Potential problem with potential client

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#1

Originally Posted By: jgallant
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A licensed structural engineer called me to schedule an inspection the other day. I sent him my contract via email after setting a day and time as I always do, so he could review the contract before the inspection. He then called me to ask about the contract clause that says I’m only liable for the inspection fee. He asked if that would be able to be upheld in courts, and if I had E&O insurance (I do). After my saying that clause is an industry standard, he still wants me to do the inspection. But mulling this over, and remembering hearing about other inspectors that turn down inspections when the client asks if they have E&O insurance, I’m thinking about calling this guy back and declining to do his inspection.


What would you do?

--
-Jim Gallant
Owner, All Point Home Inspections - Poulsbo, WA www.allpointinspections.com
Co-founder, ReportHost (Web-based report writing service) www.reporthost.com

#2

Originally Posted By: gbeaumont
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Hi Jim,


Many states, mine included have made it illegal to include a limitation of liability clause in the contract, and even in states that have not gone that far any court could find that it is an unfair contract term. It's down to the judge on the day, and if it goes far enough the jury.

I would ask the question, why does a PE need a home inspector ?? unless he practices in an industrial area, and is totally unfamiliar with Residential structures and systems. But maybe I am just being cynical (that's been said before ![icon_wink.gif](upload://ssT9V5t45yjlgXqiFRXL04eXtqw.gif) )

Regards

Gerry

--
Gerry Beaumont
NACHI Education Committee
e-mail : education@nachi.org
NACHI phone 484-429-5466

Inspection Depot Education
gbeaumont@inspectiondepot.com

"Education is a journey, not a destination"

#3

Originally Posted By: kmcmahon
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My 2nd inspection ever was for an Architect. I didn’t have a second thought about doing the inspection. I found things he was dumbfounded about.


That said, if he had asked that kind of info before we began, I would have walked away, as it sounds like he knows something and is looking for a scapegoat to pin it on.

–
Wisconsin Home Inspection, ABC Home Inspection LLC


Search the directory for a Wisconsin Home Inspector
#4

Originally Posted By: dbowers
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Gerry -


I grew up in a foundation family. We built bridges, highways, basements, etc. all over the midwest. Licensed engineers are like doctors - they're usually very knowledgeable about 1 or 2 specialized things (which often have nothing to do with a residential structure). Engineers are not automatically qualified to be home inspectors because of their degree any more than all doctors are qualified to do heart surgery, dentistry or psychology. They become qualified with the field experience.

I have served as an expert witness 23 times in 7 years either AGAINST an ENGINEER or as the Engineer's EXPERT WITNESS in his own defense.
Haven't lost yet - NOT because I knew more about engineering, but because I knew more about home inspecting.

Dan Bowers, CRI

#5

Originally Posted By: rwashington
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If your intuition is making you nervous RUN, don’t walk. A few hundred bucks is not worth your time and maybe money with legals. I may be wrong and sound like I don’t have any “nads” but how many inspections have you done that clients would ask such a thing? I have not had any. Granted I have only done about 100 inspections but I should have had at least one person ask if I carry it or not.

–
Richard W Washington


www.rwhomeinspections.com

#6

Originally Posted By: jgallant
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I’ve done inspections for several engineers (structural, etc.) and at least one architect. The only other person who’s ever asked me if I had E&O insurance was reading from a long list of questions (“Hiring a Home Inspector for Dummies”?) I’m leaning towards opting out of this one.


Gerry, besides asking other inspectors in my state, how would I go about finding if there's a law that prohibits me from including the clause about limiting my liability to the cost of the inspection?

--
-Jim Gallant
Owner, All Point Home Inspections - Poulsbo, WA www.allpointinspections.com
Co-founder, ReportHost (Web-based report writing service) www.reporthost.com

#7

Originally Posted By: jpeck
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I’ve inspected homes for engineers, architects and big time attorneys. When they ask about the contract (usually they don’t) I reply “Of, did I miss something? Let me know so I can put it in there.”


BUT (has happened twice) when they ask if I have insurance, and start down that track, I advise them that I don't have a time for their inspection. In your case, that is not possible, you've already scheduled it, but I would still pass on it.

One of the people who started inquiring about insurance kept calling back after I declined to do their inspection, saying "But the ASHI web site recommended I ask that question." "Not a problem to ask about it, I just don't inspect for people who are more interested about insurance than about what we do and DON'T DO. Sorry, but I cannot, will not, do your inspection." "But ASHI recommended I ask ... " "Sorry, no."

I do not believe that ANY ASSOCIATION should be recommending home buyers ask about insurance. If the state requires it, the state requires it, then simply ask if they are licensed. If they are licensed, they will have the required insurance.

