Liabilities of home inspections


Robert B. Jacobs: Liabilities of home inspections

By Robert B. Jacobs
Contra Costa Times Correspondent
Posted: 07/18/2010 12:00:00 AM PDT

You be the judge. Here’s a case recently decided by one of the California appellate courts.
A daughter inherited a property from her mother, who had lived in the property for more than 40 years. Before inheriting the property, the daughter had it inspected by a licensed home inspector. The report noted evidence of “wood-destroying insects, organisms and/or rot observed at posts, doors, and trim.”
The inspector also noted loose flashing at a balcony deck, which could lead to water damage. The inspector recommended a further inspection by a termite inspector.
The daughter thereafter hired a termite inspector, who found drywood termites throughout the main house and also found damage to a support post. The termite inspector recommended fumigation and repairs to the damaged areas. The termite inspector didn’t find or report any damage to the balcony railing at the elevated deck.
The daughter had the house fumigated, but didn’t have any repairs made to the wood that had been damaged by the termites or other wood-destroying pests. A few months later, the daughter’s son and daughter-in-law purchased a one-half interest in the property and moved in.
Some time later, the daughter’s son and daughter-in-law invited a guest to their new home. This guest leaned against a balcony railing. Due to the unrepaired wood damage, the balcony gave way and the guest fell approximately 10 feet to the ground below.
The falling guest
sued. Who is at fault?
The Court of Appeal decision noted that the daughter who arranged for the inspections knew about the wood damage. She chose to have the house fumigated but didn’t repair the damaged wood. However, the court didn’t discuss the daughter’s liability and it appears that she was not part of the suit.
It’s not clear whether the falling guest didn’t sue the daughter, or whether the settled with the daughter. However, the guest did sue the termite inspector, claiming it should have discovered and reported the damage to the balcony railing.
The guest claimed that the damaged railed constituted a safety hazard and that the termite inspector had a duty to discover and report the damaged wood and to recommend that it be repaired.
So as between the falling guest and the possibly negligent termite inspector, who wins?
The Court of Appeal found that a termite inspector does have a duty to “make a reasonable assessment of property for potential safety defects.” But the court also found that the falling guest didn’t hire the termite inspector and so there was no contract between the termite inspector and the falling guest.
The court further found that the termite inspection report was prepared for the daughter’s benefit. It found that the termite inspector didn’t prepare the report for the benefit of the falling guest, and as a result, the termite inspector owed no duty of care to the guest.
Therefore, even if the termite inspector failed to find or report the damage to the balcony railing, the guest had no valid claim against the termite inspector. This decision is reported as Formet v. The Lloyd Termite Control Co. 2010 DJDAR 8738.
This case involved a complex analysis by the court of duty and negligence liability theories. Liability issues and questions can be complex, and are governed by a sophisticated set of statues and case law. The fact that the falling guest lost this case is no indicator as to a how a court may rule in any given situation.
Robert B. Jacobs practices real estate, business and construction law in the Bay Area. Contact Jacobs at Bob7@RBJLaw.com or www.RBJLaw.com. The foregoing article is not a complete discussion of the subject addressed, and should not be relied on. Readers with specific questions or issues should consult an attorney.

And even though the termite inspector was found ‘innocent’ he still had to pay a lawyer to defend himself against this gold digger. Let’s hope that he counter sued to reclaim his expenses.

“This case involved a complex analysis by the court of duty and negligence liability theories. Liability issues and questions can be complex, and are governed by a sophisticated set of statues and case law. The fact that the falling guest lost this case is no indicator as to a how a court may rule in any given situation.

The last part of that sentence should be always kept in mind…

In 1986 our company (just recently purchased from an engineer and an engineering technician) had a suit launched against us by a young college educated professional couple (a doctor & a university prof) for water leakage in their basement. My ex-partner (an engineer) had done the inspection and called things correctly…found a damp/wet carpet in the basement. The house was an older small bungalow…a bit of a dog needing repair work but they bought anyway (they must have had large student loans to pay off!!).

At the first major rain after moving in, more moisture came in at the area my partner called in his report. Soon after, a lawyer’s letter appeared on our desk requesting us to do further investigation of the water’s source at our own cost!! They had not contacted us about this situation but went directly to the lawyer.

We did do a quick site visit and determined a normal shrinkage crack (mentioned in the report) about 8-10’ along the wall from the wet carpet spot had to be the water source. We mentioned that and that the crack should be dug up and sealed at a cost of about $400…No way!!- they wanted the whole foundation to be dug up and waterproofed at our cost!!! ($10,000+)

To try to stop this from snowballing (thanks to their lawyer), we offered to patch the crack at our cost (since we had another construction services company and would use our own men). Being quite new to the HI field, we hoped that this would, in the end, enhance our reputation with the other side but this was not to be- they then had the foundation dug up and waterproofed at a cost of $11,500 including the cost of landscaping and replanting shrubs, etc.

We were then sued for costs which finally got to court in 1989. By this time, my partner had sold his interest in the company to me (marriage breakup) and had moved 800 miles away. He offered to fly back and appear as a witness but I declined saying he did not need to incur that expense plus miss paid work days in his new endeavours.

I was the only witness for our side…they had 4 including the waterproofer. They had hired the most high profile criminal law firm (2 brothers) in the city…the type that defend rapists, child molesters and the like. Our lawyer (a good friend of myself and my ex-partner) was a very low key type but thought he would enjoy a day in court against this lawyer and said he would do it for NOTHING!!

First thing my lawyer told me before we entered court was to not pre-judge the proceedings by thinking we’re making points with our questions and/or testimony…it all boils down to the final decision which, in this case, was one man’s!! For a while I felt things were not going our way as the plaintiffs gave their side of the storey first.

The decision was 90% in our favour…we were to pay 10% of their repair costs and no lawyer’s costs!!!

I did not understand the 90/10 split…either we made a mistake or we didn’t. I think the judge ruled the 10% to help them with their exhorbitant costs. I told the young plaintiff on the way out that he could collect the $1,150 from my estate as we had made a reasonable offer years earlier!!!

Have not had a lawyer’s letter or significant claim since then!!

12 Steps that Help Home Inspectors Avoid Lawsuits.