Who is liable if defects are found after a home inspection?

This was an article posted in today’s Toronto Star. I am still studying to become a CPI (just started last week)…but am wondering if anyone has come across this problem before with buyers and also if the Internachi agreement would have all the bases covered in case a situation like the one in the article did arise. I personally would argue that it is a visual inspection and at the time, there was no visible indication of water damage or leaks. Thank you. Any thoughts?

In reality if HI’s were liable for all the things they want them to be liable for nobody would be crazy enough to take on the risk of doing this job in the first place, either that or it would be such an expensive service to offset the potential liability that the majority of prospective buyers/home owners would be unable to afford it…

I agree, it would not be worth it if every HI had to go to court. Having said that, in the article, the Judge threw out the exclusion clause - “the wording of the home inspector’s exclusion clause was found to be ungrammatical and ambiguous, and was not clearly brought to Smith’s attention when he signed the agreement.”

Would the standard Internachi contract to perform a home inspection be precise enough in this instance? Is this the one every member uses?

I guess back in the day the legal wording was not adequate and today it would be more so.

Thanks for your reply

Well we never found out what happened or if the home inspector made a mistake. Poorly written article. It is totally fitting that the author is a lawyer as the article has no conclusion. If your not in Canada it’s of no concern.

Thanks Bob,

I just go curious more so from the legal side of it. There are a lot of “moron” buyers who get funny ideas from reading stuff like this. Just wanted to find out more about what type of contracts or agreements all the experienced HI’s use when they agree with a client to perform a HI. Perhaps a new topic when the time is right.

Lots of us are in Canada and E&O insurance is hard to get nowadays with COVID’s impact on claims (as one Insurance Rep told me just this week). It is my understanding InterNACHI is not offering the Group option in Canada(sucks). I am using Home Gauge and they are offering US only E&O insurance and to limited number of states. I was told they are not taking on any new E&O Clients in US right now and do not offer it in Canada at all. I have contacted 7 Canadian Insurance companies that offer E&O on their website. I have gotten 3 unofficial emails and one official quote email at $4000, $3500, $2800 annually. The $2800 Official quote was not even an E&O coverage reply just General Liability. The Home Gauge US only offering had a small flat fee of $270 for first 25 contracts and subsequent price breaks at 50,100,200 contracts(great if you can get it). There seems to be a push in Ontario to make H.I. have to have E&O insurance coverage, but the current pricing seems to be attempting to push the “One Man Show” Inspectors out of the business. Anyone have any Sage Advice?

Welcome to our forum, Aleem!..Enjoy! :smile:

Thank you Larry. I look forward to learning from the rest of the community here. Cheers

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Ok Aleem Here is some information to think about. I am a retired CMI and accredited by the National Home Inspection Certification Counsel. (In Canada) NHI. I did just over 3K inspections in the greater Toronto area over 10 yrs.
The limitation paragraph, noted in the mentioned case, was very common a few years ago. Many courts considered the “take it or leave it” circumstance was arbitrary that favoured the Inspector(company) and that the client had no option.

The current interNACHI agreement does provide the client an opportunity to negotiate a limit of liability. The courts seem to accept that now.

The mentioned case indicated the inspector did not adequately explain the limit of liability. I will address this in a second.

Mr Aron did not indicate what the result of the case was, but, every PIA should clearly state a time limit as the inspection is a snapshot in time. Usually 1 year. I would suggest a lot can happen to a property over a 3 yr time frame.
I understand, from your original post, that you are just starting out. It is MHO that your most important responsibility, as a home inspector, is to ensure that your client is completely aware of the limitations of a VISUAL inspection.

I ALWAYS spent a great deal of time going over the terms of the PIA and ensuring the client understood that I could only inspect what I could see. I often told clients I did not have x-ray vision, I (with a smile) told them I was not faster than a speeding bullit, unable to jump tall buildings in a single bound etc… And that I was unable to predict the future.

I never accepted an agreement signed digitally. I always went over each and every agreement with the client at the house, before the inspection. Some times, not often, the client was not there but they never got any info unless the agreement was clearly and carefully explained. They initialled specific exclusions in the contract like the limit of liability, and others.

Unfortunately a large number of home inspector’s clients are of the opinion that if they have had a home inspection that nothing will ever need maintenance or repair or replacement, and if that happens the inspector will pay for it. That is a totally unreasonable expectation and, I’ll say it again, it is your responsibility to make sure your client clearly understand that fact!
Hope this helps
Cheers and good luck!


Hi Douglas,
Thank you so much for your reply. Wow…3K inspections….that is impressive. Did you mainly stick to GTA or also other parts of Ontario? I’m out west in Halton.
I like your approach to reviewing the PIA and getting the buyer to understand and sign off before an inspection. I think having a more in-person explanation prior to an inspection would have a more positive impact than just showing up and starting – build a rapport even if it is for a couple of hours – it can go a long way.
I, personally, would go around with a notebook or clipboard and tick off each section and make quick notes then use a mobile device. (I have been on an inspection of a friend’s house and the HI was on his mobile device most of the time – yes, he was making notes and taking pictures – but it seemed impersonal, unapproachable).
Thank you for your advice. I have millions of questions that pop up as I study and will definitely seek advice from the forum before I jump into my first real inspection.

Hi, Aleem. Welcome to the message board.
Good luck with your studies.

Read about Patent vs. Latent Defects.
A clam can be leveled at the inspector, the home owner and even an agent.