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  1. #1
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    Default legal questions for HIs

    As some of you know, I've thought about becoming an HI myself. I've gotten a little turned off because of all the discussion of litigation; it makes me wonder just how common it is to be sued or otherwise get involved in court battles. Without necessarily telling the world about your own legal battles (unless you want to), could people address this issue? Do you personally know of HIs who have gotten sued, and were the claims justified?

    I was also wondering about codes, and recommending AHJs be brought in. My understanding is that the codes are applied to new construction and to remodeling/renovation, but because of the grandfather clause work done before a code went into effect isn't subject to current code. Correct?

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  2. #2
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    Default Re: legal questions for HIs

    Quote Originally Posted by Kristi Silber View Post
    Do you personally know of HIs who have gotten sued, ...
    Yes.

    ... and were the claims justified?
    Some were, most were not.

    I was also wondering about codes, and recommending AHJs be brought in. My understanding is that the codes are applied to new construction and to remodeling/renovation, but because of the grandfather clause work done before a code went into effect isn't subject to current code. Correct?
    Correct.

    Typically, unless it is new construction, the home inspector does not need to go to the AHJ for back up, however, I've always said that home inspectors should get to know the local AHJ and try to attend the same local meetings that the AHJ inspectors attend - that not only helps you get to know the inspectors, but helps the inspectors get to know you, and understand that you are trying to keep current.

    A number of years ago several inspector friends and I were attending a two-day 14 hour continuing education class that most of the local inspectors and AHJ attend down in Broward County, FL.

    We were all sitting together in a group, about 10 of us, when the speaker down in front of about 200-300 inspectors started talking about home inspectors and what little the home inspectors know and that home inspectors are knuckle heads and jerks (I don't recall the exact words he used, but those are close), I raised my hand, he pointed up to me and said yes, go ahead, I stood and said that I am one of those knuckle head home inspector jerks and that I am where with other knuckle head jerks, and the rest of us stood up ... there was silence in the room, the speaker was dumbfounded, and stood there silent for what seem like minutes, then he recovered and said that it was nice to see PROFESSIONAL home inspectors who want to learn about the codes. Then he got back on track and he never did that again.

    Jerry Peck
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  3. #3
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    Default Re: legal questions for HIs

    "because of the grandfather clause work done before a code went into effect isn't subject to current code. Correct?"

    Not as far as home inspectors are concerned. A material defect, say a non-code complying condition, does not read code books or really care. They just wait to injure or kill somebody unless corrected. Home inspectors like to claim they're not performing code inspections, which in fact is exactely what they do. No one should call themselves a professional home inspector who does not have a firm understanding of all the appropriate building codes required for residential construction.

    Getting sued for a home inspection is not an if, but a when.

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    Default Re: legal questions for HIs

    Quote Originally Posted by Kristi Silber View Post
    As some of you know, I've thought about becoming an HI myself. I've gotten a little turned off because of all the discussion of litigation; it makes me wonder just how common it is to be sued or otherwise get involved in court battles. Without necessarily telling the world about your own legal battles (unless you want to), could people address this issue? Do you personally know of HIs who have gotten sued, and were the claims justified?

    I was also wondering about codes, and recommending AHJs be brought in. My understanding is that the codes are applied to new construction and to remodeling/renovation, but because of the grandfather clause work done before a code went into effect isn't subject to current code. Correct?
    It is not that bad. Don't screw-up and you stand a very good chance of not being named in a lawsuit. Screw-up and you stand a very good chance of being named in a lawsuit.

    That is about as simple as it gets!

    Why would you recommend an AHJ? They have nothing to do with a home inspection. They work for the municipality and not the buyer or the homeowner.

    Code is the minimal requirement and that does not always make it proper or correct requirement. Sure you can use code cites to back your findings but not always.

    You can not grandfather safety! Remember that and you will be fine...

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  5. #5
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    Default Re: legal questions for HIs

    Quote Originally Posted by Kristi Silber View Post
    As some of you know, I've thought about becoming an HI myself. I've gotten a little turned off because of all the discussion of litigation; it makes me wonder just how common it is to be sued or otherwise get involved in court battles. Without necessarily telling the world about your own legal battles (unless you want to), could people address this issue? Do you personally know of HIs who have gotten sued, and were the claims justified?

