Is the home inspector
responsible for problems in my house that weren't reported? Can I sue
my home inspector? What recourse does a buyer have against a bad home
inspector? What should I do if I've had a bad home inspection?
The
answers to these questions are somewhat complex because there are so
many variables, but the short answer is that in many cases an
inspector will refund part of the cost of the inspection if the
problems should've been discovered and reported. Otherwise it is
usually futile to sue a home inspector unless there is clear evidence
of negligence or willful misrepresentations of fact, and here's
why:
1. The
terms of contract or agreement limit the
inspector's liability. Most home inspectors have an agreement with
the customer that waives liability if the inspector doesn't
discover problems, especially those that are hidden, and if it is
determined the inspector missed problems that should've been discovered
contracts usually limit the maximum liability of the inspector to the
cost of the inspection. Typical contracts also stipulate a
method for resolution if there is a disagreement between parties,
often prescribing mediation or arbitration in lieu of a lawsuit.
2. Contrary
to popular belief, an inspector's Errors and Omissions Insurance doesn't
protect a home buyer or pay for an inspector's mistakes. Most home
inspectors carry errors and omissions insurance, but it doesn't protect a
home buyer, it protects the inspector from a lawsuit by a client
/ buyer. Typically the errors and omissions insurance companies have
the resources to hire better legal representation with more experience
defending such claims than what the average consumer can afford to
spend to win, and usually the damages aren't enough to get a high quality
lawyer to work for a consumer without charging fees or keeping
a significant portion of any possible settlement award. The chances
of winning an E & O claim against a home inspector are small. The
exception is if it can be proven the inspector was
negligent. I've provided testimony and affidavits relative to
the standard of practice for the inspection industry in lawsuits
against other inspectors that involved E & O claims, and despite it being
my opinion the inspector(s) in question acted negligently and didn't
follow the standards of practice of our industry, the plaintiffs were
unsuccessful. I'm not familiar with any case locally in which a
plaintiff has been successful suing a home inspector - it's just too difficult
to prove actual negligence.
3. A
lawsuit might be futile if the problems were hidden or if the
inspector didn't have a chance to rectify the situation before repairs
began. For example, some homeowners discover problems with their
house after they buy the home but fail to notify the
inspector until after repairs are complete, thus the inspector had no way to
either help resolve the situation or determine what burden of responsibility he
or she might have to bear, thus the inspector has no mechanism for
minimizing harm or determining cause and origin of the problem,
which creates a potentially legally complex
situation because most problems overlooked by inspectors are
concealed by contractors or homeowners, thus there might be contributory
negligence or fraud by other parties. In some cases an inspector might
actually be able to help determine who's at fault and be a potential
witness for the customer rather than being a defendant of the customer. A
good home inspector should always be an advocate for objectivity and truth.
4. Home
inspectors aren't responsible for latent or hidden defects. Sometimes the
problems in homes are discovered or uncovered through the course
of remodeling, or after living in the house for a period of
time. When this occurs it lessens the likelihood of a successful
claim because a home inspector doesn't have the benefit of living in
the home or removing finishes to examine and discover hidden problems
and typically the courts recognize these limitations.
5. Actual damages
and their effect on a home's value might be marginal. Let's say
you discover $50,000 worth of termite damage overlooked by the home
inspector. It's possible that after spending $50,000 to repair damage the
resultant value of the house might actually increase relative to what it
was purchased for, plus in most liability situations the negligent
party isn't responsible for upgrades or paying full price to repair depreciated
components, thus if a home had obvious defects that were reported and
unrelated to the termite damage at the time of purchase, and those problems got
repaired in conjunction with the other repairs, the defendant isn't responsible
for the full cost of the improvements because one party can't capitalize on the
negligence of another for gain - only for indemnification. In
other words the monetary value of claim could be reduced significantly
from the cost of repairs if there was a net improvement in the value of the
home above and beyond the cost of repairs, and even if there isn't a
net gain in value a homeowner can't recover damages unless one
could actually prove the inspector was truly negligent.
