uses that X-Ray in some way to bring in more patients...(Posts it on their website or uses it in a printed add) That is correct, The X-Ray technician own the rights to that X-Ray.
    I don't think that parallels "exactly" at all. First, many/most products produced by people employed by a business belong to the business, not to the employee. Of course, it depends on the employee/employer contract, but few, if any, businesses let employees have products created on company time or with company money, company equipment, company knowledge, company resources, etc.


  36. #36
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    Old inspector lore ... the court could rule that you did not do as you should have done if you only followed the minimum standards as you are not giving your client their due diligence.

    Remember, standards are MINIMUMS to be met, not 'do-this-but-do-nothing-else'.
    Here in San Diego, and I have personal experience in this realm, at least one judge believed that there are "standards of care" involved, and that the standards of care for one area may or may not be the same as standards of care for another area. He also believed that the home inspection industry needs to come together to create state and/or national standards of care instead of letting (unlicensed, as in California) home inspectors create their own standards of care, which could be vastly different for two inspectors who simply live on different sides of the street. The lawsuit of which I speak involved a "visual" home inspection vs. an "infrared" home inspection but on which the inspector only used his infrared camera on the two bathrooms. Lack of standards, lack of standards of care.

    The visual home inspector won the case because, at least in part, infrared cameras were not part of the accepted norm. I believe the infrared camera guy used his camera improperly, and I believe most, if not all, home inspectors using infrared cameras do the same. As the judge said, (loosely quoted), "If you're going to use the camera, why not use it in all areas instead of just one or two areas?"


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    Default Re: Rules on Agents passing out report to 4th parties

    I have no experience trying to Copyright an inspection report. However, I do have some experience getting a Copyright for music (my daughter is a singer/songwriter). Its quite involved, and there are costs involved. I can not imagine doing the paperwork, or the costs of trying to do it for every inspection I write. Since every inspection I write is slightly different, I would imagine that I would have to copyright each and every one, not just slap come little symbol on the report.


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    Default Re: Rules on Agents passing out report to 4th parties

    You could move to Oklahoma. We got this added to the Home Inspector Act:

    158:70-11-2 Additional Prohibited Acts
    (m)
    "........, no person shall disclose the results of a home inspection to any person other than the client without the written consent of the client."

    Doesn't stop the client from handing it out, but it's takes everyone else out of the picture.

    Merry Christmas!


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Tim Kerce View Post
    You could move to Oklahoma. We got this added to the Home Inspector Act:

    158:70-11-2 Additional Prohibited Acts
    (m)
    "........, no person shall disclose the results of a home inspection to any person other than the client without the written consent of the client."

    Doesn't stop the client from handing it out, but it's takes everyone else out of the picture.

    Merry Christmas!
    Does that extend to the homeowner, whose property was inspected and the Realtors involved in the transaction? If so, does the client sign off on these folk also? Is there a standard waiver on the Inspection Contract to allow the client to sign a consent? Curious to find out what the penalty is and if anyone has ever been prosecuted. There are so many holes in this legislation IMO I doubt it's enforceable. Just one of those Statutes, enacted to appease an industry that will, ultimately be shot down on appeal. However, Jim...this would be "A matter of law" issue.

    Personally I just don't see the benefit of this legislation nor the harm in report sharing. As an Inspector you are paid a fee for inspecting and reporting - it's a one time, one property, generally one fee deal. I just don't see how the Inspector/Author loses by sharing. It's not like the report can be used on another property, thus voiding potential business (think movie seat in a previous post). And, if the report is complete and the 'new' recipient is impressed, you are more likely to get a do-over (okay- perhaps at some discount but also less work) or get a referral to another property. If the realtor uses the report as a 'selling tool' then that is more likely to result in a inspection lead and to the Inspector's benefit. I'm proud of my work product and see it as a win/win.

    Having a copy of a previous report on an Inspector's own web site is no real difference. It's a selling tool and promoting business. I say make every report stand out so that even non-clients will want one (for a fee that is).