    I was also wondering about codes, and recommending AHJs be brought in. My understanding is that the codes are applied to new construction and to remodeling/renovation, but because of the grandfather clause work done before a code went into effect isn't subject to current code. Correct?
    I actually though you were an HI...hmmm go figure.
    I paid out of pocket $750ish a few months ago for a waste vent that I didn't disclose. Whether or not it was my fault is debatable but none the less, I felt bad that I didn't do everything I could have to prevent that phone call. BTW, its the first time in over 13 years I paid for anything or had any issues. Before that, I paid $30 for some window screens with holes, just to save an agents business.
    Don't sweat what you cant prevent. Just do it and do the best you can and write your reports as if they were going to be used in court for/against you.


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    Default Re: legal questions for HIs

    Thanks for the replies, guys! I guess that's more or less what I thought. Do the job well, know your stuff, have a solid contract, good communication with the client...all help to avoid problems, though they may crop up anyway.

    And yes, of course safety is the primary concern, followed by dwelling hazards. Anyone discuss liability or insurance issues (for instance, downspouts draining onto walkways, or the presence of a wood stove)?

    Scott, I've seen people recommend calling in an AHJ in cases where something isn't done to code but exceptions are acceptible if OK'd by the AHJ. It's a way of handing off the liability.

    Marc, I'll take that as a compliment! Says at the bottom of my posts that I'm not an HI, but not everyone sees it.

    Do not think of knocking out another person's brains because he differs in opinion from you. It would be as rational to knock yourself on the head because you differ from yourself ten years ago.
    - James Burgh, 1754.

  7. #7
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    Default Re: legal questions for HIs

    Quote Originally Posted by Kristi Silber View Post
    Scott, I've seen people recommend calling in an AHJ in cases where something isn't done to code but exceptions are acceptible if OK'd by the AHJ. It's a way of handing off the liability.

    Marc, I'll take that as a compliment! Says at the bottom of my posts that I'm not an HI, but not everyone sees it.
    KS, don't know about up yander but here, the AHJ has no liabilities at all, Zero. I did a re inspection the other day after a dryer duct was installed and finaled by an AHJ, but, it ran through the furnace return box... See what i mean.

    Yes, I missed that at the bottom. Guess you can see now why I paid out that $7hundies...


  8. #8
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    Default Re: legal questions for HIs

    Quote Originally Posted by Kristi Silber View Post
    Thanks for the replies, guys! I guess that's more or less what I thought. Do the job well, know your stuff, have a solid contract, good communication with the client...all help to avoid problems, though they may crop up anyway.

    And yes, of course safety is the primary concern, followed by dwelling hazards. Anyone discuss liability or insurance issues (for instance, downspouts draining onto walkways, or the presence of a wood stove)?

    Scott, I've seen people recommend calling in an AHJ in cases where something isn't done to code but exceptions are acceptible if OK'd by the AHJ. It's a way of handing off the liability.

    Marc, I'll take that as a compliment! Says at the bottom of my posts that I'm not an HI, but not everyone sees it.
    Yep, I have seen folks saying that the recommend the AHJ to approve it or whatever. This just tells us that they do not have a clue and as you said they are just trying to pass off the liability. Local code folks will not get involved with a home inspection, settle a dispute or give an opinion.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  9. #9
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    Default Re: legal questions for HIs

    Good morning Kristi

    Regardless how thorough an inspection can be there are people in the real world who think that an inspector should find every conceivable problem. With that in mind it only takes someone with that mind set to allege the inspector was negligent or breached the contract and/or both.

    They go to a lawyer and tell him their story, and the next thing the inspector receives a claim from the court.

    There are many court cases in which inspectors have been found to be negligent and there are many cases in which the court found the inspector did nothing wrong via the SOP and a standard of care.

    I currently know two inspectors who are being taken to task by purchasers wherein the client bought the house, found problems and rather than follow through with the inspection findings sold the house then filed claims post sale claiming a loss.

    In both cases the plaintiff did not even contact the inspectors for a call back or any explanation.

