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  1. #1
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  2. #2
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    Default Re: legal opinions on inspections and agreements

    That was interesting.

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  3. #3
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    Default Re: legal opinions on inspections and agreements

    Where do we tune in to for the Supreme Court decision?

    The beatings will continue until morale has improved. mgt.

  4. #4
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    Default Re: legal opinions on inspections and agreements

    So... inspectors in KY are liable for subsequent water leakage into basements not visible at the time of inspection.

    It also appears that these judges consider water leakage a "structural" issue.

    I would assume the contract disclaimed future performance based on current observation, if so and inspectors are liable for their inability to predict the future, then it's going to be pretty hard to stay in business in KY.

    Michael Thomas
    Paragon Property Services Inc., Chicago IL
    http://paragoninspects.com

  5. #5
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    Default Re: legal opinions on inspections and agreements

    I suspect that one of the key issues in the backs of their minds was that the untrained buyer saw the crack, and that the trained inspector pooh-pah it.

    If there is a crack in a basement wall it seems to me, who does not see basements, that anyone, and especially a trained and knowledgeable inspector, would go 'Whoa! That ain't a good thing. That needs to be sealed to keep out water. And being as I do not know whether or not it has been sealed on the outside, and I can see that it has not been sealed on the inside, that I need to write it up in my report ... ESPECIALLY since my client noticed the crack and asked me about it.'

    I may be way off base here, but ... cracks in basements walls are NOT 'good things' from what I've read and heard.

    Structural or water intrusion, two different things, but the work had to be done *regardless* which it was, and the client felt they were injured (financially) and sued to reclaim that loss.

    I've always heard and read that the clauses limiting the liability are next to worthless in most cases, that they are simply one more hoop to jump through on their way to sue you, and that the hoop is quite easily jumped through.

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

  6. #6
    Ted Menelly's Avatar
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    Default Re: legal opinions on inspections and agreements

    I hear about basement walls being cracked and inspectors not writing them up all the time. They also make similar statements such as confusing water leaks with structural. In a basement they are one in the same. You are below ground level. Water outside wants to come inside. No leak at the time of the inspection....so what. If there is a crack in the foundation and one has no clue what may or may not have been done to correct this or water proof the crack then there IS going to be a leak someday.

    I think the guy did a soft report to the client and Realtor. No mention....bad boy. Why would anyone put their reputation at stake to do such a thing. Not to mention their money and wait a minute...how about the client that is paying you for a list of concerns in the home that are buying the report for.

    I read that thing twice and do not see where any contract what so ever would include complete negligence. I can see writing an opinion that this is pretty common in the area but they should follow up with at least a foundation company and how about the fact....it is cracked....needs repair....could leak.

    The inspector blew it. I have said for a long time that contracts that inspectors trying to hide behind one or two times the inspection is absolutely absurd and should have gone away a very long time ago. A leak happening in plumbing after the fact and a leak happening in a foundation (cracked) after the fact....not quite the same.

    I do not care how minor a crack is in a home even if it is just in the brick and not the foundation and there are no doors out of square or windows jammed or drywall cracked. I will write it up as in need of repair and will mention grading and drainage if that looks to be a concern and add that gutters are needed if there are none and mention that the washout next to the home is due to no gutters.

    Cracks in brick could leak even though I do not see signs of it at that time. It may have even been leaking in or insects getting in but I just do not see them right now.

    Crack in a basement foundation wall needs to be written up no matter what. It is our job and yes a home inspector could be and should be liable no matter what he contract states if water comes leaking in due to that6 crack.

    YES.....In this case structural was water leakage. No ifs and or buts about it. No matter how you want to look at it...even upside down and backwards. Water outside, crack in foundation....leak sooner or later and probably sooner into the basement.

    Of course that is all just my opinion and that is what I would write.


  7. #7
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    Default Re: legal opinions on inspections and agreements

    "So... inspectors in KY are liable for subsequent water leakage into basements not visible at the time of inspection.

    It also appears that these judges consider water leakage a "structural" issue."


    The way I understand the ruling, the inspector said the crack was "inconsequential" and then also stated in the report "no structural defects".
    When an inspector states that a crack in the basement wall is inconsequential AND then reports that there are no structural defects, the inspector is likely over confident in his abilities. He has taken on himself the added liabilities of those statements.
    As to whether a leak is a structural issue.
    The basement wall is part of the structure, the basement wall has a crack, the crack is a defect, therefore, the crack is a structural defect.
    I think most reasonable people, (and all HI clients) would come to the same conclusion.