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jack Feldmann View Post
    I have no experience trying to Copyright an inspection report. However, I do have some experience getting a Copyright for music (my daughter is a singer/songwriter). Its quite involved, and there are costs involved. I can not imagine doing the paperwork, or the costs of trying to do it for every inspection I write. Since every inspection I write is slightly different, I would imagine that I would have to copyright each and every one, not just slap come little symbol on the report.
    Jack
    You are correct - each and every report - because they are all different, representing a different property and different clients would have to be registered each time. You could Copyright your own personal template if you have one but what's the point.


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    Old inspector lore ... the court could rule that you did not do as you should have done if you only followed the minimum standards as you are not giving your client their due diligence.

    Remember, standards are MINIMUMS to be met, not 'do-this-but-do-nothing-else'.
    Jerry

    I didn't say, 'do-this-but-do-nothing-else'. What I said was, if one chooses to step outside Inspection industry standards (which also include manufacturers recommended procedure for testing) then that action can result in liability. As another example, and we have had this discussion before - Use of a recommended 2"x4" in garage door pressure testing. If the Inspector uses a 4' pole standing on end for the door close down on and damage to the door occurs, a Court would likely determine that this method was not within industry standard (nor, in this case recommended testing procedure) and rule against the Inspector. Industry standards are typically used when there are no specific guidelines. Standards are NOT necessarily minimums to be met they are goals to achieve so as to make a minimum determination. If one choses to add to that minimum determination for the client's benefit then care MUST be taken when taking additional actions which might fall outside accepted industry practices.

    Courts always look to see if: (i) The Respondent's (Inspector) actions were reasonable (ii) Followed guidelines (iii) Was WITHIN the standards for the industry (absent specific guidelines) (iv) Within the course and scope of the activity - Inspection. (v) Within the training and experience of the Respondent and (vi) The training methods were appropriate for the task. Any activity in contravention of those guidelines would likely rule against the Respondent, without regard that they were performed with good intentions.


  42. #42
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Larry Morrison View Post
    I disagree; as I said it would probably need to go to court but our reports, in my opinion would be protected under the same intellectual property laws that the music and film industry depend on to prevent theft (piracy) of their work.

    We re not talking about our client sharing the report with someone for their benefit but a real estate agent using our (and our client's) property for monetary gain (helping them sell the home to another party and getting their 3-6%).

    Others in the business world are protected under law. Another example that would parallel this exactly would be; You doctor sends you on to get an X-Ray, and then after treating you, uses that X-Ray in some way to bring in more patients...(Posts it on their website or uses it in a printed add) That is correct, The X-Ray technician own the rights to that X-Ray.

    Ian, to quote the great Hank Hill---"Sure, I'd like to tape a baseball game without the express written consent of major league baseball, but that's just not the way it works."
    Sorry - again, Larry - but they are NOT protected. For some Christmas Day reading please do a little research on the definitions of Intellectual property as it pertains to Copyright law. Just Google 'Intellectual Property' I'm sure you will find enough there to send you to sleep after lunch. In all the scenarios you have quoted there is always a 'loss' involved (loss of profit, loss of revenue, where is 'your' loss with the x-ray use?). With the Inspection report, there is no loss. There may be gain by the Realtor but no Loss to the Inspector or original client. They suffered no financial harm just perhaps bruised ego. Is it that you believe you are entitled to a slice of the realtor's commission for using your report to sell the house, when you have already been fully paid for providing a service to a client with whom you have a contract?


  43. #43
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    Default Re: Rules on Agents passing out report to 4th parties

    Work for hire

    From Wikipedia, the free encyclopedia


    A work made for hire (sometimes abbreviated as work for hire or WFH) is a work created by an employee as part of his or her job, or a work created on behalf of a client where all parties agree in writing to the WFH designation. It is an exception to the general rule that the person who actually creates a work is the legally recognized author of that work. According to copyright law in the United States and certain other copyright jurisdictions, if a work is "made for hire", the employer—not the employee—is considered the legal author. In some countries, this is known as corporate authorship. The incorporated entity serving as an employer may be a corporation or other legal entity, an organization, or an individual.[1]


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Jerry

    I didn't say, 'do-this-but-do-nothing-else'. What I said was, if one chooses to step outside Inspection industry standards (which also include manufacturers recommended procedure for testing) then that action can result in liability.
    Quote Originally Posted by Ian Page
    Jerry

    I used the word 'within' (industry standards) for a specific reason. If an Inspector goes outside of industry standards, even with every good intention to please or satisfy the client, a Court may rule against him/her for not following the accepted norm.