    Anecdotal stories and my own personal experience is that an inspector who has insurance and advertises same is painting a big target on their backs because the insurers will most likely settle out of court rather than fight the claim as it is expedient financially to pay out rather then expend funds to fight the claim.

    In return the insurers blame the inspector(s) as a bad risk when in fact the inspector did the inspection by the book.

    When you read all the dialogues about inspectors being sued and consider the number of real estate transactions every year the claim ratio to sales is rather low at least from a Canadian pov.

    When you factor in your yearly E&O premium and the deductible and you have a claim, the cost needless to say is quite expensive.

    There is always someone looking for someone else to pay for their own ignorance and short sightedness.


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    Default Re: legal questions for HIs

    Quote Originally Posted by Marc M View Post
    .
    I paid out of pocket $750ish a few months ago for a waste vent . .
    .
    $750 to Stub out a Vent ?

    How Much $ does a boot go for on The Left Coast? ( I'll FEDEX YA a case.)
    .

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  11. #11
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    Default Re: legal questions for HIs

    Quote Originally Posted by Scott Patterson View Post
    Local code folks will not get involved with a home inspection, settle a dispute or give an opinion.
    I disagree. I could rattle off several instances where the AHJ was called, after I called out items on inspections, to settle the issues. In most cases they've backed up my findings and other times they're wrong

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  12. #12
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    Default Re: legal questions for HIs

    The others covered your question very well. But as you probably know it is a complicated business, at least IMHO.

    In your reply, Kristi, you made mention of having a good contract / agreement. While I agree that it's important to have such, my point is that I would NOT have the expectation that a signed piece of paper (contract) will prevent another party from potentially filing a suit against you. I have an ongoing situation that sounds much like the one(s) Raymond Wand described. Completely fraudulent claims in complete defiance of the contract, but they found an attorney willing to draft some letters. As others have said, it is a reality in this business.


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    Default Re: legal questions for HIs

    Unfortunately there are clients that attempt to use their home inspector as their personal ATM. "I am insured" and "Please sue me" both have the same number of letters. However, get yourself occurance type E&O and GL policies and assume all your reports will be read by attorneys. I am not being negative, just sharing my experience as performing EW work mostly related to home inspector litigation for more than20 years.

    Jerry McCarthy
    Building Code/ Construction Consultant

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    Default Re: legal questions for HIs

    Also keep in mind that the Twin Cities area is much different than any other area of the country. Many of the cities have Truth in Sale of Housing or Disclosure reports which must be conducted prior to a sale. The reporting issues may be from national building codes, national property maintenance codes, or even local ordinances. As a buyer's inspector we don't necessarily deal with these issues directly, we do need to know what each city is doing.

    For example, the City of Coon Rapids will not turn the water on to a vacant house until:
    A water restoration permit fee of $75 is paid
    The local AHJ performs an inspection covering anything they deem to be a safety hazard
    Check permit history and any mechanicals installed without permits will need to have permits paid and work reviewed by a licensed contractor.
    Once repairs are made the city will turn the water on.

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    Default Re: legal questions for HIs

    ken

    is coon rapids close to elephant breathe montana

    cvf


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    Default Re: legal questions for HIs

    I want to go to Elephant Breath MT!

    I bet a lot of this varies regionally - right down to the litigiousness of the average citizen and the way the courts deal with the disputes. Certainly the role, knowledge, professionalism and power of AHJs would vary.

    What a shame you can't rely on a contract to protect you! Why? Faulty contract, different interpretations, contract simply ignored? I suppose it could be any of the above. Hhmmh.

    Ken, that's interesting about the Twin Cities being different in their disclosure statements. I'd heard that some cities, especially Minneapolis, had gotten really particular about home sales, but not that it extended to the region or was different from other areas. I bet that's reflected in my insurance reports; I'm sure the rental property requirements are, they're generally in pretty good shape.

    How much use do HIs make of public records like disclosure statements? Is it best to go in without expectations of what you'll find?

    ...I am not being negative, just sharing my experience as performing EW work mostly related to home inspector litigation for more than20 years.
    Jerry, that alone would give you a different perspective!

    Do not think of knocking out another person's brains because he differs in opinion from you. It would be as rational to knock yourself on the head because you differ from yourself ten years ago.
    - James Burgh, 1754.

