Thread: Limitations, Liability, & Lawsuits

Limitations, Liability, & Lawsuits

I’m writing this because I repeatedly see post asking questions about E&O insurance, what to write in a contract, how to word a phrase in a report. Largely caused by fear of being sued. Seeing these post so often, makes me think these are questions that many people have. I feel these question can be sum up in three words; Limitations, Liability, & Lawsuits (LL&L). Most of the questions are not “I have a problem, what do I do?”, but more like, “What should I do to prevent from having a problem?”. If you would like to know what to do to prevent from having a problem, this is written for you.
You need to understand that even a New York lawyer cannot write a contract that will keep you from being sued. If you are sued, a well-written contract can help to limit your losses and even to win.
I said win, but if you are sued and go to court, you have already lost. So the only way to really win is to keep out of court.
These are some of my thoughts, you might think of it as my philosophy, which I use to keep out of court.
Some of these thoughts I came up with own my own, but most of them I learned from reading or from someone whose opinion I trust.
Everyone has an opinion on something, and some people have an opinion on everything. Accept advice only from those sources that you believe to have knowledge or experience in areas that will benefit you.
I don’t recommend you seek advice from someone that has been sued many times and lost, not even someone that has been sued and won, get advice from someone that has never been sued at all. You might be thinking that advice from someone who has been sued and won is good advice. What you need to be thinking is what advice will keep me from being sued. When you are being sued then you get advice from someone that has been sued, but not advice on how to avoid being sued.
Saying that, allow me to tell you a little about myself, and why you might benefit from my experiences.
First of all, I have never been sued; also I have never been threatened with a lawsuit. Let me tell you why I mention that. Some of you know that I install burglar/ fire alarm systems (1986). I own and self-manage 10 rental properties (working on #11 now). Just these two occupations alone expose me to liabilities that most of you will seldom, if ever, have. Installing alarm systems has a very high probability of being sued. As everyone knows, landlords are rich, or at least that’s what renters think.
I say this because I want you to know I understand lawsuits and how to live without fear of them.

First of all do not focus on fear. Why would you want to focus your mind on something you fear? Whatever you focus on, that is where you are headed. Our minds are wonderful at achieving what we think about. If you fear getting sued your mind is constantly thinking about what will happen when you are sued. I’ll save you a lot of thinking by telling you “Only bad things happen when you are sued”. Instead of thinking about getting sued, think, for a moment, about what would cause you to be sued.
This changes the whole focus of your mind from thinking about what you fear to thinking about something you can control. So what can you control? You control what causes lawsuits in the first place. Hint: You are the cause of all lawsuits and claims made against you. That’s right, you are the cause, not the unhappy customer, not someone who says you missed something, not even someone looking for a quick buck. So you don’t think you are the cause of someone suing you. Lets look at it closer.
You control what and how much knowledge you have, not someone else.
You control what is in the agreement, not someone else.
You control what houses you inspect, not someone else.
You control who you will inspect for, not someone else.
You control how much time you spend on an inspection, not someone else.
You control how much you get paid, not someone else.
You control how someone perceives you, not someone else.
You even have control over what someone expects from you.

With only a few exceptions, you control everything.
If you have control over all of these (and more) how could you not be the cause of someone suing you?
You’re the cause because you either did not have control in the beginning or lost control along the way.

So far the only thing I’ve spoken about are lawsuits. That’s because when we talk about Liability, E&O insurance, Limitations of the inspection, were still talking about lawsuits. If it were not for fear of a lawsuit, nobody would have E&O, or even bother with having a contract.
Being sued is the courts way of telling us when we have exceeded our limitations. Remember even the best New York lawyer will not keep you from being sued. By not exceeding your limitations you can hope to avoid looking up at someone wearing a robe.
Remember, lawsuits are the direct result of you exceeding your limitations.
You do know what limitations are? Limitations are what you have control over, I listed some above.

Offer and recommend additional services
When I go to the Doctor for almost any reason, the Doctor recommends additional test be run. Sometimes the test is done at a different office, sometimes in the same office. Blood test, P test, EKGs, scans, you name it, always more test.
You should also offer additional services, and even different levels of services.
One house needs a different inspection service than another house.
EFIS, Pool, Hot tub, older houses, crawlspace, shower pan, drain line scope, roof condition, etc.
A 60 year old 250 lb man with swollen feet needs a different check up than a 30 year old.

In my alarm business, on every invoice I have printed:
Other products, services, and feature selection are available that will provide you with better protection.
For HI:
Additional services, testing, and more comprehensive inspection services are available that will report defects and deficiencies that will not be discovered with this inspection service alone.

Insurance companies do it all the time: They say do you want 100k, 200, or 1M coverage; 500, 1000, 2000 deductible, GL, E&O, WC, disability. They even have riders and umbrella policies. It’s about having choices.

