Vacant Properties and the Home Inspector

                                                                                                                         Pictures        are worth a thousand words...
    and sometimes a thousand dollars as well. 
    **Vacant Properties and the Home Inspector**
    By Joseph Denneler, Esquire
    I can usually tell when the real estate market is picking up by        the number of claims against home inspectors that are sent to me by        inspectors and their insurers. The number of claims generally rises and        falls with the transaction market. I used to tell trucking clients that        if they are on the road for thousands of miles it is inevitable that        you will be involved in some form of accident, regardless of fault.        This holds true for inspectors as well. If you’re doing more        inspections, your chances of getting a claim increase regardless of        fault. 
    Unfortunately the economy is still feeling the aftereffects of the        downturn, and many homeowners are still losing their homes to        foreclosures and other financial pitfalls. The result is that many home        inspectors are inspecting bank owned and otherwise vacant properties.        Vacant properties can be challenging because of several factors. The        two most prevalent involve utilities and the condition of vacant homes        adjoining the inspected home. 
    I recently had two cases where it was alleged that the inspector turned        on the water service within an inspected property. In the first, it was        alleged the inspector filled the tub and failed to shut the water off        or open the tub drain. This, not surprisingly, caused the home to        suffer significant water damage. The seller submitted an insurance        claim and the seller’s insurance carrier made a subrogation claim to        recover the cost of repairs. The inspector and his client were present        for the inspection, but the client was not with the inspector when the        bathroom was inspected. The inspector took no photographs of the        bathroom. 
    I know the inspector and I am quite sure he did not leave water running        in the bathroom. He’s meticulous and goes back through every home he        inspects before he leaves to make sure nothing was left on.        Unfortunately my opinion is not a good defense to the subrogation        claim. We responded to the claim and asked for proof that the inspector        failed to turn off the tub faucet. 
    As expected, the "proof" was that the inspector was there and        nothing more. In fact, the damage was not discovered until a few weeks        after the inspection. Several people had access to the home during that        time period. We called the insurance carrier’s bluff, and the claim        went away. Unfortunately not every claimant goes away so easily, and as        a result, we must always focus on ways we can prevent the claim letter        from ever being issued to the inspector. Even if you are right, it costs        money to hire an attorney or submit a claim to your insurance carrier. 
    **[FONT="Verdana"]Pictures Worth        Thousand Words (Dollars) **
    Pictures are worth a thousand words and sometimes a thousand dollars as        well. The easiest way to prevent a claim like the one described above        is to photograph the tub being filled and the tub being drained and        shut off. The same is true for any plumbing component that is tested        for flow and drainage. An extra 25 seconds to take two photographs        would seem invaluable if the alternative is having to prove in court or        arbitration that the water was drained and shut off. 
    In another recent claim, my client inspected a vacant condominium unit        that was owned by a bank after a foreclosure. A few days after the        inspection, the owner of the unit below the inspected unit reported        flooding coming from the inspected unit above. The owner of the lower        unit contacted the real estate agent for the bank and reported the        claim. 
    Unfortunately, the real estate agent told the bank that he was certain        the water service was not on in the inspected unit, and that the        inspector must have turned the water on, and an alleged "slow        leak" present in the inspected unit caused the flooding in the        unit below. A year later, after the owner of the lower unit got fed up        with trying to negotiate a resolution with the bank, a lawsuit was        filed and the bank joined the inspector as a defendant, alleging the        inspector turned on the water during the inspection.[/FONT]
                                                        Nearly every        set of standards of practice for home inspectors provide that an        inspector is not required to turn on the water service to inspect a        building, and generally an inspector will not turn on the water in a        vacant building because of the possibility of a hidden pitfall in the        plumbing system. I have no doubt my client did not turn on the water        service to conduct the inspection. But since this claim was in        litigation, a simple letter explaining the lack of liability on the        part of my client was not sufficient to eliminate the claim. 