  17. #17
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    Default Re: legal questions for HIs

    Kristi,

    You wrote "What a shame you can't rely on a contract to protect you! Why? Faulty contract, different interpretations, contract simply ignored? I suppose it could be any of the above. Hhmmh."

    You're assuming people actually read them?!

    My experience says "yes" to your questions.

    And, some people act illogically / irrationally and they'll try and sue you if they "perceive" they've been slighted. Whether it's true or not.
    Don't think you can AVOID lawsuits just because you have signed paperwork. That signed agreement may help you get OUT of the lawsuit eventually, but it may not prevent someone from dragging you thru the mud a while before that. Just my two cents...


  18. #18
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    Default Re: legal questions for HIs

    Quote Originally Posted by dave koloskee View Post
    Kristi,

    You wrote "What a shame you can't rely on a contract to protect you! Why? Faulty contract, different interpretations, contract simply ignored? I suppose it could be any of the above. Hhmmh."

    You're assuming people actually read them?!

    My experience says "yes" to your questions.

    And, some people act illogically / irrationally and they'll try and sue you if they "perceive" they've been slighted. Whether it's true or not.
    Don't think you can AVOID lawsuits just because you have signed paperwork. That signed agreement may help you get OUT of the lawsuit eventually, but it may not prevent someone from dragging you thru the mud a while before that. Just my two cents...
    A contract is just a first year law student challenge to a fair to good attorney.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  19. #19
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    Default Re: legal questions for HIs

    Quote Originally Posted by Kristi Silber View Post
    I want to go to Elephant Breath MT!

    I bet a lot of this varies regionally - right down to the litigiousness of the average citizen and the way the courts deal with the disputes. Certainly the role, knowledge, professionalism and power of AHJs would vary.

    What a shame you can't rely on a contract to protect you! Why? Faulty contract, different interpretations, contract simply ignored? I suppose it could be any of the above. Hhmmh.

    Ken, that's interesting about the Twin Cities being different in their disclosure statements. I'd heard that some cities, especially Minneapolis, had gotten really particular about home sales, but not that it extended to the region or was different from other areas. I bet that's reflected in my insurance reports; I'm sure the rental property requirements are, they're generally in pretty good shape.

    How much use do HIs make of public records like disclosure statements? Is it best to go in without expectations of what you'll find?



    Jerry, that alone would give you a different perspective!
    ...Kristi,
    what Jerry Mac said is exactly the way to go. "Per Occurrance", not a "Claims Made" Policy is the safest and best way to CYA..... Bonds are a cheap way to meet the financial / insurance requirements to get your HI / SPI license, but IMO they are a waste - if there is ever a claim against the bond and the bond pays a claim made against you, you pay back that amount.
    Ouoted from another site: " How do surety bonds work? The principal (you) pays a percentage of the bond amount called a bond premium. In return, the surety extends "surety credit" to make the required guarantee (the bond). A claim can arise when the principal does not abide by the terms of the bond. In the event of a claim, the surety will investigate to ensure it is valid. If the claim is valid, the surety will look to the principal for payment of the claim and any associated legal fees.
    What good is a bond if I have to pay for claims? A bond is not insurance, it is a form of credit where the principal (you) are responsible to pay any claims. The alternative to a bond is to post cash or a letter of credit. Surety bonds are advantageous, as they typically require no collateral, which frees up capital. Bond premiums are also similar to fees for letters of credit and are typically less than one would earn making conservative investments with the available capital."
    ... Just my $0.02 worth. Good Luck !!!

    Last edited by Jim Hintz; 03-12-2012 at 10:44 PM. Reason: because I wanted to

  20. #20
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    Default Re: legal questions for HIs