    "within" is 'not outside', as in "within" (industry standards) is 'not outside' (industry standards), "within" (industry standards) is ANYTHING AND EVERYTHING ABOVE AND BEYOND the minimum required by the standards - which is what you were referring to "even with every good intention to please or satisfy the client, a Court may rule against him/her for not following the accepted norm" and that is correct only as far as the court may rule against the inspector FOR ANY reason ... including adhering strictly to the minimum standards, as such, you are incorrect in that statement. Now, if you would like to try to redefine what you said into something that sounds more accurate, excellent.

    Jerry Peck, Construction / Litigation Consultant
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    Default Re: Rules on Agents passing out report to 4th parties

    Good conversation here. I have tweaked the "Use by Others" paragraph in my contract as a result.

    If you choose not to decide, you still have made a choice.

  46. #46
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    [/I][/COLOR]"within" is 'not outside', as in "within" (industry standards) is 'not outside' (industry standards), "within" (industry standards) is ANYTHING AND EVERYTHING ABOVE AND BEYOND the minimum required by the standards - which is what you were referring to "even with every good intention to please or satisfy the client, a Court may rule against him/her for not following the accepted norm" and that is correct only as far as the court may rule against the inspector FOR ANY reason ... including adhering strictly to the minimum standards, as such, you are incorrect in that statement. Now, if you would like to try to redefine what you said into something that sounds more accurate, excellent.
    Perhaps in states where they have home inspector licensing, but here in San Diego, there definitely is a minimum industry standard (see CREIA SOP), an industry standard (see 90% of the people who don't use CREIA SOP), and "standards" (and I use "standards" very loosely in that one specific instance) that are not (yet, perhaps) within the industry standards.

    Infrared cameras are not yet part of the industry standards in my area. Not sure they ever will be until the cost of infrared cameras come down even further. By then we'll probably have something else.

    I do not use an infrared camera at the urging of my own real estate/business attorneys simply because there is no industry standard defining their use.

    My husband, a Realtor with Century 21 Award, goes to all the home inspections on his listings. At one back in September, the buyers (a straight couple) were discussing the home inspector, out of earshot (maybe; home inspectors have great hearing!). Buyers were disappointed that they hired a home inspector who advertised his infrared camera and not once did they even see the infrared camera, much less see the home inspector use it.

    As my own attorneys said in their email to me: "If you're going to use infrared cameras which have no standards yet within the home inspection industry, make sure you use the camera anywhere and everywhere on the house. Do not miss a spot!" (Quoted directly from their email.) I agree with them. I will have the discussion again the first week in January, as that is my week to consult with my real estate attorneys, business attorneys, CPA, tax attorney, and E&O provider to implement new protocols as new laws or expiring laws dictate.


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    Default Re: Rules on Agents passing out report to 4th parties

    Reality is - reports get passed on. I know my reports make the rounds and I see other reports prepared by other inspectors. There is a whole host of reasons why they get passed around. Its a given, and its a fact of the business.

    Personally I don't worry about it.

    Merry Christmas


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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    [/I][/COLOR]"within" is 'not outside', as in "within" (industry standards) is 'not outside' (industry standards), "within" (industry standards) is ANYTHING AND EVERYTHING ABOVE AND BEYOND the minimum required by the standards - which is what you were referring to "even with every good intention to please or satisfy the client, a Court may rule against him/her for not following the accepted norm" and that is correct only as far as the court may rule against the inspector FOR ANY reason ... including adhering strictly to the minimum standards, as such, you are incorrect in that statement. Now, if you would like to try to redefine what you said into something that sounds more accurate, excellent.
    Simple...SOP - Standard Operational Procedure.

    That standard set by industry organizations, State legislation, knowledge, experience, training and those methods used by fellow inspectors which have tried and tested results without deviating significantly from common industry practices. If you are the only Inspector in your area who fills a shower pan to the rim to see if it leaks (even though you may think it necessary to provide more information) a court may determine that it was unnecessary, outside the industry norm and attach a greater degree of liability. More is not necessarily better. There is a legal term for that which escapes me at the moment.