    "inspectors are liable for their inability to predict the future"
    The problem is, the inspector was predicting that the home buyer would not have a problem caused by the crack in the basement wall.

    "Mullins accompanied the inspector during the inspection and, at that time, questioned the inspector regarding a crack in the basement wall. He was told that it was inconsequential. After NKI issued its final report in which it concluded that there were no structural defects"

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  8. #8
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    Default Re: legal opinions on inspections and agreements

    These court decisions force HIs to be insurance companies which we're not claiming to be nor compensated for.


  9. #9
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    Default Re: legal opinions on inspections and agreements

    "These court decisions force HIs to be insurance companies ..."

    I don't see it that way.
    If the inspector had only REPORTED WHAT HE SAW, he likely would not be having this problem.
    An inspectors first duty is to report what he sees.

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  10. #10
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    Default Re: legal opinions on inspections and agreements

    The Inspector made a mistake. It would have been so easy to go into yes that crack should be of concern, and write it up as such. What the appeals court was saying is you can cover your *&& just so far in the wording of your contract. But it is not over yet. I would like to know the extent and position of the crack. I would want to know for sure that the "crack" in question was the reason the basement flooded. It is not over yet, the KY Supreme Court has yet to rule.


  11. #11
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    Default Re: legal opinions on inspections and agreements

    Quote Originally Posted by Rick Cantrell View Post
    "These court decisions force HIs to be insurance companies ..."

    I don't see it that way.
    If the inspector had only REPORTED WHAT HE SAW, he likely would not be having this problem.
    An inspectors first duty is to report what he sees.
    I wasn't even really talking about the crack... it's the concept that we are paid $300 and are liable for $10,000.... that's called insurance.

    Basic contract law in the USA states that people must have legal capacity to the enter into a contract and it's binding.... at least that's the intent. The intent before all the lawyers started driving the ship.

    As for just reporting what you see.... that no longer flies in my state. We have to tell the buyer what to do (repair, replace, etc, etc).... So with every hairline crack it's basically be an alarmist and call in an engineer or risk being the guy in the lawsuit. Not very good choices IMO....

    Gotta love those attorneys


  12. #12
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    Default Re: legal opinions on inspections and agreements

    Follow these simple rules and you will stay out of trouble.

    The biggest problem I see when working with (and against) HI's... they are...
    The report identifies a problem condition, but NOT its significance or
    meaning.

    The report understates the significance or meaning of a problem condition.

    The inspector verbally dilutes the significance or meaning of a problem
    condition identified in the report.

    The report fails to suggest that the client retain an expert to more fully
    evaluate a problem condition.

    The report fails to identify a limitation which prevents or hinders a more
    thorough inspection of an area.

    The inspector does not obtain a signed contract from the client.

    The inspector presents the contract for the first time immediately before
    the actual inspection.

    The contract does not contain a limit of liability provision.

    The contract does not identify what services are being offered and excluded.

    During a reinspection, the inspector makes some admissions of liability to
    the client or agent.


  13. #13
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    Default Re: legal opinions on inspections and agreements

    Hum... to me a "structural" defect is one which results in failure or movement of structural (as opposed for example to "finish" materials) systems or components, or which can cause the same.

    For example in my view cracking drywall caused by foundation settlement is a cosmetic defect which is a symptom of the structural defect which is it's underlying cause, while a sloping floor is not a structural defect, but the undersized girder below it is.

    Similarly, on my view water intrusion through (for example) a vertical foundation hairline crack is not a structural defect per se, though it could be (but not always is) a symptom of a significant structural defect in the foundation wall, just as water intrusion through an improperly sealed passage of a water line through the same wall is not also a structural defect unless the creation of the hole through which it passes has structurally compromised the wall itself.

    And while I have seen numerous instances of water intrusion into unfinished basements through cracks which are not "structural" issues in the first sense, I suppose they could be considered by a client to be a "structural" defect in the sense that they are the result of a "defect in the structure" even though that defect does not have "structural significance".

    My conclusion is that the difference ought to be specifically addressed in my reports.