    Just a couple of additonal thoughts on this discusion:
    • Don't use a "boiler plate" contract/agreement. I think it takes a bit of time and research to review as many as you can to cull out the best language that you understand. If you don't understand your own contract/agreement you client won't either.
    • Make sure you have a "weazel clause" in the contract/agreement. Your realtors, title company's, etc. all have one.
    • Understand the differance on Alternate Dispute Resolution(ADR). Mediation, arbitration, and litigation. Mediation is certainly the best way to go. You can get in and hopefully get on with your life as quickly as possible. In arbitration, the arbitrator can and more than likely will throw the contract/agreement out the window. The last resort is litigation.
    • No matter what business your in, your going to hear "My (whatever relative) is a lawyer". Don't fold or be intimidated by this. In reality, most lawyers, don't want to do "Pro Bono" work that is going to drag out over two years just to get to a deposition. (Unless, they just passed the Bar and are looking for experience).
    • Construction litigation is a specialty! Most specialist won't look at a an issue for much less than $100K. But as Jerry said, if your advertising Bonded & insured, you do have a target on your back. Most general pratice lawyers do not like to handle construction cases, because they can get technically exhaustive. If a GP lawyer does take a case, he's only doing it for billable hours.
    • CYA!!! Be incorporated and if you have any assets, set up a trust. Any lawyer should tell you not to sue a poor person.
    Please,do not take this to be any kind of legal advice, but solely as experience of over 35 years in the construction and building industry.

    Enuff said, My lawyer just left aVM


  21. #21
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    Default Re: legal questions for HIs

    Also, there is a huge difference between regular arbitration and binding arbitration. Be very careful here and always know what you're signing up for.

    Jerry McCarthy
    Building Code/ Construction Consultant

  22. #22
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    Default Re: legal questions for HIs

    Lots of great advice in this thread. I have spent too much time trying wrangle and angle on the liability. The abreviated result is it ain't there. I found to my surprize you cannot limit someone's right to sue. You can use a lot of road blocks mentioned here to craft a legal bullit proof vest, leaving just your extremeties. My prioritized list goes like the following;
    1) Control expectations. 2) In a claim situation be aggressively proactive to fix / mitigate / settle 3) Try to limit your liability via contract, ( sometimes / areas limiting redress to a refund holds up ) 4) Limit the venue, ( Small Claims Court, mandatory arbitration or mediation, ( I don't know the difference ) 5) The corporate shield works, if you follow the rules w/ good record keeping / don't comingle $ etc. In my view nobody need worry about fraud unless they were intentionally fraudlent. And of course you can buy limitless protection from the legally sanctioned racketeers, if you "FEAR" being successfully sued one day.


  23. #23
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    Default Re: legal questions for HIs

    Huh. Maybe I'll stick with the job I have for a while, where I don't have to worry about that stuff. It's really too bad there's not more legal protection for HIs.

    I agree with Garry, controlling expectations is key. Good communication with the client seems very important. The way one responds to a complaint if there is one can determine how it all pans out. Make 'em feel validated, show concern without backing yourself into a corner.

    Heh heh, what do I know? But has anyone yet delved into the psycho-social side of the question? I think not! So much can be accomplished, so many things made easier, by respecting others (or acting as if you do).

    Thanks to all for your great advice and comments! As usual, it's been an informative thread.

    Last edited by Kristi Silber; 04-02-2012 at 12:26 PM.
    Do not think of knocking out another person's brains because he differs in opinion from you. It would be as rational to knock yourself on the head because you differ from yourself ten years ago.
    - James Burgh, 1754.

  24. #24
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    Default Re: legal questions for HIs

    My 2 cents though it may be viewed as a repeat of other posts:

    Current building codes or not, old house or new, safety first.

    Your best defense against liabiltiy is to be as thorough as you can when observing and reporting. Don't leave out little things that you may not see as a big deal, it's not for you to decide what is important, that is for your client to decide. Some agents hate this but they are not buying the house.

    Follow your SOP to the last detail. I can't tell you how many times I've gone to an inspection and looked at a recent inspection report by another licensed inspector and found umpteen things not included in the report that are required to be there by the TX SOP. I'm not speaking of the occasional missed issue, a lot of times they are no brainers and/or safety issues in plain sight. I have found this to be fairly common in my experience and some of the HI's that produced these reports have been inspecting for a long time.

    We all miss things from time to time for various reasons, but strive for due diligence and attention to detail. Take the time to look at things a second time while you are inspecting, you will likely find it will pay off.

    One other thing I find helpful. Before I PDF or print my inspection report I look through all of my photos and notes one last time to see if I forgot anything. You might be surprised more often than you think.


