Business Ethics question

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1

Originally Posted By: Robert Jonston
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Again, I haven’t read all the posts yet so this may have been discussed.


I am thinking of setting up a home inspection business, probably as a LLC. I am also a professional engineer and would like the business to allow the flexibility to perform certain engineering services.

Is it unethical to offer engineering services or opinions as a result of a "normal" or standard as defined by the SOP home inspection. Example: While inspecting a house, I notice that the owner is building a porch above a garage entry, attempting to clear span 26' with a small 6" wide flange beam. I know this will exhibit at least excessive deflection. What if the owner or client asks "what should this be?" This is an easy engineering question and one I would want to answer. However, does it fall under the same criteria as the home inspector who is also a licensed plumber and sees a leeky pipe that can be easily fixed?

Note: this was a hypothetic question based on a real experience - I was able to discourage the porch builder prior to construction.

My main thought is that I would like to be able to perform certain "special" inspections with defined scopes which fall outside of the SOP - such as sizing a garage beam offering advice on a sagging floor or roof. Does this require two separate business entities? Don't ask how this affects E&O insurance - don't know yet. I expect the engineering portion of the business to be very minor with respect to the standard inspections.

Curious to see your thoughts....

2

Originally Posted By: jmyers
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Robert,


The delimma you are facing is one that all home inspectors face at one time or another. If you are there in the capacity as a home inspector your insurance company may not be willing to provide you with coverage for rendering a structural opinion on the house.

Most home inspectors would simply state that the joists that were used for that span were inadequate and would recommend contacting an engineer for further evaluation.

In your particular case, being a licensed engineer, you could charge the client additional monies to render that opinion and even provide them with a recommended course of action. This would be assuming of course that your engineering license is current and you have the necessary insurance to cover any problems that would arise out of rendering that opinion in the capacity as an engineer.

I don't believe this would come down to an ethics question but rather a liability and insurability problem.

Joe Myers

3

Originally Posted By: jburkeson
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jmyers wrote:

I don't believe this would come down to an ethics question but rather a liability and insurability problem.



Joe,

How would this be ethically any different from me offering to perform electrical work as a licensed, bonded and insured electrical contractor?

Joe.

--
Joseph Burkeson, RPI (Hooperette)

?Anyone who has proclaimed violence his method inexorably must choose lying as his principle.?
~ Aleksandr Solzhenitsyn
4

Originally Posted By: jhagarty
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icon_question.gif

–
Joseph Hagarty


HouseMaster / Main Line, PA
joseph.hagarty@housemaster.com
www.householdinspector.com

Phone: 610-399-9864
Fax : 610-399-9865

HouseMaster. Home inspections. Done right.
5

Originally Posted By: Robert Jonston
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I am still struggling with this. Insurance aside for a minute as I am sure that for enough money I can be insured both to practice engineering and home inspection -


I still keep coming back to the fact that this is really no different than any contractor offering a product or service as an extension of an home inspection.

However, nothing that I know of prevents a contractor from operating in two fields - one may be inspection and other may be electrical for instance, only that the ethical requirements of the home inspection industry prevent solicitation of work as part of the inspection which I don't neccessarily disagree with since I am sure it limits corruption. But, I do know it doesn't work vice versa.

For instance, I work for the design/build division of a construction company. We will perform inspections at a client's request and even do engineering or scientific analysis with the hopes and intentions of securing the larger maintenance, rehab, construction, or design work. The inspections may or may not be free. As far as I know, this is common and acceptable, if not expected practice.

The way I am leaning now is to offer "home inspections" as defined by a HI association and a limited amount engineering services, but be very clear about the scope and limitations of each from the onset. If engineering services are to be recommended as the result of the HI, which I expect will happen regularly, I will have to defer to another PE, citing ethics (just seems odd if I'm capable). However if an engineering study is requested for a situation which I have not been associated, then I will do the study provided I am working under my experience, have the proper insurance, etc., etc.

Well, I thought about this a lot today so I could go on - but anyway - thanks for the input.

6

Originally Posted By: Scotty Lee
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[quote=“Robert Jonston”]Again, I haven’t read all the posts yet so this may have been discussed.


I am thinking of setting up a home inspection business, probably as a LLC. I am also a professional engineer and would like the business to allow the flexibility to perform certain engineering services.

Is it unethical to offer engineering services or opinions as a result of a "normal" or standard as defined by the SOP home inspection.

Yes, I would say that this would be unethical if you tried to sell another service to your client based on your findings from the inspection you are doing for them.

Now if you told your client that you found that the floor was sloping to the south 1" and to the southwest 3", and did not charge extra for this I would say that you provided a service outside the scope of the normal home inspection, and good job!

Most of the time the reason a home inspector recommends an engineer to look at a foundation is CYA protection for the home inspector.

