Why is Your Inspection Contract Important?
By Joseph Denneler,Esquire
I am a lawyer whospecializes in the defense of home inspectors in litigation.
I’ve been representing homeinspectors for many years and my law practice is almost entirely dedicated to this work.
Being in this position has given me a wealthof knowledge about inspector claims.
Once I became established in this field and my practice began to grow, I also started teaching risk management to home inspectors all over the United States.
An inspection contract isan important and necessary risk management tool that provides the first level of defense to an inspector.
Many states that areregulated require that a contract be used to establish the scope of the services to be provided to the client.
Even in states that have no such regulations,an inspection contract may be required by your insurance carrier.
Why? Well, more often thannot, your inspection contract can prevent significant legal expenses defending a claim in court.
It is also the best way to let your clientknow exactly what is included and what is not.
Many homebuyers only go through the process ofbuying a home once or twice in their lifetime.
They are not familiar with the ins and outs ofa home inspection.
A well-written contractgives the client all of the information needed to make an informed purchase ofthe services of an inspector.
Based on numerous conversations with inspectors about claims over the years, aswell as the many cases I’ve handled personally, I have learned some universal truths.
One is that many claims arise from ambiguity,particularly ambiguity about what a home inspector does and, more importantly,what a home inspector does not do.
I realized that in many cases claims could beavoided with a clear, concise and accurate inspection contract.
The contracts I saw in my cases were oftenhaphazardly put together documents combining several other contracts,
without regard to the standard of care beingemployed by the inspector or the scope of the inspection.
Many lacked the required statutorily language.They were often several years old, with no revisions for changing laws,changing conditions or changing times.
I know from my years ofdefending inspectors in litigation and assisting insurance carriers with claimsall over the country that the requirements fo
r what must be in aninspection contract vary widely among the states that have regulations inplace.
Some, like Kentucky,require that the contract contain a “right to cure” provision allowing an inspector the opportunity to cure a defect before the client can file a legal action.
New Jersey has many requirements, includingspecific language identifying the correct standards of practice.
Virginia has differentrequirements for contracts used by “certified” inspectors and those who are notcertified.
In addition to the standards of practice, an inspection contractmust reflect that state’s position on things like arbitration,
limit ofliability and other defensive clauses found in most inspection contracts.
These nuances are criticalfrom a legal standpoint. In many states, if the inspection contract does notfollow the requirements of that state, the entire contract can be voided.
This means no chance for arbitration, no limitof liability and no opportunity to see the alleged damages before they areprepared.
Moreover, I need to be able to show a judge ora jury that my client followed the applicable standards in every aspect of theinspection.
The advantage to having an inspection contractthat speaks the language of a particular state is invaluable.
When I can show a judge or jury that my clientagreed to do exactly what was required under a particular state’s inspectorregulations,
it creates the inference in the judge orjury’s mind that my client is focused on the appropriate standards and nothingelse.
It eliminates ambiguity as to what was part ofthe inspection and what was not.
Your inspection contract is the most important partof the home inspection transaction.
It sets thestage for what you will do, the limits on your ability to inspect and addressesspecific state standards.
It is theprimary communication given to your client before you perform your work.
Itshould be written in tandem with your applicable standards of practice.
It should bewritten based on your state’s specific laws and regulations. It should work.
You should be using contracts that are specific toyour state and specific to their regulations.
Your contract needs to be rightthe first time.
It needs toreflect your standards of practice and your duty to your clients.
It is themost important first step in preventing ambiguity.
It is thefirst step toward preventing claims before they happen.
You should always have an up-to-date, correct contract.
About the Author
**Attorney Joe Dennelerprovides inspection contracts written to the home inspection standardsapplicable and specific to your state.
OREP Insured’senjoy 25% off these services.
You can contact Joe directly atJDenneler@srstlaw.com or if you’re an OREP Insured and would like your discount code,