  49. #49
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Simple...SOP - Standard Operational Procedure.

    That standard set by industry organizations, State legislation, knowledge, experience, training and those methods used by fellow inspectors which have tried and tested results without deviating significantly from common industry practices. If you are the only Inspector in your area who fills a shower pan to the rim to see if it leaks (even though you may think it necessary to provide more information) a court may determine that it was unnecessary, outside the industry norm and attach a greater degree of liability. More is not necessarily better. There is a legal term for that which escapes me at the moment.
    Ian,

    I can tell that you simple 'don't get it' and I am apparently not able to explain it to you in a way which allows you to get it - a failure on my part, I apologize for that.

    Jerry Peck, Construction / Litigation Consultant
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Raymond Wand View Post
    Reality is - reports get passed on. I know my reports make the rounds and I see other reports prepared by other inspectors. There is a whole host of reasons why they get passed around. Its a given, and its a fact of the business.

    Personally I don't worry about it.

    Merry Christmas
    Agree.

    It's possible that the clause in my contract covering use by others has prevented problems, but in 16 years, it never has.

    If you choose not to decide, you still have made a choice.

  51. #51

    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by ren ramsey View Post
    Do any of you from states outside of NC know of any laws your state may have against realtors giving your report to other parties when the deal goes bust. I have an agent who I inspected the property, the deal went bust, and then another party came along and she offered to give the new buyer my report" to save him money". Does anyone know of laws through your real estate commissions that prevent this. I spoke with NC real estate commissioner and she basically said that it was ok for them to do that as long as the realtor encouraged them to get their own inspection. How about you NC inspectors, Have your respective associations addressed this with anyone at the state level?
    It's illegal here in Oregon. I recently sent an e-mail to a Realtor, who gave my report to a 2nd
    buyer, that if my report is used by anyone other than the original buyer (who contracted with me) I would sue him in court.


  52. #52
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jerry Peck View Post
    Ian,

    I can tell that you simple 'don't get it' and I am apparently not able to explain it to you in a way which allows you to get it - a failure on my part, I apologize for that.
    Jerry
    I do 'get' the point you are trying to make. I just don't agree with it and I haven't seen anyone else coming to your rescue either. I am surprised that as a Litigation Consultant that you haven't encountered this issue in court . Your argument confounds a relatively common legal principle. Where there are no strict mandated rules or guidelines to follow, the Court looks at common and accepted practices within that industry, typically local to where the occurrence took place, in making a ruling. Unusual, additional or extraordinary methods or procedures may not, in the Courts judgment, be tried and tested (by similarly employed or engaged personnel) and could result in liability for the person performing the work.
    And I accept your apology...


  53. #53
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jeff C. View Post
    It's illegal here in Oregon. I recently sent an e-mail to a Realtor, who gave my report to a 2nd
    buyer, that if my report is used by anyone other than the original buyer (who contracted with me) I would sue him in court.
    Sue...On what grounds? What legal principle would you declare in your affidavit and court filing? What loss would you incur? What harm has been done that would you ask the Court to make whole? What judgment would you seek?

    Last edited by Ian Page; 12-24-2013 at 11:24 PM.

  54. #54
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Jerry
    I do 'get' the point you are trying to make. I just don't agree with it and I haven't seen anyone else coming to your rescue either. I am surprised that as a Litigation Consultant that you haven't encountered this issue in court . Your argument confounds a relatively common legal principle. Where there are no strict mandated rules or guidelines to follow, the Court looks at common and accepted practices within that industry, typically local to where the occurrence took place, in making a ruling. Unusual, additional or extraordinary methods or procedures may not, in the Courts judgment, be tried and tested (by similarly employed or engaged personnel) and could result in liability for the person performing the work.
    The difference is that you are in California ... where they do things quite differently some of the time ... and I have not consulted on any case in CA to date. Not all states have the same laws as CA does ... thankfully in some cases, not so in other cases.