You also need to check to see if your state has any requirements for putting your PE stamp on your home inspection reports, I have heard that some states require PE's to do this.

7

Originally Posted By: jmyers
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Joe B,


You are not there performing any actual physical work on the home. You are rendering an opinion and charging them for that opinion which you are certainly qualified and licensed to do. As a licensed electrician you would actually be there performing physical work on the electrical system which to me would qualify as an ethics violation. As an engineer you can recommend a course of action without ever performing any work on the home. After all, a home inspector is there to provide a written evaluation of the home much like an engineer.

My point was to simply be careful to separate the two fields because the E & O carrier will certainly not cover you while acting in the capacity as an engineer is you are there for a home inspection. To them you are not paying for it, so they will not cover for it! ![icon_biggrin.gif](upload://iKNGSw3qcRIEmXySa8gItY6Gczg.gif)

Joe Myers

8

Originally Posted By: Robert Jonston
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What about the HI who is also a licensed WDI inspector. When doing a standard inspection this individual sees evidence of wdi damage and recommends a full wdi inspection, something he can provide as an additional fee.


Following the same lines of thought, my reasoning is that this would be unethical as well. What do you think?

9

Originally Posted By: jburkeson
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Quote:
You are not there performing any actual physical work on the home. You are rendering an opinion and charging them for that opinion which you are certainly qualified and licensed to do. As a licensed electrician you would actually be there performing physical work on the electrical system which to me would qualify as an ethics violation. As an engineer you can recommend a course of action without ever performing any work on the home. After all, a home inspector is there to provide a written evaluation of the home much like an engineer.


Hi Joe,

I understand what you are saying, but you would not expect an engineer to perform actual work since it is not his profession. What I am trying to say is that just like an electrician's stock in trade is electrical work, an engineer's stock in trade is engineering opinions. I just don't see the ethical difference between the two. Both are licensed experts in their particular field who are profiting from a business relationship directly derived from the result of a home inspection.

Joe.

--
Joseph Burkeson, RPI (Hooperette)

?Anyone who has proclaimed violence his method inexorably must choose lying as his principle.?
~ Aleksandr Solzhenitsyn
10

Originally Posted By: Charles Hopkins
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Hello,


I am in the process of becoming an HI. I was considering also offering
myself as a negotiator for the buyer. What would be the ethical ramifications in your opinions ?


Charles

11

Originally Posted By: jhagarty
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icon_question.gif

–
Joseph Hagarty


HouseMaster / Main Line, PA
joseph.hagarty@housemaster.com
www.householdinspector.com

Phone: 610-399-9864
Fax : 610-399-9865

HouseMaster. Home inspections. Done right.
12

Originally Posted By: jfarsetta
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Guys,


This is a lot simpler than you are all making it out to be.

Architects and PE's are, by law, are regarded as being far above home inspectors in their perceived knowledge of structural elements within the home. For that matter, right or wrong, a judge or jury may rule in favor of a licensed professional's opinion as to the condition of a home, over that of a home inspector. Now the stage is set.

Some PEs offer sealed engineering reports as their versions of home inspection reports. It's a nice twist and a clear marketing advantage. The fact of the matter is that PEs are also required by law to carry E&O insurance for whatever services they perform, as allowed by law, within their state. Tjis includes ALL services, including Home Inspections, folks.

Home inspections are within the engineer and architect's per-view, according to state standards of practice. Period, end of report. So, to state that offering an engineering service or licensed opinion is beyond the scope of a home inspection may be true in the majority of cases, but it is clearly not beyond the scope of an inspection in whomever's opinion is duly LICENSED to render such an opinion, such as an architect or PE.

If the average HI offers an engineering opinion, we may be found guilty the unlicensed practice of engineering, and for that, the line is clearly defined. On the other hand, an engineer offering t perform these services is clearly different than an electrician offering to perform work after he, as the inspector, has determined the electric to be faulty. Fixing a faulty circuit is not an engineering practice, involves labor and materials, and could never be considered to be a part of an inspection.

Now, if you look at the NACHI Code of Ethics, you will see that we prohibit an inspector from soliciting or from OFFERING TO PERFORM these types of repairs or upgrades on any property we have inspected for a period of 1 year. But, again, the practice of an engineering opinion, or study is different.

Many consider a home inspection to be an engineering evaluation. PEs get ticked when that heppens. But what we do is clearly within the scope of what they are licensed and insured to perform. In fact, in most legislative HI bills, architects and PEs are exempt from the law.

If an engineer is licensed in the profession, and wishes to include an engineering study or recommendation as a part of his/her report, than more power to 'em. In fact, I'm jealous. All I can do is referr it out for further evaluation. So, PEs can opper those opinions and services, while most of us are barred by law from doing so.