It’s important you know I’m not talking about CYA, or about dancing around words.
Let the customer know you have additional services available to them.
Let them know you have different levels of service available.

Expectations/ Overstating your qualifications
It’s called “Puffing”. Don’t say your an expert, unless you are, maybe not even then.
If something does come up the customer will always remember how you said you were the best around, or an expert at something. Don’t do it on the phone, don’t do it on the web, don’t do it.
That's why so many of you dislike Nachi. They enable the entry level novice inspector to appear to be more qualified than they actually are.

Focus on what is important to the customer
The thing that will get you into more trouble than anything else is water damage.
Water damage, leaks, mould, and rot. Overlook any of these and your in for a ride you won’t like.
50% of your inspection time should be looking for water damage.

Heating and cooling problems.
Nothing will make a customer hotter than if 6 months after the inspection the AC has a problem.
I almost always find something questionable so I recommend the HVAC system be serviced on 60-80% of inspections. In the report I say:
The condition of the HVAC system warrants additional inspection and servicing by a qualified HVAC technician.

If any appliance fails or needs service after the inspection your customer will be unhappy. Check out every appliance the best you know how.

Another thing that will upset a customer are lights that dim and outlets that don’t work. Check every outlet. Plug in a portable heater to check if the lights dim.

Always recommend a termite inspection.
In Georgia a termite letter is required by the mortgage companies, but not all home sales go through a mortgage company.

Always recommend that a whole house surge protector be installed.
Control boards for the stove, dishwasher, HVAC, etc are not cheep, and if one goes bad it will be perceived as you overlooked it and therefore your fault. You will be getting a call.


That's all for now

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Good points,

However I think you are remiss to dismiss learning from those that have been sued for whatever reason.

There are many ways to reduce risk, such as pre-screening clients, turning down those that give cause for possible concern as you mention.

Being sued is the courts way of telling us when we have exceeded our limitations

Actually the courts are finding fault for what the inspector hasn't done, should have done according to industry standards and a standard of care.

I don't know of any cases finding fault for exceeding limitations rather the courts seem to think that we should exceed the fundamentals of the SOP by ensuring a standard of care.

From a Canadian courts pov -

The general legal principle that applies is that the standard of care applicable to a professional in the performance of his or her duties is one of reasonable skill, care and knowledge (Central Trust Company v. Rafuse, 1986). Although the standard is an objective one, the law will tailor it to fit each circumstance. Not surprisingly, there has been much debate about how that standard is to be applied in respect of professionals who, by definition, engage is the trading of their skill and knowledge. The one uncontroverted principle arising from that debate is that a professionals error of judgment will not constitute negligence. The problem, of course, has been how to distinguish misjudgment from negligence.

More to the point, when it comes to determining the importance of professional standards in respect of the legal standard just described, a court considers that a standard practice falls below the legal standard only if the standard practice fails to adopt obvious and reasonable precautions readily apparent to the court. Otherwise, the court will show deference to the standard practice.

Here are some points that should keep you out of trouble from a lawyers pov.

1. The report identifies a problem condition, but NOT its significance or
meaning.

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

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

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

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

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

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

8. The contract does not contain a limit of liability provision.

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

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

Thanks Raymond

Sometimes I don't write as clear as I would like to, it's one of my limitations.

"However I think you are remiss to dismiss learning from those that have been sued for whatever reason."

This is what I said
"When you are being sued then you get advice from someone that has been sued, but not advice on how to avoid being sued. "
If you are being sued then you should get advice from someone with experience at being sued.


"Actually the courts are finding fault for what the inspector hasn't done, should have done according to industry standards and a standard of care.
"I don't know of any cases finding fault for exceeding limitations rather the courts seem to think that we should exceed the fundamentals of the SOP by "

I'm not talking about exceeding SOP limitations, I'm talking about your personal limitations:
Your education, your time constraints, your ability to communicate,
over promising then under delivering.

I can't remember where I read this, but it made an impression on me.

When there is something you can't inspect, such as a snow covered roof, ALWAYS put in your report that you will return to the property (for a fee, or not, doesn't matter) when the item in question becomes accessible, if the client desires.

This was advice from a judge to a home inspector. Judge said that simple statement makes all the difference in the world, rather than just stating "I couldn't get to the xyz item because of blahblahblah, period."

I put a general statement to this effect in every report and I repeat it when there is something specific I can't get to.

"When there is something you can't inspect, such as a snow covered roof, ALWAYS put in your report that you will return to the property (for a fee, or not, doesn't matter) when the item in question becomes accessible, if the client desires. "


That's right. Once I completely overlooked inspecting the water heater. Did not know about it until I was writing the report. In the report I stated that I overlooked the WH and would return to inspect the WH at no charge on request. Never got a request.

Rick,
Very good. Thank you for your interest and time. Sometimes appreciation is just never mentioned.

