Limit of Liability

Somebody said TREC or ??? is wanting to keep the Texas inspectors from using language in a contract that limits their liability. Anybody know if thats a rumor or not?

Why would anyone want to contractually limit their liability?

Various reasons. Not all Limitations of Liability are written the same.

Requirement of E&O carrier.
Reducing chance of frivolous lawsuits or meritless claims
Used in place of E&O insurance.
Exclude certain types of damages.

Don’t forget, your insurance carrier, medical and home / auto, limits their liability. Sure it may be a million dollars but it is a limit.

Tort reform is another form of a limit of liability.

Now that is scandalous

This could turn out to be a good discussion.

“Scandalous”. Why? It is an insurance policy for the inspector just like car insurance or home owners insurance. It isn’t for the benefit of the client. It is solely for the benefit of the inspector. Some purchase it due to state requirements. Some purchase it to cover their assets. A business decision for sure.

Even insurance companies limit their liability.

Juan, I think a better question is Why Wouldn’t anyone want to limit their liability?

I personally can see no reason to leave my liability wide open with no limits at all? I just don’t see any point to that.


They want to disallow the inclusion of liability limitation language in the state promulgated report form by the inspector.

I don’t believe that there is an intent to force inspectors to remove such language from their own service contracts, only from the report.

Disclaimer: That is my perception from what I have heard. It is not based on any first hand or inside knowledge.

Chuck, I’m afraid we’re going to have to ask you to remove your disclaimer from the above post.:smiley:

Many inspectors insert their contract language in the page numbering of the report. Some put it up front and some at the end. Some not at all. It is permitted by TREC Rule and has been allowed for many years.

A consumer complains that contract language is not allowed in the report regarding a $3,000 dispute. They cite various TREC Rules. The consumer appears to be lawyer. Most of this information is available via Open Records.

The TREC attorneys indicate their displeasure about limits of liability and complaint notification deadlines. They organize an inspector subcommittee meeting before deciding the open complaint. The consensus is contract language is not allowed. The TREC lawyer and inspector committee members label inspectors as “crossing the line”, playing poker with the client”, “slipping it in” and “holding the report hostage until the client signs”.

TREC proposes changing Rule to state “Inspector may not insert contract language including limits of liability in the report”

What is obvious is the bias TREC lawyers have against a limitation of liability. WHOOPS. They jumped the gun. The first line of the promulgated form that has been in use for more than 10 years states:

This property inspection report may include an inspection agreement (contract), addenda, and other information related to property conditions.

Time to spin on it. TREC does not want contract language in the report. They take a different course and make it clear they have no control over contract language. Now they are amending their concern to preventing any and all contract language in the page numbering of the report.

I see TRECs concern from a few perspectives. 1) They do not want to appear to endorse any contract language 2) They don’t want the consumer to feel held hostage. The problem is the inspector does not control the timeline of the contract or option period. Any urgency to get a hold of the report is created outside the control of the inspector. I suggest a compromise. Remove the contract from the page numbering system and add this to the top of the report. It’s in 12 point bold because that is how they want to tell the consumer the inspector cannot put contract language in the report.

The Texas Real Estate Commission advises that the home inspector does not have control over any real estate acquisition timeline that may cause the person relying on this report to be under duress. Some real estate contracts include an “option period” that allows the buyer to cancel, or perhaps renegotiate, the purchase agreement. If you need more time to understand or investigate the home inspection report, any inspection agreement (contract) or addenda consult your real estate agent or attorney before the end of any applicable option period or acquisition of the real estate.