A client recently asked me to perform an inspection on a new construction residential property. He also informed me that the Seller (Name will remain unmentioned here) who is a well known builder requires that the Inspector the buyer chooses must fill out a questionaire requiring the inspector to include a copy of his Certificate of Insurance and Insurance Agent’s name. The seller (builder) also told the client that the Inspector should have at least $1,000,000 liability coverage. Once the questionaire is submitted by the Inspector, they will either approve or dissaprove the inspection??
To my knowledge, this action appears to be innappropriate since this will clearly limit the buyer’s ability to select an inspector of his choosing. Did anyone have a similar experience and does anyone know what the rights of the seller are in this regard? I always thought that an inspection was solely between the client and the inspector and does not need an approval by the seller or sellers agent.
I have been asked to produce this type of documentation before. Until the day of closing that house belongs to the builder and is consider a construction site. It would not be fair to ask his subcontractors to carry this type of insurance and for you not to…
To: R Hensel - I understand and agree to what you are saying, however these subcontractors work on behalf of the builder and the inspector works on behalf of his client with no obligations to the builder.
Until such time that the buyer closes … the builder owns the house. Anyone entering it without his permission is trespassing and he has the right to require whatever he wants from a potential inspector. The buyer’s rights are not violated in that they are free to walk away from the deal if they disagree with the builder’s terms.
So if you get hurt or damage something, who’s house is it? Who can get sued? When on their property, it is there rules and many of them have insurance that REQUIRES its subs and people who enter the site to have insurance. Since you are getting paid to perform a service on a house that is owned and occupied by the builder, then its his rules.
Simple answer to your question. Here they can ask you to provide this. Problem with NOT having this is the builder is going to SLAM YOU. He will say “OMG, are you serious this guy doesn’t have this?” That home inspection profession has run amok and filled with unqualified and uninsured people. I am not saying this will be the case, I am say he will make it the case.
I’ve had this happen in the past. I’ve handled it in different ways.
Depending on my mood swing. One way is to look at the buyers RE Contract to see what is says regarding the buyers RIGHT to have inspections - Does it give him / her the right to have an inspection by an inspector of their choice or NOT … I assume you are a licensed Texas inspector that the state has deemed qualified to *****.
Also I MIGHT agree with them and write a letter of some type to buyer and cc it to builder and a well known attorney firm, AG’s office, etc. agreeing that protection is needed for ANYONE on the site AND due to known incidences of people like INSPECTORS being hurt on job sites by unlicensed or uninsured SUB-CONTRACTORS, etc hired by the BUILDERS (to save $$$) you feel it absolutely a GREAT idea to trade licenses and INSURANCE info with each other, SO lets HAVE the builder provide us with the $1,000,000 insurance policies and LICENSES of ALL subs and workers on the site (like julio, enrique, manuel, etc) AND get me a Copy of the Builders license, insurance, agent, etc.
Once I’ve got that I’ll be more than happy to provide mine BECAUSE I have to ensure for my safety AND my clients best interests these are in place.
I would also mention my inspection license, my code certification(s), and my engineering degree in the letter which should obviously raise a red flag to a buyer IF the builder trys keeping you out. YOU do understand however many builders reluctance to let home inspectors onsite because so many of them are newbies with almost nothing but correspondence OR online training BUT no real world experience. I would think in Texas however that should NOT be an issue considering the amount of schooling you’ve had to take VS the builder or subs to get licensed.
In short jerk their socks also. Let them see you can dance with the wolfes
In the sense that you will be required to have appropriate liability coverage, where a hard hat (you keep one in your truck, right?) and sometimes even be asked to come at a different time than you client… it’s not that unusual.
I know that when I’m going to a larger builder’s site, I should be prepared for these questions.
It’s quite common here too. I keep a supply of packets containing copies of my “Credentials” (as they like to call it) so I don’t have to fumble around each time I’m asked.
Thanks for all the responses - I have no problem with supplying anyone with my Insurance Credentials - The only thing that concerns me here is that any seller could require credentials of an inspector which are well beyond what is required by the licensing agency - In effect, this does limit the buyer’s ability to select an inspector of his choice as per the Texas Real Estate Commisiion rules - It also gives the seller a avenue to “suggest” an inspector he is familiar with - Just a thought.
Eugene, just like many things, codes/standards/regulations are not the bar to aspire to, they are just minimums.
If you did have the GL they are asking for, and it’s just a lower amount, you could contact your insurer to check on costs to increase and whether it’s worth it to you OR give what you do have to the seller/builder, they may just be fine with it.
The builder is Ashton Woods, at least that’s the one I just dealt with. No need to keep their name secret.
The buyer should have refused to sign an agreement that limits their access to an inspector in such a way. Anyone buying an Ashton Woods home should refuse to sign the independent property inspection agreement as it unfairly limits their ability to use the inspector of their choice.
The requirement that the inspector have GL insurance is not so egregious, although I highly doubt that they require the same of their own subcontractors and the $1M amount seems high, but not totally outlandish.
What is completely outlandish is the requirement for $1M E&O insurance. E&O is not intended to protect the builder but the inspector. The builder has no valid reason to require such unless Ashton Woods is attempting to shift liability for shoddy construction onto the inspector. Texas requires home inspectors to carry $100K E&O.
The builder is also demanding CABO certification and that the inspector be on a county list for providing third party code inspections for builders (builders get to hire their own building code compliance inspectors from these lists - anyone with a TREC license who is foolish enough can get on one of these lists). There is no valid basis for them to make these demands.
The agreement also demands that the buyer indemnify Ashton Woods for any and all liability or injury claims that arise out of these inspections. If a subcontractor runs over the inspector with a bulldozer, the buyer is liable to defend Ashton Woods. If a roofer falls off the roof while making repairs identified during the course of the inspection, the buyer will be liable for any claims. This clause has no end date. The buyer will be liable forever.
Yes it is still the builder’s house but anyone contemplating buying an Ashton Woods home should refuse to sign any contract that so limits their choice of representation and shifts so much potential liability from the builder to them and their inspector.
I refused to inspect this house due to the E&O requirement from the builder - you should too.
In Missouri, the buyer gets to choose his own inspector and the buyer is responsible if something happens to the property during the inspection. I only need to provide my proof of insurance to the buyer, not the homeowner. The most common ploy in my area is when the Realtor asks the inspector if he is bonded. I return and tell her, I will show you my bond, if you show me yours. Bonding is not required in the selling or inspecting of real estate in Missouri, and they know it.
Do home builders require insurance of real estate agents when they show a builder’s home, open doors and locks, etc? Heck no.
I had an issue last week that a new home builder was requiring workmans comp insurance to inspect a new home in Kansas. Workman’s comp is not required on one person companies in Kansas. Even with $4 million in GL and E&O, way over Kansas home inspection requirements, I was not hired. Sad how home builders (along with agents) all seem to find a way to keep us out of the transaction. Gee, seems that the builders and agents work together along with the lenders. Hmmmm.
And the public and lawmakers get concerned when fraud erupts.
mmaizel
(Marvin Maizel, CMI® Fl State Lic HI 681)
16
There is nothing that stops the owner’s friend from helping him with a punchlist…or a walkthrough at any time as long as the new owner has, or gets, approval to enter. There is also nothing wrong with the owner passing on the comments in his own words. I can tell you from the builder’s side, this is a very common occurance.
(you keep one in your truck, right?) and sometimes even be asked to come at a different time than you client… it’s not that unusual.