It is in interesting to see backgrounds that will effect perspectives and promote a wider view of potential issues. Like you I have rental property which will add a whole new dimension to your view of the world. Which is where our experience generated from.

Rick, what your are saying is be proactive and not reactive.

The CYA principle is often about method employed. If your concern is to CYA with respect to your state's SOP you exceed that SOP. By taking it in reverse if you perform a better job (exceeding SOP) you will CYA without being focused on the CYA just being focused on quality performance.

The term " fear " has many perceived meanings. For me "fear" is concern of potential events. And you are right on focusing on the correct things surrounding a concern. Focusing on the best method to secure a ladder is better than focusing on the pain of falling two stories (been there done that experience know actual pain an financial consequences).

Raymond,

States in the U.S. have preclusion's for your suggestion .."8. The contract does not contain a limit of liability provision."... in that a person can not waive certain rights. This varies by state and all should be know exactly where their state stands on the issue.

To many have the false idea that they can protect themselves with a liability limitation clause. To many focus on the process of protection rather than as Rick proffers that if you perform well liability protection will not need to be a concern (fear). Mater of philosophy.

That was great information for inspectors to take bits and pieces from and apply to to their business and risk management practices.

FYI, be VERY careful about using limitation clauses... Check to see if they are valid in the state in which you inspect. For those in New Jersey where they are illegal (a limitation clause is contradictory to the licensing requirement of 500K E&O policy), DEFINITELY get rid of that clause in your contract. We have a class action lawsuit because an inspector used one. And the plaintiff's attorney are asking for EVERY inspection report for the past 6 years where he used the same contract to get the others to join in.

Thanks
Ben and Garry

Lots of good points, but don't listen to me, I have been sued.
If you think you can do things to avoid being sued, you are wrong.
You can do things to avoid losing a lawsuit but you can do a perfect inspection every time, have all the appropriate disclaimers and limits of liability and some ahole will still sue you.
All of the things mentioned in this thread will help you win a lawsuit or may keep a lawyer from taking a case on contingency, but there are people out there with lots of money who are willing to pay the lawyers. If a guy has money, the lawyer will sue.

So, bottom line, there is nothing you can do to avoid getting sued, just things you can do to help you win.

Benjamin
I sympathize with you. But this is why I said do not ask advice on how to avoid being sued from someone that has been sued. Your mind has already determined that there is nothing you can do to avoid a lawsuit. It only thinks about how it can win a lawsuit.
Using the Doctor analogy again; If you fall from a ladder and break a leg, your Doctor can treat that. Wouldn't it be better to control the causes that led to falling from the ladder before you fell.
If you want to live a long and healthy life, ask Jack LaLanne, not a 250 lb heavy smoker even if they are a 100 years old. You ask a 100 year old 250 lb smoker, who their your Doctor is.
I'm not saying do this or don't do that and you will never have any problems. I'm saying think about what reasons would make someone want to take you to court.
Once you know what those reasons are, take action so that those reasons do not exist. If you eliminate all the reasons you will not wind up in court. Of course you cannot eliminate every single reason, but it is within your control to reduce the number and severity of the reasons.
I think you, I and everyone else will agree that there are things someone can do (and not to do) that will cause them to be sued.
Example: if you report the roof as not needing repair and it leaks, you have done something that can get you in trouble. Like wise if you do not report that the roof needs repair and it leaks, you can also get in trouble.

If there are things you do and don't do that can cause you to be sued, then there are things that you can do (or do not do) that can help to keep you from being sued.

Back again


For those of you that have been sued, you may be thinking; He just doesn't know, or He’s naive.
I ask you this, Did you make any changes to the way you do business after being sued, or are still operating the same way? Chances are very good that you made at least a few changes. If you did make any changes, did you made the changes thinking that it would help to prevent you from being sued again. So if you made any changes that you think will help prevent you from being sued. If you had thought about it sooner would you have made the changes before you were sued? That's what I’m talking about, making changes now that can help prevent you from being sued.

The first thing we need is:
What are the reasons you might get sued?

Does anybody hay any ideas?

If any inspector thinks he/she is immune from getting sued because of how thorough they are, how good the agreement is, etc., etc., I invite you to spend a day with me in my office and listen as I deal with my clients who received notice of a claim or potential claim. I see it all day, every day and it's mind blowing.

Ben,

Since limitations of liability have been legislated out of inspectors contracts and since E&O providers at one time required inspectors to limit their liability what exculpatory language have the insurers recommended in lieu of?

Thanks.

Ben
Good points.

"If any inspector thinks he/she is immune from getting sued because of how thorough they are, how good the agreement is, etc., etc., "

Thats why I said "...even a New York lawyer cannot write a contract that will keep you from being sued.".

As for being thorough, well it certainly will help

No body is immune. However would you agree there are some things that can reduce the likelihood?

You know better than anybody, what are the reasons inspectors are sued?