  25. #25
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    Default Re: legal questions for HIs

    Good advice by Eric…… plus go by the 5 D’s = Detect, disclose, describe, disclaim, & defer. Peruse your code book collection often, collect manufacturer’s installation instructions, go to HI meetings/ tool boxes/ state/ national conferences, join ICC, get certified as a ICC Combination Residential Inspector, share and be open to other viewpoints. You can always be better…………………

    Chinese Proverb - Education:
    “He who asks a question is a fool for a minute; he who does not remains a fool forever”.

    Jerry McCarthy
    Building Code/ Construction Consultant

  26. #26
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    Default Re: legal questions for HIs

    Quote Originally Posted by Eric Shuman View Post
    My 2 cents though it may be viewed as a repeat of other posts:

    Current building codes or not, old house or new, safety first.

    Your best defense against liability is to be as thorough as you can when observing and reporting. Don't leave out little things that you may not see as a big deal, it's not for you to decide what is important, that is for your client to decide. Some agents hate this but they are not buying the house.

    Follow your SOP to the last detail. I can't tell you how many times I've gone to an inspection and looked at a recent inspection report by another licensed inspector and found umpteen things not included in the report that are required to be there by the TX SOP. I'm not speaking of the occasional missed issue, a lot of times they are no brainers and/or safety issues in plain sight. I have found this to be fairly common in my experience and some of the HI's that produced these reports have been inspecting for a long time.

    We all miss things from time to time for various reasons, but strive for due diligence and attention to detail. Take the time to look at things a second time while you are inspecting, you will likely find it will pay off.

    One other thing I find helpful. Before I PDF or print my inspection report I look through all of my photos and notes one last time to see if I forgot anything. You might be surprised more often than you think.
    Inspect every single home as if you were buying it. Your mom were buying it. You brother were buying it.

    Look at your pictures every time you open them as in a quick scan, not just the picture you are looking for. That is a wonderful piece of advise.

    Tell your clients that you are there to reduce their risk in the home buying process and cannot eliminate that risk completely. Even if you write it as a general disclaimer or add it throughout the report. Tell them anyway.

    Be real. Don't be so darn business like. Don't load your reports with disclaimers in every section and try not to do it all all where possible. Don't make it look like you are hiding behind standards or disclaimers. When you leave the inspection you better be more than just an inspector. You better be having the folks compliment you on occasion. You better compliment them on occasion. If they don't like you it can become a real problem. If they get lightened up and feel good at the inspection, treat you more as a confidant than someone you have a business relationship with, joke with you, laugh at yours, accept compliments on their career, etc etc etc.

    What am I getting at here?

    Stop with the darn worrying about getting sued and create a relationship, not a business partnership. Inspect like you would want your home inspected. Tell them more than there is a crack half way back on the left side of the home. Tell them why it may be there,,,,,,,ground flat or sloped back to the home, no controls joints for such a long run, no gutters, tree growing next to the home etc. Offer advice to a point that you know for sure but do not throw it out there haphazardly.

    Do not worry about what anyone but your client and the inspection at hand. You start worrying about attorneys and Realtors and your next referral and you just cannot do a good job, period.

    My inspector generally only puts the big ticket items in the summary

    What summary? My report is the summary. It is not loaded with endless dribble that has nothing to do with the inspection. You can turn to any page and know exactly what is going on and where it is and a picture or picturesssssss to show them what is going on.I see thirty page reports all the time. If the garbage is taken out of the report it matches the summary word for word and picture for picture. Why do you want to give someone a report that is twice as long as it should be so they have to decipher it all the way thru and wonder why there are two reports with all the same concerns and pictures.

    Enough said. Concentrate on the client and the home being inspected.

    No question is a dumb question

    Oh yes. Treat your clients with respect respect respect. Don't talk to them like they are idiots or adolescents. Don't ever let the Realtor or anyone at the home interject in between what you say to the client. They are there to get an understanding of whats going on. Not to comment on everything you comment on. They are not the inspectors. They should not speak unless spoken too. If they say something stupid, wait till they finish and then turn to your client and repeat what you already said. The interfering party will get the hint and shut up without you having to tell them to shut up.

    Wow. I love that last sentence


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