--
Jerry Peck
South Florida

#8

Originally Posted By: gbeaumont
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Quote:
Gerry, besides asking other inspectors in my state, how would I go about finding if there's a law that prohibits me from including the clause about limiting my liability to the cost of the inspection?


That is really a question for your business atourney, I did have a list somewhere of the states the excluded this typeof contract term, I'll see if I can find it, but like I said even if it is not specificaly illegal it can sometimes be overturned anyway.

Try this case law: http://www.perkinscoie.com/content/ren/updates/buslaw/062703.htm

Interestingly (unless your the one being sued ![icon_wink.gif](upload://ssT9V5t45yjlgXqiFRXL04eXtqw.gif) ) the court in this case upheld the limitation of liability clause for 2 main reasons, they were firstly that the clause was sufficiently conspicuous within the contract, and secondly that the plaintiff had not found issue with the contract in 47 previous business dealings with the defendant. This of course suggests that had those 2 conditions not existed that the court may have found for the plaintiff. Like I said I wouldhave your contract reviewed by a Washington State business lawyer.

Regards

Gerry

--
Gerry Beaumont
NACHI Education Committee
e-mail : education@nachi.org
NACHI phone 484-429-5466

Inspection Depot Education
gbeaumont@inspectiondepot.com

"Education is a journey, not a destination"
#9

Originally Posted By: roconnor
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gbeaumont wrote:
... why does a PE need a home inspector ??

OMG ... I just fell off my chair!

That coming from someone who thinks PE's should not get a pass on HI licensing. I need to go lie down now ... ![icon_eek.gif](upload://yuxgmvDDEGIQPAyP9sRnK0D0CCY.gif)

--
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
#10

Originally Posted By: gbeaumont
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Canadian Judge wrote:
As a further alternative, I find that there is a concurrent liability in contract and tort in this case. While that conclusion does not permit Ms Cudmore to circumvent or escape a contractual exclusion or limitation of the defendants' liability, I find that the language of the so-called exclusion or limitation clauses does not provide an escape to the defendants.


Although, this is a Canadian case American contact law is very much the same, and going back to my earlier comment,judges the world over can find any contract term to be "unfair" or not in the common good.

I would suggest, that any member who uses a "limitation of liability" clause in his or her contract to have the document thoroughly evaluated by a business lawyer practising in their state.

Regards

Gerry

--
Gerry Beaumont
NACHI Education Committee
e-mail : education@nachi.org
NACHI phone 484-429-5466

Inspection Depot Education
gbeaumont@inspectiondepot.com

"Education is a journey, not a destination"
#11

Originally Posted By: James D Mosier
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That clause may not hold up in court but it may keep you from getting there.


Several years ago friends of mine had pipes freeze their first winter destroying the entire kitchen. They called the "inspector" that they used and he pointed to that part of the contract they had signed. He refunded their inspection fee and went on his way. They then called their homeowners insurance and they took care of the kitchen.

BTW, the pipes (newly installed bright shiney copper) were sitting on top of the insulation in the attic at the time of inspection. This is NE Ohio.

--
Jim Mosier

#12

Originally Posted By: dfrend
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Maryland has upheld the limitation of liability clause on several occasions. So long as the client was provided opportuntiy to read the contract. I have it in mine as well at the suggestion of my attorney. Obviously anyone could challenge it, but with previous cases having it upheld, it is protection from going to court.


Check with an attorney if you are worried about the clause.

Jim, If he is asking if you have insurance, tell him. Most clients have gotten urging to ask from advice columns. Now if he wants proof, then.... tell him to call your attorney.

--
Daniel R Frend
www.nachifoundation.org
The Home Inspector Store
www.homeinspectorstore.com

#13

Originally Posted By: jhagarty
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Jim:


The Homeowner"s Insurance may have paid the claim but the Loss due to water may impact the future marketability and insurability of the home.

Underwriters are relying on CLUE Reports with increasing frequency. Here is the link to obtain a coopy of a report:

http://www.choicetrust.com/servlet/com.kx.cs.servlets.CsServlet?channel=home&product=homebundle&subproduct=default&anchor=

Some informational background:

http://www.frascona.com/resource/jag403clue.htm

--
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.

#14

Originally Posted By: roconnor
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I understand that limitation of liability provisions have been holding up in my neck of the woods too, as long as the client sees the contract and provisions well ahead of signing the contract. I believe it’s called “right of refusal” … which means they have ample time to get another inspector if they don’t like your terms … but don’t quote me on that.


You mileage may vary depending on your state laws and how good your attorney is who reviews your contracts and will ultimately defend you.

I have also heard that it helps to avoid the "nuisance" complaints.

--
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

#15

Originally Posted By: James D Mosier
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Joe,


Interesting reading thanks.

I was just using that as an example of the clause keeping the inspector out of court.

--
Jim Mosier