Originally Posted by Rick Cantrell

Back again


For those of you that have been sued, you may be thinking; He just doesn't know, or He’s naive.
I ask you this, Did you make any changes to the way you do business after being sued, or are still operating the same way? Chances are very good that you made at least a few changes. If you did make any changes, did you made the changes thinking that it would help to prevent you from being sued again. So if you made any changes that you think will help prevent you from being sued. If you had thought about it sooner would you have made the changes before you were sued? That's what I’m talking about, making changes now that can help prevent you from being sued.

The first thing we need is:
What are the reasons you might get sued?

Does anybody hay any ideas?

Yep

Hiding behind a contract that limits liability for your screw ups. That gets folks just plain pissed. They will look for a way to get you.

Number 2 is you did not make friends with your clients. You did not let them know that you are there to reduce their risk and not eliminate the financial risk. You did not know that walking around the home in the early morning may or may not reveal something that the sun shining across the surface will. etc etc etc

You did not joke with the kids. You had them calling you sir because that's what they do especially when you are older for respect. My name is Ted, and yours is. I call them Bo or Jane or what ever their name is. I go to their level whether they think they are above you or below you. I am real. As real as I can get.

You did not pick on them in a fun way about the fact that they are 5 feet or less or 7 feet tall. You may think it a bit crass but that is what their friends did all there life. I had a woman that with her heals on was at the very least 7 feet tall one day and the next day the woman was five feet or less. I had to get after both of them. They laughed and it was fun. The tall one the joke was nose bleeds and the short one was "is everyone always bumping into you because they do not see you. They both had fun with it. Break the tension. loosen them up. Have fun with what you do for a living. So freaking what if the front of the house is falling off. Have fun with it.

They want real people looking out for them. They want a friend that knows they are taking a risk on you but lift that risk talking about and joking about what money pits homes are. Not in a scary way but a way so they understand. Most of all the conversation must come up about the very short time you are there. When you do a walk around bend down and point at things or let them know you are looking at it. If they think you walked thru the home and did not look at everything then you are screwed.

When explaining your findings use lots of hand waving gestures so they are looking around.

When you leave they feel that everything was looked at (and it was) and you did the best you could with the literal quick inspection of being there a few hours with them.

The report and the knowledge is all wonderful and all but If you don't make a friend and they are not put at ease you are screwed.

I personally can tell on the phone instantly the type of person I am going to deal with on the inspection. No matter how hard nose they are I will break them before I leave. They will feel like they got a massage and sat in a hot tub when I leave even if it is a dump. That is not a lame game. It is called life. You are the friendly caring understanding man with a great background for the business that is doing his best for the amount of time you are there and are looking out for them and most of all they know you care.

Kind of hard to beat the c r a p out of you later after all that.

Good point Ted

Friends don't sue friends.

It's not a reason someone may sue you, but it's a very good reason someone may not.

Anyone else.

Friends don't sue friends?

Hiding behind a contract that limits liability for your screw ups. That gets folks just plain pissed. They will look for a way to get you.

Thats odd considering where the limitation of liability is still legal insurers will want you to put it in as well as your lawyer.

I have it in my contract and I know others with it and the clients aren't pissed, never had a problem, but then again being thorough is a good risk reduction tool amongst other risk reduction skills, fwiw. But then again any client regardless of your contract is going to find a bulls eye if need be.

Raymond
You wonder why I said "Friends don't sue friends".

Someone is much more likely to sue you if they do not like you.
So the reverse is true, they are less likely to sue if they do like you.
In fact they are less likely to sue you if they feel that they know.

Rick

I have heard that arguement many times, and I understand the concept, but reality is it just doesn't always happen that way. Friends invited into homes of other friends and have an accident are one example where friendship is thrown out the window.

My advice is sound your clients out when they first call, ask them about what they intend to do with the house, are they handy, resourceful, first time buyers, do they have children, do the children experience allergies, et ceteras.

I ask them is they are using an agent, what concerns they have, do they know the age of the roof, furnace, any other upgrades, where they are moving from. Get to know them and set their expectations.

Then I tell them what I do. I refer them to my contract on my web page and to bring it filled out to inspection.

I always instill in my clients to attend, 99 percent do, and for those who don't I will charge them more.

Always deal with complaints promptly. Many inspectors will become defensive and give the client a hard time or no follow up. That is going to piss them off for sure.

Not being argumentative, I guess I have like you experienced things differently.

Originally Posted by Raymond Wand

Rick

I have heard that arguement many times, and I understand the concept, but reality is it just doesn't always happen that way. Friends invited into homes of other friends and have an accident are one example where friendship is thrown out the window.

My advice is sound your clients out when they first call, ask them about what they intend to do with the house, are they handy, resourceful, first time buyers, do they have children, do the children experience allergies, et ceteras.