    My client identified several components of the plumbing system that        were leaking at the time of the inspection. When the inspector ran the        dishwasher it leaked all over the kitchen floor. The inspector works in        a state where the standards of practice forbid him from disclosing any        information gained during the inspection with third parties unless the        condition creates a significant risk of injury to the owner of the        property. Water leaks do not meet this definition, so the inspector was        unable to contact the owner and disclose the condition. 
    Thankfully the buyer’s real estate agent was present for the        inspection. The agent wrote an e-mail to the bank’s agent a few days        after the inspection which indicated that as soon as the agent and        inspector entered the unit there was water on the floor in the bathroom        emanating from a plumbing leak. Unfortunately inspectors are often        alone during inspections of vacant properties, and a witness is not        always available to bolster the inspector’s defense. 
    After we extricated the inspector from the case, he asked me how he        could prevent another claim like this in the future. My suggestion was        to note in the body of the inspection report for a vacant property that        the water was on when the inspector arrived to the site. An inspector        will almost always note when the water or any other utility service is        not activated for the inspection. But sometimes it’s necessary to        document conditions that are not abnormal or an impediment to the        inspection. If the inspector makes it a point to note that a utility is        on at the time of the inspection, it could diffuse a similar claim in        the future. 
    **[FONT="Verdana"]Adjoining        Property **
    It’s not always the inspected property that is vacant. Sometimes an        adjoining vacant property can have a negative impact on an inspected        property. Consider a semi-detached home where the adjoining property is        vacant. Certainly water issues arising in the vacant home can manifest        in the inspected home and can be visible and readily accessible to the        inspector. Structural concerns may not be so visible. The effects of        structural and foundation issues in the vacant adjoining building can        be easily hidden, fraudulently or otherwise, with paint, carpeting,        sealing of cracks and other routine things sellers do to give a        property an aesthetic boost. [/FONT]
                                                        No inspector        is required to speculate on the condition of a property that is not        within the scope of an inspection. However, inspectors need to be in        the business of preventing the possibility of claims, not reacting to        them. The financial exposure (even when the inspector is right) is too        significant to behave differently. The best advice I can provide,        again, is to make proactive statements in the body of the inspection        report. When inspecting a semi-detached or duplex home, note that        conditions of the adjoining property can have a negative effect on the        inspected property, and that those conditions are beyond the scope of        the inspection. There is no prohibition on giving your client some        homework. Make the client aware of the issue and let the client take        the next steps to investigate the adjoining property. This type of        advice is not required by the standards, but could serve to eliminate        the probability of the client coming back to you when the adjoining        property causes damage to the inspected property. 
    Inspectors have to play with the cards they are dealt. Unlike gambling        in a casino, an inspector can put aces under the table and up a sleeve        to prevent a losing hand. Taking proactive steps to prevent claims        involving vacant properties are your aces, and you always play the        aces.
                                  **About        the Author****
    **Attorney        Joe Denneler provides inspection contracts written to the home        inspection standards applicable and specific to your state. OREP        Insureds enjoy 25% off these services. You can contact Joe directly at or if        you’re an OREP Insured and would like your discount code, email
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Every home inspector should read Roy’s comments. Claims are a virus that is spreading rampantly. Even when you are not served, sued, or threatened by a lawsuit, you can be pulled into one. Give every client and agent a CD or thumb drive full of InterNACHI articles, graphics, SOP’s, codes of ethics, ALL pictures taken of the inspection, and have the buyer sign the agreement stating that they received AND understand the reports, CD, articles, etc. included and contained within the report. Even when damage is hidden, via termites or poor construction, and you did the inspection, any attorney will pull you into a lawsuit, whatever your reports state and whatever pictures say. Remember that the job of any attorney is to extort the most money from any client or foe.

With many re-hab TV shows, more people are trying to flip houses, and losing their bank accounts. Use extreme caution when doing inspections for investors and flippers.

It is also sad that Nick and Ben clog up this message board with junk that causes good points for HI’s to be pushed back on the board list.

Please Nick and Ben. Please start a message board thread to put all of your new logos, brochures, classes, house of horror stuff onto. Leave the discussions for us HI’s, please.

I second that.