But, to state that a licensed PE cannot go the extra mile in his report, is like stating that if I hired a PE to review my reports, and chime in with recommendations, I couldn't do it. Nothing stops a person from going beyond the SOP.

--
Joe Farsetta

Illigitimi Non Carborundum
"Dont let the bastards grind you down..."

13

Originally Posted By: Nick Gromicko
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The Farsetta man strikes again.

14

Originally Posted By: Charles Hopkins
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Joe,


Thank you very much for your reply. I see your point. I wonder
though what makes the lawyer more qualified to negotiate the price
than me. Thanks again

charles

15

Originally Posted By: Nick Gromicko
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Charles:


As far as I know it is illegal for anyone to represent a home buyer anywhere in all 50 states unless he/she is either the buyer's licensed attorney or licensed REALTOR.

Nick

16

Originally Posted By: Charles Hopkins
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Thank you Nick,


While I have your attention....I am greatly appreciative of your
efforts at NACHI.

I got the point of the legality. But it justs seems to me to be a niche
in there somewhere ....where a homebuyer come get some help on the
condition of the home and coaching/advice preparation based on the conditions found in the home when negotiating the sale.

Again thanks

Charles

17

Originally Posted By: tgardner
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I had to hash the PE thing around a while back. I bcame to the conclusion that if I was going to be a HI then I was going to be a HI. I was NOT going to be a PE ( even though I am one ) because a PE practice is just that - it takes practice. As a HI I’m a generalist and not doing the day in and out calculations and tests required to offer a PE’s recommendations. I would rather defer to a PE that does those tests and resulting calcs everyday than take my license chances doing those evals once or twice a year. ( My PE is in mechanical engineering. Man, I know pumps, compressors, electrical distribution, piping and HVAC like the back of my hand. Structural stuff - I know the basics. Other than bad GFCI’s and double taps, most of my deal busters have occured when I referred my clients to a Structural E for evaluation)


TG

18

Originally Posted By: Nick Gromicko
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Charles:


Negotiating on behalf of another in a real estate transaction requires a principal/agent relationship. Something only a REALTOR or attorney could enter into.

You could certainly provide all the information your client needs to support one side of a negotiation, but you could not actually represent your client without one of those two licenses.

Nick

19

Originally Posted By: Robert Jonston
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Joe F. - Thanks for your insight on this.


I needed to snap of the engineers production mentality for a moment. My line of thought was that my engineering "opinion" would be based on experience of course, but more importantly, calculations and analysis, as required. I was thinking of those calculations as simply a product I would be selling. The calculations and study to me are work just as an electricians connection of wires. And I was thinking that I would have to use a SOP like NACHI's as the "law" for any inspection.

However, as you suggested may be true, licensed engineers and architects will be exempt from the upcoming HI license requirements in Indiana. Approaching the job as an Engineering Project rather than just an inspection, however, opens the door for many options. I could use an HI SOP to simply help define the scope of work when applicable. I believe this is a valid approach.

The more I think about it though, I will probably stray away from all but the easiest engineering problems. If an issue ever arose with a design, I will need to prove that I was working in an area of my "expertise". Engineers are only to stamp designs within their area of expertise. Though a PE civil engineer, the main focus of my work has been construction management. Typically, when I do design something, I will send it out to be stamped by an independent engineer, limiting the risk for my construction company. Doing something similar would probably be advisable in the HI business as well.

20

Originally Posted By: roconnor
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Joe F is right on the money.


I am an engineer by trade and also have an engineering practice, and part of that includes performing residential and commercial condition inspections. Home inspections are considered a sub-practice area of engineering as long as you are "qualified" (kind of self regulating, as you are expected to know your limitations as a Licensed Professional, or you could lose your license).

Don't worry, I am with the majority of other engineers who do not consider only a home inspection the practice of engineering, as long as you avoid crossing into the "evaluation" part ... just like engineers prepare estimates, but just estimating alone is not the practice of engineering.

Even for engineering evaluations of commercial buildings/structures it is routine practice to do an initial engineering "walk-through" visual observation (very similar to a home inspection ... "observe and report"), and recommend/follow-up with more detailed investigations, evaluations, and testing as needed based on the walk-through.

Again, as a licensed professional you are treated a little differently, and you are expected to be straightforward and not recommend unnecessary things or you could lose your state license for unprofessional conduct. Losing your license is not a good thing, since you would have wasted 8-10 years of time getting the education/experience, probably 30k-50k in education costs, and countless hours preparing for two killer all-day exams getting the license.

But in your case RJ you may want to be careful and talk to an attorney, since it sounds like your primary business is a construction company and not an engineering company/practice.

--
Robert O'Connor, PE
Eagle Engineering ?
Eagle Eye Inspections ?
NACHI Education Committee

I am absolutely amazed sometimes by how much thought goes into doing things wrong