6. Home
inspections are not warranties. A home inspection is an evaluation of a
home that's limited by time and accessibility of components. Not all
problems at a home can be discovered through the course of an inspection
and no home inspector is an expert at everything. Some inspectors do offer
warranties to their clients for problems that occur subsequent to the
inspection, but only if those problems weren't discovered at the time of the
inspection. Also, home inspection warranties might have either a
deductible for each problem, or a limit on the coverage
that amounts to little more than the cost of the inspection. Plus,
many warranties only cover repairs to correct the problem in question, not the
resultant damage. For example, if there is a leak at the bathtub that
wasn't discovered during the inspection, the warranty will pay for the
cost of repairing the leak, but there might be a monetary limit on the
cost of repairs, or a deductible that the homeowner must pay up front, and
none of the subsequent water damage is covered - only the repair to the
leak that caused the damage would be covered.
So,
what should a homeowner do if they find a problem missed by their home
inspector? The first thing to do is contact the inspector and/or
inspection company to let them know about the problem, and if the inspector
wants to see the problem allow them to investigate it, assuming the inspector
is trustworthy and responsible. The inspector might be able to offer
solutions, provide names of reliable contractors, and give some
advice relative to how to prevent similar problems from recurring -
and depending on whether the inspector feels responsible for not
discovering or reporting the problem, they might contribute to
the cost of repairs. Also, the inspector might be able to determine
if there is evidence of prior repairs or if pre-existing damage was
intentionally concealed by a third party, which might help a homeowner recover
from a fraudulent seller who failed to disclose defects at the time of
sale. Second, it's important to document everything - take photos, keep a
journal, and save all correspondence / communications. Third, do
everything possible to minimize or mitigate damage - ignoring or
neglecting a problem is never the proper solution. Fourth, if there's
significant damage consider contacting the insurer to determine if it's covered
by the homeowner policy.
If
a homeowner isn't satisfied with the inspector's response to the discovery of
problems consider notifying the agent(s) involved in the
transaction. Sometimes agents have a bit of leverage with inspectors to
help get a satisfactory outcome. An inspection client can post bad
reviews online, however this shouldn't be used as a tool of vengeance or
retaliation, and posting negative reviews will hurt any chances of
winning a lawsuit or settlement because if there is so much as one
word in the review deemed misleading, the inspector now has
ammunition for his or her own complaint or counterclaim for defamation.
The
principle of 'caveat emptor' or 'buyer beware' is important to consider
because it is something taken into account by the courts. A home
buyer must assume some risk, and it's generally understood that sellers
of homes do try to make cosmetic repairs to hide existing damage, and it's also
understood home inspectors can't and won't find every
problem. Hiring a home inspector to evaluate the condition of a
property is essential, but there are no guarantees. In most cases inspectors
aren't responsible for the problems they miss, and if you assume otherwise
you're going to be disappointed.
The
best way to prevent yourself from getting stuck with a defective house is
to hire a home inspector that's knowledgeable, thorough, and
experienced. Most agents don't refer their clients to
the most thorough inspectors out of fear inspector will find too
many problems and be more likely to derail the sale. The biggest home inspection
nightmares I'm aware of have been the result of home buyers hiring
inspectors as per agent referrals without doing their own research
into the inspector's background and client reviews. The most common
complaint I hear from my non-clients is, "I shouldn't have hired the
inspector my agent recommended."
There
are a handful of cases in which homeowners have succeeded in claims
against inspectors, but they are rare. Lawsuits will take years off your
life and usually the stress isn't worth the money. When people call
me with home inspection horror stories I try to maintain objectivity, look
at what could've been done differently by the various parties, and determine
what can be done going forward. I recommend using the entire experience as
a learning tool - putting money into a home is the cost of tuition
for a Homeownership Degree, and though mistakes made by home
inspectors are discouraging and often cost homeowners money, those
homeowners will be that much better prepared for the next problem, or
the next home purchase.