    Jerry Peck, Construction / Litigation Consultant
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  55. #55

    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Ian Page View Post
    Sue...On what grounds? What legal principle would you declare in your affidavit and court filing? What loss would you incur? What harm has been done that would you ask the Court to make whole? What judgment would you seek?
    I would sue based on theft of my report. The report belongs to me and the person who contracted with me. The Realtor wanted to be a hero in the eyes of the second buyer by telling them that he could save them $400 by giving them a report from 2 months earlier.

    Oregon state law says this is illegal. I would sue for the original inspection fee and would also file a complaint with the real estate board.

    If I have to play by the rules, so does everyone else.


  56. #56
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    Default Re: Rules on Agents passing out report to 4th parties

    I've been a home inspector for 24 years. I am aware of about a dozen instances of Realtors passing my report along to another buyer - sometimes for personal gain. I was able to engage a couple of those Realtors in a discussion about doing so. Usually, their reasoning was along the lines of "Well you JUST did the inspection a few months ago. Do you want to get paid again?" or "Why do we need another inspection when you just did it a few months ago?"
    In answer to the first I asked the offending realtors if they would waive their commission if they sold the same house within a few months. Most said no (then why should I?!). One said he would give his client a break on the commission (I told him I would match the percentage of the break). In answer to the second, I used the opportunity to educate the realtor in all the possible things that could go wrong at any time and asked if they were willing to take responsibility for advising their client to forgo their own inspection especially in light of the wording in my report that ONLY the original client could use/rely on my report. Every realtor that I work with knows that I offer a discount on "re-inspections" even though I will still spend the same amount of time doing a complete Inspection and new report. For those realtors who just don't get it, I rest content in the strength of my pre-inspection agreement to limit my liability and the knowledge that they just bought themselves a first-class ticket on the karma train. Could I TRY to take them to court or file a complaint? Sure. Do I want THAT reputation? Nope! I'd rather try to educate.


  57. #57
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    Default Re: Rules on Agents passing out report to 4th parties

    If you love something....let it go!

    I could care less what anyone does with my report once I send it to my client.

    Dan Cullen
    www.domicileconsulting.com
    Chicago IL

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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Dan Cullen View Post
    If you love something....let it go!

    I could care less what anyone does with my report once I send it to my client.
    Ditto. I don't consider it my report at all. I consider it my client's report. They paid for it. If they want to give it away, there isn't much I can do about it. If the realtor hands it out without asking for their permission, that's really between the realtor and the client, in my opinion.

    Jim Robinson
    New Mexico, USA

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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Dan Cullen View Post
    If you love something....let it go!

    I could care less what anyone does with my report once I send it to my client.

    That is all fine and dandy, but ... this thread is not so much about "the report being passed around" and that is the end of it, this thread is more about "the report and the home inspector's and home inspection company's LIABILITY from the report being passed around".

    I suspect that not very many of us have a problem with our reports being passed around for what is essentially ADVERTISING purposes because that is what reports being passed around do.

    I suspect that all, including Dan and Jim would have a problem BEING HELD LIABLE for their reports be passed around AND USED (MIS-used, really) by others with whom the inspector and inspection company have no contract or other relationship with.

    It is interesting to me to have watched this thread go from discussing liability with the MIS-use of reports by others to 'it okay to pass my reports around' ... BIG DIFFERENCE between those things.

    I suspect that if we managed to keep the thread on the same topic then the responses from all would be the same - HECK NO, NO LIABILITY IF THERE IS NO CONTRACT OR RELATIONSHIP ... or maybe that is just me thinking that all of us do not want additional liability put on us for and from something we have/had no connection with ...

    Jerry Peck, Construction / Litigation Consultant
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  60. #60
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    Default Re: Rules on Agents passing out report to 4th parties

    Somewhere, a few years ago, I read about a HI being sued by a third party who had a hand-me-down inspection report that the HI had done for a different client a couple of years earlier. His insurance company settled so the question of liability was not settled. Of course, the HI was out a deductible so there was some financial pain for him.

    If true, or even if not, I think any HI should address the issue in their contract whether they are really concerned or not. We are in a business where a cavalier attitude can bite you in the posterior.