I ask them is they are using an agent, what concerns they have, do they know the age of the roof, furnace, any other upgrades, where they are moving from. Get to know them and set their expectations.

Then I tell them what I do. I refer them to my contract on my web page and to bring it filled out to inspection.

I always instill in my clients to attend, 99 percent do, and for those who don't I will charge them more.

Always deal with complaints promptly. Many inspectors will become defensive and give the client a hard time or no follow up. That is going to piss them off for sure.

Not being argumentative, I guess I have like you experienced things differently.

All of those are good
And yes, sometimes a friend will sue you, but less often that someone who does not like you.

Rick

I know one thing, when I started in 1991 I really enjoyed my job, but now 20 years later it certainly has changed, what with all the licencing, liability, expectations, overheads...
Every time I complete an inspection I worry what I said, reported, and what I should have done to go above and beyond. I guess thats why at 55 my hair is silver.

Wish I had hair.

Originally Posted by Raymond Wand

Friends don't sue friends?

That's odd considering where the limitation of liability is still legal insurers will want you to put it in as well as your lawyer.

I have it in my contract and I know others with it and the clients aren't pissed, never had a problem, but then again being thorough is a good risk reduction tool amongst other risk reduction skills, fwiw. But then again any client regardless of your contract is going to find a bulls eye if need be.

Not pissed at signing, pissed when they find something you missed or if they want something for nothing and then they investigate how to get something from you

Besides, too stuffy and too business like and you are too threatening.

Here is an article that might contain some helpful info 12 Steps to Help Inspectors Avoid Lawsuits.

I might as well beat the stalkers to the punch and confess that I posted the link to this article for purely marketing purposes and to generate new members for InterNACHI. How's that for a disclaimer?

Truth in marketing at least!

> Hiding behind a contract that limits liability for your screw ups. That gets folks just plain pissed. They will look for a way to get you.

To me, the shortcoming of this approach is that unless the inspector is very careful to educate them, almost all clients will assume to some extent, and some clients will assume on every occasion in which their advantage, that any practical limitation on the inspection represents a "screw up" on the part of the inspector.

_____________

IMO, many inspectors are overly concerned that clients will be put off by inspectors admission that home inspection is not exhaustive, or that there are many legal and practical practical limitations on what we can do, or that we are offering an opinion - hopefully, an informed and carefully thought-out opinion - but in the end just opinion with which others may differ.

Then there are the inspectors who regard the client is a problem, and do everything possible to prevent them from attending the inspection - despite the fact that IMO the primary way that client comes to understand how hard we worked to evaluate the property is to watch us perform the inspection - my attitude is that if I regard the client is a problem, they are far more likely to become one.

I practice every type of potentially effective liability control I can imagine or I've heard about.

Every inspection starts with a five-minute presentation outlining the real-world limitations of inspection, based on a brief written explanation that's included with the copy of the contract I e-mail every client at least 24 hours prior to the start of inspection (the rare exception is when I'm doing a "rush" job, and in that case the client and I review the explanation of limitations document prior to the inspection, point by point).

This document is the start of an attempt to help the client understand that the limitations to inspection are not arbitrary inventions of attorneys, they reflect the actual conditions under which a home inspection is performed.

Here's how the written explanation of limitations starts:

Throughout my inspection career one of my goals has been to understand how to make my property inspections and reports more useful to my clients.

As part of that effort I have followed up with clients, talked with other inspectors, asked real estate agents and attorneys about their experiences with inspectors and inspections, and read through client reviews of home inspection services in venues such as Angie's List.

When doing so, I pay particular attention to the people who've had a disappointing experience, looking for ways to improve my inspections and how I communicate my findings to clients.

Sometimes, it's clear that these inspection clients are unhappy because their inspector failed (as best I can judge, hearing only one side of the story) to do as good a job as they should have given the circumstances.

But I often find myself suspecting that the client was disappointed because their inspector failed to correctly explain the limits of what any inspector can reasonably observe and report given the circumstances and time limits of a typical property inspection - after all, when you're attempting to market your services it's uncomfortable to discuss what you can't do for a potential client.

However experience has taught me that's it's a mistake to allow a client to assume that you can do more than you actually can.

A competent inspection and report can (and often does) make it possible for a client to avoid unpleasant surprises and unexpected expenses - or at least make an informed choice if they decide to purchase a property despite known shortcomings.

But it's equally important that clients fully understand the limits of such inspections, because otherwise they will quite reasonably believe the inspector should have alerted them to every problem that is present or develops in the future.

And my explanation of the major limitations of inspection ends with this:

10) Finally, and this is very important, please feel free to comment on any aspect of the inspection and report, and especially to ask questions about anything you feel I may have overlooked or which you feel you do not fully understand.

I have limited time available to perform you inspection, I must decide where to focus my attention, and some conditions at an inspection may be difficult to observe – it is possible you may see something I did not. (For example depending on how the light hits it a stain on a ceiling it may be readily visible from one vantage point, but virtually invisible from another. If you are standing in the right location, you may observe a stain I did not.)

