TREC rules on payment

Local Inspection Issues Texas/TPREIA Home Inspectors
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I’m being challenged to provide the TREC rules that we can not accept payment from any one except from out client. (Agent wants to pay for client) I have been searching and can not find it.
Am I right on this? If so where can I find the document.

Thanks’
Mark

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Mark,

TREC does not address payment methods. Simply state it is your company policy. If you want to put it off on someone else simply say “My insurance company requires me to be paid directly by my client only”. You could also tell the agent that this protects them because they may assume liability for your work by writing the check. Suggest this “The buyer can pay me and you can reimburse them”.

I also use this strategy when I charge for return trips. For example, the listing agent or builder fails to have water turned on. I charge for return trip. Buyers or selling agents are great at saying “the agent or builder will pay your return fee”. Ha, fat chance. I say my insurance company requires me to receive payment from only you. You pay me before report delivery then ask them to reimburse you."

John Cahill
Exiled TREC Inspector Commitee Chairman

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Mark…I occasionally accept payment for an inspection from someone other than the client, i.e a Realtor, other family member, etc. Like John said, there’s no rule against that and it doesn’t change who the client is on my Service Agreement. I never, ever charge the buyer or the buyer’s agent for a return visit and have, so far, been successful in getting those fees begrudgingly paid by the seller/seller’s agent.

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HMMM. I guess I have been following this policy for so long I thought it was in the rules.
I appreciate your input guys.

Mark

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I have one agent that pays the inspections for all of his buyers as part of the service he provides. I don’t even quote him prices because he pays me more than I would charge. Does a lot of new construction homes for new buyers. Really a great full service agent. Too bad he’s moving to CO. I would only take payment from the agent, if I KNOW the agent to have the utmost ethics. In this case I list the agent as my client and indicate that the inspection was for XXXX on behalf of YYYY.

I collect payment from builders and listing agents all of the time, whenever I have to do a reinspection for a client because one of the utilities that was supposed to be on wasn’t. It’s not my client’s fault the seller didn’t have the house ready for the inspection. In these cases I only list my client on the report. The other party is merely covering what should have been an unnecessary expense.

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I have a buyer that does not want any part of the inspection report to be seen by the seller. Since the seller did not have the gas on and is going to pay my reinspection fee is the seller entitled to the report since they paid for it?

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It doesn’t matter to me who pays for the report. Whoever signs the inspection agreement is the name that goes on the report and that is who receives the report. If a seller leaves a check for me in the kitchen drawer for a reinspection because they left the gas off, they are entitled to nothing from me. I’ll gladly cash their check. My agreement with the client is that they will pay me for my service. If they arrange for the seller to give me money, that’s their business.

Many times an agent will pay me for an inspection because the buyer is overseas. The report is then written for the agent in their name and they sign the inspection agreement. My services in this case are not contracted with the actual buyer. The agent is my client in this case. The agent most likely forwards this report to their buyer. What they do with their paid for report, I do not care.

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Here’s how I handle it:

I tell the client and their agent what my fee is for a reinspection and I prepare an agreement and invoice in the client’s name. I then tell them verbally, that if they cannot collect the fee from the seller / builder or listing agent that I will waive the fee when I do the reinspection. The seller and listing agent are never my clients and not entitled to the report. They are merely reimbursing the buyer for additional fees incurred as a result of their failure to make the house ready for inspection.

Here is the relevant clause from my inspection agreement “If a return trip is required because utilities are not turned on, the property is inaccessible or any other reason, a minimum fee of $200 will be charged.”

I will only offer this if I have a strong faith that the buyer’s agent will make a bona fide effort to obtain the payment. I do this frequently and only occasionally wind up eating the fee (which generally comes back in terms of good will). This approach seems to go over very well with agents and buyers.

Don’t offer this on REOs though.

Edit: Just read John’s post - his approach is very similar to mine.

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Richard, I agree with John O & Chuck, a payment from a listing agent or seller for a re-inspection is a service charge, a trip fee, a penalty or whatever and doesn’t entitle them to anything in the report.

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TREC 535.220 E2 is the administrative code governing inspector pay.

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1 Like
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I asked ChatGPT to make REC 535.220 easier to understand, this is the result

Simplified Version:

Duties of Real Estate Inspectors

(a) High Standards of Conduct

Inspectors must act with higher integrity than ordinary business people. They need to be professional, fair, and objective, and they must uphold the good reputation of the home inspection profession.

(b) Responsibilities to Clients

  1. Client’s Interests: Inspectors should prioritize their client’s interests and use their best skills and knowledge.
  2. Knowledge Improvement: Inspectors should continuously learn about new developments in their field.
  3. Independence: Inspectors should ensure their work is unbiased and not influenced by outside interests.

(c) Responsibilities to the Public

  1. Professionalism: Inspectors should always act professionally and fairly towards the public.
  2. Public Education: Inspectors should help the public understand the importance of inspections, even if they don’t get hired.
  3. Preventing Fraud: Inspectors should protect the public from fraud and unethical practices.

(d) Responsibilities to Other Inspectors

  1. Fairness: Inspectors should deal fairly and with integrity with other inspectors.
  2. Cooperation: Inspectors should work with other inspectors to uphold high standards in the profession.
  3. Reporting Violations: If an inspector knows about rule violations, they should report them.

(e) Compliance Requirements

  1. No Conflict of Interest: Inspectors must not inspect properties if their pay or future work depends on the inspection results or the property’s sale.
  2. Definition of Settlement Service: This includes services related to property transactions, like mortgage brokers, lenders, title services, appraisers, and more.
  3. No Referral Fees: Inspectors cannot pay or receive fees for referring inspections or being on preferred lists.
  4. Client Consent for Referrals: Inspectors need written client consent before referring non-settlement services.
  5. Fair Payment: Inspectors can pay or receive fair fees for actual services.
  6. No Repairs Post-Inspection: Inspectors cannot be hired to repair inspected properties within 12 months of the inspection.
  7. Confidentiality: Inspectors must keep client information private unless they have the client’s permission. However, they can disclose immediate safety hazards to occupants.
  8. Allowed Activities: Inspectors can engage in educational activities and pay for actual goods or services without violating these rules.

(f) Professional Cooperation

Inspectors should work well with other professionals to promote fairness and professionalism in the industry.

(g) Consumer Notice

All licensed inspectors must provide consumers with an official notice as required by regulations.