    Last edited by Michael Thomas; 09-08-2010 at 09:30 AM.
    Michael Thomas
    Paragon Property Services Inc., Chicago IL
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  14. #14
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    Default Re: legal opinions on inspections and agreements

    "Hum... to me a "structural" defect is one which results in failure or movement of structural (as opposed for example to "finish" materials) systems or components, or which can cause the same. "
    I am not saying it is or is not a structural problem.


    "I suppose they could be considered by a client to be a "structural" defect in the sense that they are the result of a "defect in the structure" "
    That is exactly the point I was making.
    The client, the clients lawyer, the general public, a jury, and likely a judge, even many HI's*, believe it to be, a structural problem.
    * will report it as

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  15. #15
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    Default Re: legal opinions on inspections and agreements

    All of this is moving the Inspector farther and farther out on the limb of liability without compensation. When (like Oregon) the HI is not only responsible for finding the faults but recommending action of how to repair, then the profession is further exposed. Wait until the Federal Misgovernment gets involved in order to standardize the practises and procedures. They will not leave this alone as it gives them a chance to expand their powers, and in my lifetime I do not recall any situation where DC (District of Crooks) did not jump all over an issue and make it theirs. In this issue of the crack, was not the home seller required to pass on the information that the basement flooded?


  16. #16
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    Default Re: legal opinions on inspections and agreements

    Good topic.

    I'm already very careful to make it clear both verbally and in the written report that I cannot predict the likelihood of moisture intrusion except on the basis of what I can observe at the time of the inspection, but it's always possible to improve both verbal and written presentations, and henceforth I will be even more aware that clients might suppose such problems to be "structural".

    However.... I see MANY instances of seepage through cracks in basement walls which have otherwise functioned adequately (held back the soil and supported the structure above) for decades, and will likely do so for decades more.

    It seems to be that these latter types of defects are different in important ways from water intrusion.

    If someone considers water intrusion through a crack to be a "structural" defect in an otherwise functional foundation wall, then what term do they use to distinguish 1) seepage from the sort of problem which 2) prevents a foundation wall from adequately performing the latter tasks above?

    Michael Thomas
    Paragon Property Services Inc., Chicago IL
    http://paragoninspects.com

  17. #17
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    Default Re: legal opinions on inspections and agreements

    Quote Originally Posted by Philip View Post
    .... Wait until the Federal Misgovernment gets involved in order to standardize the practises and procedures. They will not leave this alone as it gives them a chance to expand their powers, and in my lifetime I do not recall any situation where DC (District of Crooks) did not jump all over an issue and make it theirs
    Probably not very likely, as architects, engineers, physicians and almost every other regulated profession I'm aware of is licensed at the state level. If there is a trend toward national regulation at all, it's a trend toward reciprocity agreements between states.

    Michael Thomas
    Paragon Property Services Inc., Chicago IL
    http://paragoninspects.com

  18. #18

    Default Re: legal opinions on inspections and agreements

    hmmm... some disagreement here about whether a crack is a structural issue, but this appeal court decision is only about the clause limiting liability.

    "...we hold that a contract clause limiting the damages recoverable from a home inspector for negligent inspection is not part of an arm's-length agreement and is void as against public policy."

    The judges stated that "...the contract was a contract of adhesion. It was not executed after negotiations between Mullins and NKI, but was on a pre-printed form prepared by NKI and presented on a take-it-or-leave-it basis."

    (Contract of adhesion - A type of contract, a legally binding agreement between two parties to do a certain thing, in which one side has all the bargaining power and uses it to write the contract primarily to his or her advantage.) From online dictionary.

    Interestingly, the senior judge dissented and was "not persuaded that this case presents the degree of disparity in bargaining power between the parties that requires intervention by the courts".
    Given that this was a small business (presumably with one basic product, home inspection) serving a single customer, and that the customer had the choice of all the inspectors working in the area, I have to agree that the client was not strong-armed into signing the contract. That said, I have the contract signed and in my hand before I leave the office to go do the inspection. Clients have time to read the contract and sign it before the inspection starts.

    I can see this going to the Supreme Court (though maybe not over $7400 worth of flood damage).

    As for the cracks; cracks get detailed because they usually lead to water infiltration. If I also consider them structurally significant, I write that up too.
    Do you guys have liability limiting clauses in your contract? Are you willing to take them out if a client asks?