So if observe anything at the inspection about which you have any question, or which you feel I may have overlooked, please bring it to my attention.

After the inspection, I try to write my reports in the most straight-forward way I can, but in order to make my observations and recommendations clear to tradesmen and others who may be called on to prepare estimates and perform repairs or improvement I sometimes must use technical terms which may not be familiar to homeowners.

So if there is anything in the report which is unclear, or if you feel anything has been omitted from the report which should be there, please do not hesitate to contact me and I will take as much time as is necessary to do the best job I possibly can of addressing your concerns.

IMO, with the exception of a few jerks who are going to be suing us anyway, clients don't expect us to be Superman and Women, if the limitations of how we do our job are made clear to them, and then they see us doing them, and they are provided with a report that really makes an effort to help them understand what we discovered, candor about our own limitations and the limitations imposed by the conditions at home inspection is a client relations and liability control plus. not a minus.

This isn't just theory, it's my daily practice.

My contract states at the top, in bold red lettering:

"This contract limits Paragon Property Service's liability. Please read it carefully prior to the inspection, and ask about anything you do not understand."

One reason for this is that Illinois court ruling upholding strict liability limitation provisions in home inspection contracts specifically cited the fact that such notice was prominently present on the contract.

So if clients are going to be unhappy about inspectors who limit their liability, presumably they're going to be very unhappy with me, and I'm going to be hearing about.

I have had exactly one client who has even mentioned the fact that my contract includes a strict limitation of liability - the client was lawyer, he agreed to proceed on the basis of my contract as written, and has since referred me business.

And while many clients who find me via the website ask the usual questions about licensing, insurance, experience and so on, not one has ever asked about limitation of liability in my contract.

And despite that every client understands the limitations of my inspections, my approach produces a level of client satisfaction the results in the kind of personal referrals where I don't have to spend 20 minutes on the phone attempting to convince someone who doesn't know who I am. and doesn't understand that the term "Home Inspection" encompasses a very wide range of services, that my fee is worth the difference between myself and some Checklist Charlie who will be in-and-out of a complicated foreclosure in two hours (including the on-site report) for $250 less than I charge.

Basically, I've pretty much given up on getting price-sensitive business unless the client is interested in understanding the differences:

"I understand why you are concerned about price - nobody wants to pay more than have to."

"But since experience allows me to understand the difference between inspections - there are huge differences in the quality of home inspections and reports - I think you may be asking yourself the wrong questions."

"The difference between that price and my service is $125 - the cost of a really good dinner out, with drinks."

"If you think it might be worthwhile to spend that much money to save hundreds or thousands of dollars on your purchase, I'll be happy to explain how my services often save clients that kind of money".

"But if you are only concerned about the cost of the inspection - and I understand how that could be - then it makes sense for you to go with the least as expensive inspector you can find ."

"Would you like me to try and explain the difference?"

I do land a few such jobs, but it's not because the client believes that I'm willing to guarantee or warranty the results of my inspection.

_________

As for return visits, if a system or component is inaccessible, I will offer to return to inspect for reasonable fee, in my case $125 an hour plus travel time. I am paid to inspect he property as accessible at the time of inspection, and it additional efforts must be made to reinspect it that is someone's financial responsibility, but it's not mine.

On the other hand, if I discover when writing the report that I've overlooked something I should have observed, or that on further reflection should have been more thoroughly inspected, or inspected differently (happens once or twice a year, in part because I'm a very compulsive inspector), I am very insistent in attempting to obtain access to the property to inspect as required at no cost to my client - just a matter of good liability control.

What does happen far more frequently - probably once or twice a month - is I will return to a property without charge to meet a structural engineer, or electrician, or HVAC contractor or someone else who is evaluating some condition as a result of my recommendation - he is there because there is something that I would like to understand better, and as I explain to the client "The problem with my business is that the only way to educate yourself, is to educate yourself."

YMMV

This is how I handle my limit of liability. It has been tested a couple of times and has worked well for me for over a decade.
Yes, I am not Superman!

Originally Posted by Scott Patterson

This is how I handle my limit of liability. It has been tested a couple of times and has worked well for me for over a decade.
Yes, I am not Superman!

I tell people I'm a mere mortal.

Originally Posted by Michael Thomas

I tell people I'm a mere mortal.

You say in your limited liability statement

" We agree that *** *** ***
Inc., its employees, agents and subcontractors assume no liability for the
costs of repairing or replacing any unreported defects or deficiencies
either current or arising in the future or any property damage,
consequential damage or personal injury of any nature."