    Here's the clause from my contract for any or all to toss a critical dart at:

    USE BY OTHERS: This report is for your sole use as the client. You cannot sell, duplicate, or disclose any of this report except for the purpose of negotiation with seller or contractors. You will indemnify the inspector and inspection company for any losses incurred from use of this report by unauthorized parties.

    If you choose not to decide, you still have made a choice.

  61. #61
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    Default Re: Rules on Agents passing out report to 4th parties

    Lisa Endza
    Director of Communication
    InterNACHI

  62. #62
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    Default Re: Rules on Agents passing out report to 4th parties

    Quote Originally Posted by Jeff C. View Post
    I would sue based on theft of my report. The report belongs to me and the person who contracted with me. The Realtor wanted to be a hero in the eyes of the second buyer by telling them that he could save them $400 by giving them a report from 2 months earlier.

    Oregon state law says this is illegal. I would sue for the original inspection fee and would also file a complaint with the real estate board.

    If I have to play by the rules, so does everyone else.
    Jeff
    I assume you have read all the previous posts regarding this issue. First, it is not 'theft'. You will have a very hard time convincing any Law Enforcement agency (Police/Sheriff. District Attorney /Prosecutor) that there is a 'Theft' of the report and those are the agencies who would pursue the matter on your behalf in criminal proceedings (Theft is a crime dealt with in Criminal Court and not Civil Court). If you hope to file an allegation of some misuse of your report in Civil Court, you have to stipulate, by filing an affidavit, how you were harmed, request compensation for your loss or whatever is necessary to make you whole. The fact that you have already been paid for completing both Inspection and subsequent report means you have no loss to be compensated for. You can't sue for something you have already received. There is no guarantee that your services would have been used again for a second inspection on the same property. So if there is a 'loser' it's the unknown Inspector who didn't get to perform that Inspection because the property purchaser used the report completed by yourself for which you were compensated by the original client (with whom you had a contract).

    The report is a 'work product' and you were contracted by the client to perform both an Inspection and Report. You, if fact, sold the report to them for a fee. It's their report, you just created it. Nevertheless, because you performed an Inspection you could still be held liable if there were some glaring omission later discovered by the 'new' purchaser. That's a primary reason for E&O insurance. The Realtor may be trying to be a 'hero' and use the report you completed to make them look good and sell the property but your reports should contain some bold paragraph indicating the condition of the property was reported for the day of the Inspection only and should not be substituted for a new inspection. If the new clients like your report, maybe the will use you instead of someone else. It will not necessarily prevent any law suit against you but it'll help.

    Please read the Lisa's link - Nowhere in that Inter-Nachi recommendation does it state or infer that the Realtor has committed any violation (Criminal or Civil) - unless some specific State legislation which may be the case in Oregon, but does provide information on how you can, perhaps, avoid some liability yourself. Reporting the realtor to their Board may be the only serious recourse.

    Please quote the Oregon State Law you referred to making the report exchange, illegal.

    - - - Updated - - -

    Quote Originally Posted by Jeff C. View Post
    I would sue based on theft of my report. The report belongs to me and the person who contracted with me. The Realtor wanted to be a hero in the eyes of the second buyer by telling them that he could save them $400 by giving them a report from 2 months earlier.

    Oregon state law says this is illegal. I would sue for the original inspection fee and would also file a complaint with the real estate board.

    If I have to play by the rules, so does everyone else.
    Jeff
    I assume you have read all the previous posts regarding this issue. First, it is not 'theft'. You will have a very hard time convincing any Law Enforcement agency (Police/Sheriff. District Attorney /Prosecutor) that there is a 'Theft' of the report and those are the agencies who would pursue the matter on your behalf in criminal proceedings (Theft is a crime dealt with in Criminal Court and not Civil Court). If you hope to file an allegation of some misuse of your report in Civil Court, you have to stipulate, by filing an affidavit, how you were harmed, request compensation for your loss or whatever is necessary to make you whole. The fact that you have already been paid for completing both Inspection and subsequent report means you have no loss to be compensated for. You can't sue for something you have already received. There is no guarantee that your services would have been used again for a second inspection on the same property. So if there is a 'loser' it's the unknown Inspector who didn't get to perform that Inspection because the property purchaser used the report completed by yourself for which you were compensated by the original client (with whom you had a contract).