    Egbert Jager
    Diamond Home Inspection
    http://www.diamondhomeinspection.ca

  19. #19
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    Default Re: legal opinions on inspections and agreements

    "I see MANY instances of seepage through cracks in basement walls which have otherwise functioned adequately (held back the soil and supported the structure above) for decades, and will likely do so for decades more."

    Michael
    If the wall: leaks, seeps, weeps, cracks, or has large gapping holes in it, it is not functioning properly. The wall was not designed to seep.
    The wall has a defect.

    " I will be even more aware that clients might suppose such problems to be "structural". "

    It's not that it's structural, it was reported as "no structural defects".
    Forget the word structural, just think defect.
    Report the defect.

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  20. #20
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    Default Re: legal opinions on inspections and agreements

    As for the cracks; cracks get detailed because they usually lead to water infiltration.
    Thats it.

    Do you guys have liability limiting clauses in your contract?
    No.
    Clauses do not limit your liability, not really.
    The best way (I know of) to reduce liability is to offer additional services (testing and or more in depth inspection) on areas of concern.
    Of course you charge for the additional services.
    By offering these additional services the client can decide if they want to inspect those areas further OR DECLINE the additional service. If you do not perform the service, then recommend the client to get the service performed.

    ' correct a wise man and you gain a friend... correct a fool and he'll bloody your nose'.

  21. #21
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    Default Re: legal opinions on inspections and agreements

    material defect is more appropriate in my opinion.

    'material defect'--a defect which significantly affects the value, desirability, habitability or safety of the dwelling, and which can be identified by a noninvasive physical examination of the property's systems and components."






  22. #22
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    Default Re: legal opinions on inspections and agreements

    Lots of good discussion on this one.

    I think the inspector forgot to think about the secondary concern of the crack and got focused on just looking at it from a structural failure angle.
    Voice recorders are very useful in collecting data since you can "listen to your onsite thoughts" while writing the report.

    He also forgot that contractors can place estimates on anything they want and at any price they want.

    Very similar to what I have always said, most missed items are right next to a reported issue and overlooked due to tunnel vision.

    Bruce King, B.A. King Home Inspections, LLC
    www.BAKingHomeInspections.com
    Certified Master Inspector, Independent Inspectorwww.IndependentInspectors.org

  23. #23
    Ted Menelly's Avatar
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    Default Re: legal opinions on inspections and agreements

    Quote Originally Posted by Bruce King View Post
    Lots of good discussion on this one.

    I think the inspector forgot to think about the secondary concern of the crack and got focused on just looking at it from a structural failure angle.
    Voice recorders are very useful in collecting data since you can "listen to your onsite thoughts" while writing the report.

    He also forgot that contractors can place estimates on anything they want and at any price they want.

    Very similar to what I have always said, most missed items are right next to a reported issue and overlooked due to tunnel vision.
    Or from the cliebt or Realtor hanging out of their backside. (did I just say I cannot stand being continually hounded during an inspection....again?)


  24. #24
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    Default Re: legal opinions on inspections and agreements

    Quote Originally Posted by Egbert Jager View Post
    ... Snipped...
    Do you guys have liability limiting clauses in your contract? Are you willing to take them out if a client asks?
    SURE! However, the fee for the inspection increases by $2500!

    The old ITA/KAPLAN agreements included a line that stated if the client elected to waive the limits on liability the inspection fee would increase by $___________. Typically, the amount would be for the deductible of E&O insurance.

    The above statements are expressed solely as my opinion and in all probability will conflict with someone else's.
    Stu, Fredericksburg VA

  25. #25
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    Default Re: legal opinions on inspections and agreements

    My contract has a limitation clause to the amount of the fee or $1,000 or whichever is greater.

    I have never had a client including lawyers ask for changes or deletions to my contract.


  26. #26
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    Default Re: legal opinions on inspections and agreements

    Quote Originally Posted by Stuart Brooks View Post
    Typically, the amount would be for the deductible of E&O insurance.
    Doesn't your E/O carrier require a LOL clause? If so, they migth frown on it being removed.


  27. #27
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    Default Re: legal opinions on inspections and agreements

    Quote Originally Posted by Michael Thomas View Post
    Probably not very likely, as architects, engineers, physicians and almost every other regulated profession I'm aware of is licensed at the state level. If there is a trend toward national regulation at all, it's a trend toward reciprocity agreements between states.
    When did you become aware of the Lead Abatement Laws?


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