And then you say

"We agree that sole remedies for any deficiency in the performance of Paragon Property
Services Inc. are, as appropriate, a re-inspection at no additional charge
or a refund of the inspection fee. In the event of a claim by the Client that
an installed system or component of the Subject Property that was
inspected was not in the condition reported by the Inspector, or was
improperly left unreported"

And then

"Altering or repairing any item without giving us
notice and a reasonable opportunity to investigate your claim
(except for an emergency) will waive any claim you may have
against us."improperly left unreported"


So this all simply states in the beginning that you are not going to repair or replace anything even if it causes property damage and or what ever, just simply no liability at all.

Then you say you will reimburse the inspection fee or reinspect

Then you say if they have a complaint against you but you already said you are not liable for anything and you won't fix anything or replace anything.

You say there is no liability or replacement or repair but " that was
inspected was not in the condition reported by the Inspector" and then state they will get their money back if you

----------------------------------------------------

So you have no liability what so ever

You will pay them back

If you miss something altogether you are not liable but if you actually report on something and screw it up you do have laiblity and will pay for it

But if something is left unreported you will pay them back but you have no liability.

You have no liability but if they fix something before they tell you and you can go back then you have no liability but you already told them you or anyone else is absolutely positively not liable for anything.

Not picking on the statement but I was just left confused or maybe I am reading it all wrong or maybe it is left for interpretation about everything or maybe you are liable but maybe not liable and you won't repair or replace anything but you can be held liable unless of course they don't tell you on time before a repair which I guess you will be paying for because they gave you due notice and you did screw something up.

Seriously Mike. I am getting older and maybe a bit lame but that left me exactly how it sounded it left me in my entire reply to the Limited Liability Statement. Totally .... HUH.

I am glad that is works for you. Seriously I am but I would personally never sign that contract and find another inspector. But that is just me, a little older and a little bit lame and a whole lot confused. Not only would I not sign it but I would not ask anyone else to sign it.

Oh wait. I have never had anyone in over 3 1/2 decades ever sign a limited liability statement for home inspection ...... ever. And yes. I have E&O Insurance. And yes they know I do not sign a limited liability statement.

They know I am a mortal and not superman or perfect. They do know that I am a straight forward kind of guy that is there looking out for them the best I can possibly muster in the short time I am there and only there to reduce their risk in the financial end of the home buying process and I cannot possibly eliminate that risk.

The clients I love are the ones that want a couple hundred for a leak that develops after the fact and after the fact that the seller put out 20,000.00 in repairs for all the goodies I found. In those case I just send Vinnie to see them In reality I take a picture of ever single water fixture and under every sink, shower, tub, hose bib etc and anywhere there is water for that matter with the water running so they can never pull that.

I hope that everyone realizes that a contract will not prevent a lawsuit. Contracts are really just a bluff and a good contract is just an elementary exercise for a fair attorney.

I have seen countless contracts simply ignored by attorneys. They know that if they can keep the lawsuit going long enough that the chances are that it will settle before a judge can rule on the merits of the case and the contract. Then let's not even think about the judge tossing the contract out because they do not agree with it.

The big advantage we have in Illinois is that it's a "strong contract state" and that we have an appellate court ruling upholding limitation of liability to the cost of the inspection, providing the contract is appropriately written.

That means, first, that no lawyer aware of the appellate court ruling is going to take this kind of case on contingency unless they're willing to relitigate it past the appellate court and on to the state Supreme Court, which I'm told is highly unlikely - if there was any chance at all of success, it's likely this would've been appealed further after the appellate court ruling.

Secondly, it means that if somebody does want to sue for an amount in excess of the inspection fee, it's going to get tossed right back out of court based on the appellate court ruling, and that defense is extremely straightforward and probably with the financial means of most home inspectors.

This doesn't mean that somebody won't be willing to pay the cost of a pointless lawsuit, which is why I carry E&O.

But it does mean that their lawyer is going to be telling them going into it that the absolute maximum they're going to recover is a cost of the inspection fee.

That's a pretty strong disincentive to sue - it's one thing to to spend your own money "to get back at that son of a bitch", it's another when you know that there is no chance that you're going to receive a substantial monetary award.

Under those circumstances about the only thing you have to be afraid of is a lawyer representing themselves, or a complete nutcase who is willing to spend their own money as long as the inspector has to spend theirs.

Doesn't mean it can't happen, but Illinois where a much better position than many other states.

"The point is, you can be as careful and inspect as well as possible in the time allotted, ..."

Which is a good point.
Different levels of service also mean different time allotment.
If the customer wants to save money they have the choice to hire you for less time, of course in less time you are not able to inspect as throughly as if you had 2 hours more.
Should Home Inspections be a buffet or ala-carte?

As I have learned in my short 12 year history in this industry. You can have all the right wording in your contract, all the right insurance and do the best inspection in the industry. You are still subject to a law suit. Period.

Recently I had a client call me for a sewer ejector pump that failed a week after she moved into the home. I explained to her that I do not do sewer ejector pumps, as stated in my inspection contract with her, and also do nothing with the sewer system in way shape or form.