    The report is a 'work product' and you were contracted by the client to perform both an Inspection and Report. You, if fact, sold the report to them for a fee. It's their report, you just created it. Nevertheless, because you performed an Inspection you could still be held liable if there were some glaring omission later discovered by the 'new' purchaser. That's a primary reason for E&O insurance. The Realtor may be trying to be a 'hero' and use the report you completed to make them look good and sell the property but your reports should contain some bold paragraph indicating the condition of the property was reported for the day of the Inspection only and should not be substituted for a new inspection. If the new clients like your report, maybe the will use you instead of someone else. It will not necessarily prevent any law suit against you but it'll help.

    Please read the Lisa's link - Nowhere in that Inter-Nachi recommendation does it state or infer that the Realtor has committed any violation (Criminal or Civil) - unless some specific State legislation which may be the case in Oregon, but does provide information on how you can, perhaps, avoid some liability yourself. Reporting the realtor to their Board may be the only serious recourse.

    Please quote the Oregon State Law you referred to making the report exchange, illegal.


  63. #63
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    Default Re: Rules on Agents passing out report to 4th parties

    This what I have on my reports. I have it on a separate page in large bold type

    IMPORTANT INFORMATION: This report, including any references, images and photographs relates to an inspection of the property located at (address) and performed on (date) by (Inspector dba ) and is an agreement solely between (clients name and Inspector) in exchange for a fee . The inspector and report author holds no responsibility as to the condition of the property or any component thereof after the above date, whether included in the report or not. The report should not be substituted for any other inspection or report during any future real estate transaction. Any person, entity or their affiliate(s) not originally contracted with (Inspector) agrees to hold ( Inspector) harmless in any real estate transaction or future litigation wherein this report was used as a basis for making any decision whatsoever regarding the condition of the aforementioned property or any component thereof.


    Feel free to use it but any user also agrees to hold me harmless also in any litigation.


  64. #64
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    Default Re: Rules on Agents passing out report to 4th parties

    Salgado v. Toth (November 11, 2009), the British Columbia Supreme Court considered the standard of care of a reasonably prudent home inspector and more importantly, the effectiveness or, moreover, ineffectiveness, of limitation of liability clauses in the professional context.

    The purpose of a home inspection is to provide purchasers with an expert opinion about deficiencies and the condition of the property. Allowing home inspectors to exclude all liability for performing a negligent visual inspection would mean home buyers could not rely on the inspections. The policy behind the court’s findings is found in the following paragraph:

    The purpose of obtaining an inspection is to provide a lay purchaser with expert advice about any substantial deficiencies or, as is set out in the Standards, any “ significantly deficient” problem relating to systems or components that can be discerned upon a visual inspection – deficiencies of the type or magnitude that reasonably can be expected to have some bearing upon the decision making process of a purchaser regarding whether they will purchase the property or upon which they will renegotiate the price. An inspector invites reliance by the very nature of the advice that is given. Plainly, if prospective home purchasers did not believe that they could secure meaningful and reliable advice about the home they were considering purchasing, there would be no reason for them to retain an inspector to inspect that home. In the case, reliance is obvious.


    This case is a cautionary tale for home inspectors and other professionals who attempt to rely upon exclusionary clauses to limit their liability for negligence. Professionals cannot limit their liability for negligence in connection with the very services they are providing. To limit liability to the fees charged would defeat the purpose of retaining the professional, which is reliance upon the professional’s advice.

    Last edited by Raymond Wand; 12-28-2013 at 09:49 AM. Reason: added quotes

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    Default Re: Rules on Agents passing out report to 4th parties

    I was sued by a fourth party three years after the inspection. It was thrown out of court in less than two minutes. However, it did cost me to retain an attorney. The cost was less than my deductible.

    I have all the stuff in the report about who it's for, etc, but it doesn't stop (or even slow down) anyone from passing it around. I probably get less than a handful of calls each year from someone that has a copy of my report and want to use it. I lose jobs all the time because of price, I don't give a crap about the remote possibility I lost a job on a house I inspected before. I did an inspection, got paid, and moved on.


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