One week later I was the lucky recipient of a certified letter from her attorney seeking compensation for the $3800.00 sewer ejector pump, along with additional charges/damages due to the sewer back up in the home. Sheet rock, insulation, carpeting / pad, clean up and pain / suffering as well as her hotel accommodations.

Contacting my insurance company. I was told that this was not a covered item due to not being an inspect-able commodity. They did turn it into a claim (Thankfully) and researched it to find that this is not an inspection item and that I am not liable for it in anyway shape or form, thus denying her claim.

Now facing a civil law suite.

Am I liable. NO!!!!!. Even according to the state laws and the state contact persons who govern the laws. However, the money will be spent for attorney fees and yes I will will in the long run as long as I do not count the money and time I will spend in court that the insurance company does and will not cover.

Originally Posted by Jim Scott

As I have learned in my short 12 year history in this industry. You can have all the right wording in your contract, all the right insurance and do the best inspection in the industry. You are still subject to a law suit. Period.

Recently I had a client call me for a sewer ejector pump that failed a week after she moved into the home. I explained to her that I do not do sewer ejector pumps, as stated in my inspection contract with her, and also do nothing with the sewer system in way shape or form.

One week later I was the lucky recipient of a certified letter from her attorney seeking compensation for the $3800.00 sewer ejector pump, along with additional charges/damages due to the sewer back up in the home. Sheet rock, insulation, carpeting / pad, clean up and pain / suffering as well as her hotel accommodations.

Contacting my insurance company. I was told that this was not a covered item due to not being an inspect-able commodity. They did turn it into a claim (Thankfully) and researched it to find that this is not an inspection item and that I am not liable for it in anyway shape or form, thus denying her claim.

Now facing a civil law suite.

Am I liable. NO!!!!!. Even according to the state laws and the state contact persons who govern the laws. However, the money will be spent for attorney fees and yes I will will in the long run as long as I do not count the money and time I will spend in court that the insurance company does and will not cover.

Exactly. Rick's hubris is that he can control and prevent such a situation, and that he has the luck not to have been sued yet.

Ted, you have E&O insurance and do not have inspection agreements?

Originally Posted by Jim Scott

As I have learned in my short 12 year history in this industry. You can have all the right wording in your contract, all the right insurance and do the best inspection in the industry. You are still subject to a law suit. Period.

Recently I had a client call me for a sewer ejector pump that failed a week after she moved into the home. I explained to her that I do not do sewer ejector pumps, as stated in my inspection contract with her, and also do nothing with the sewer system in way shape or form.

One week later I was the lucky recipient of a certified letter from her attorney seeking compensation for the $3800.00 sewer ejector pump, along with additional charges/damages due to the sewer back up in the home. Sheet rock, insulation, carpeting / pad, clean up and pain / suffering as well as her hotel accommodations.

Contacting my insurance company. I was told that this was not a covered item due to not being an inspect-able commodity. They did turn it into a claim (Thankfully) and researched it to find that this is not an inspection item and that I am not liable for it in anyway shape or form, thus denying her claim.

Now facing a civil law suite.

Am I liable. NO!!!!!. Even according to the state laws and the state contact persons who govern the laws. However, the money will be spent for attorney fees and yes I will will in the long run as long as I do not count the money and time I will spend in court that the insurance company does and will not cover.

Jim, you need to get a copy of your policy and read it. This is what E&O is for. They should defend you on this. My guess is that your insurance will cover you because an ejector pump is part of the plumbing system of the home and you did report on the plumbing system. Also, I hope that you did report that an ejector pump was present but you just did not test it.

Another point is that your clients homeowners should have payed for the cleanup and everything else that was part of the pump going bad. Just keep this in mind.......

Who is your E&O with? If they are doing going to act like this we all need to know so that they can be avoided. My E&O does not cover an EIFS inspection, but if I report that a home has EIFS on it and then go on to inspect/explain it like I would any other cladding (But not do an EIFS only inspection) and then later my client sues me, my E&O will defend me.

Sounds like your insurance company is bluffing you. If you are in a licensed state you need to notify your state agency, the insurance commission, and the AG. You are being done wrong!

"I hope that you did report that an ejector pump was present but you just did not test it."

I think it also important to recommend in the report that the ejector pump be inspected.

"Rick's hubris is that he can control and prevent such a situation, and that he has the luck not to have been sued yet."

I apologize if I sound arrogant, that is not my intention.
I also do not wish to offend anyone, I'm only trying to offer suggestions that may be of help to some.

Possibly I have been lucky, and that could change with the next phone call or mail delivery. However I do believe that it is better to plan on ways to avoid a lawsuit rather than ways to defend a lawsuit.

I'm a pilot, and every pilot receives training in accident avoidance, as well as accidence survival. Those pilots that do not practice accident avoidance are much more likely to need accident survival.