Who is your client?

Originally Posted By: Brian A. Goodman
This post was automatically imported from our archived forum.



This is from one of Robert Z’s posts about the definition of “fee paid inspection”, in one of those places I can’t post to.


This is a simple report for insurance on older homes prior to writing a policy. These are one-page simple narrative reports. No request or requirement for review or reporting outside the above guidelines. The client is the homebuyer and is responsible for the fee. The report is provided to the insurance company and copied to the buyer. These may or may not be part of a home inspection. For this scenario let?s assume it is a stand-alone report.

Very few inspectors are familiar with this concept, but the client in this case in not the buyer, even if he picks you, engages you, and pays you. The client is the insurance company, who is relying on your professional work product to make a business decision. This happens every day in appraisal, perfectly normal and understoood, but isn't the norm in home inspection. I won't bore you with the long explanation unless someone asks, but it's true.



2. For existing members. As these meet the clients request, the COE and I believe the SOP would these count as Fee Paid Inspections?

Scenario #2

I recently completed a 4-point inspection as follows

A. Electrical. Review for functional operation only.

B. Plumbing. Review for functional operation only.

C. Roof. Review for functional operation and provide opinion if under 15 years old.

D. HVAC/Heat. Review for functional operation only


I think you had it right already Robert, it's reaching. I'm not that up on NACHI SOP, but I can't imagine such minimal inspections being accepted as home inspections. I urge you to resist the temptation to pad your numbers, for what it's worth.


Originally Posted By: jpeck
This post was automatically imported from our archived forum.



Brian A. Goodman wrote:
The client is the homebuyer and is responsible for the fee.

The report is provided to the insurance company and copied to the buyer. These may or may not be part of a home inspection. For this scenario let?s assume it is a stand-alone report. [/i]


The report is provided to, in many cases, the homeowner, and they ARE the client. The insurance company USES your report.

Now, if you are contracting these inspections from the insurance company (and many are done this way) the client is the insurance company.

Quote:
Very few inspectors are familiar with this concept, but the client in this case in not the buyer, even if he picks you, engages you, and pays you. The client is the insurance company, who is relying on your professional work product to make a business decision.


The insurance company USES the report in either case. Who is you client depends on the circumstances.

Otherwise, you could say you client is the mortgage company if they request a copy of your roof report, because they would use it to make a business decision. Or the roofer who uses your report for repairs, or the plumber, or ... you get the idea ...

The person or business who USES the report does not determine who the client is, the contractual business agreement you have is with your client ... and they may SHARE that report with whomever they so choose.

Quote:
This happens every day in appraisal, perfectly normal and understoood, but isn't the norm in home inspection. I won't bore you with the long explanation unless someone asks, but it's true.


And the appraisals are ordered by, and used by, someone other than the 'buyer', the cost is then passed on to the 'buyer'.

HOWEVER, as a buyer, if you were my appraiser, and I was paying you, you had better think of me as your 'client', otherwise I will use another appraiser (and I have). See, that view depends on who the contractual arrangement is with. Whoever USES the report, appraisal, etc., does not determine who your client is.


--
Jerry Peck
South Florida

Originally Posted By: Brian A. Goodman
This post was automatically imported from our archived forum.



[quote=“jpeck”]


The report is provided to the insurance company and copied to the buyer. These may or may not be part of a home inspection. For this scenario let?s assume it is a stand-alone report.

The report is provided to, in many cases, the homeowner, and they ARE the client. The insurance company USES your report.

Now, if you are contracting these inspections from the insurance company (and many are done this way) the client is the insurance company.


Sorry Jerry, legally speaking that just isn't true. The insurance company is initiating / requiring the inspection and will depend on your work product to make a business decision. That means your fudiciary obligation is to them, not the buyer. If you wound up in court the judge would have no confusion about it.


The insurance company USES the report in either case. Who is you client depends on the circumstances.

Otherwise, you could say you client is the mortgage company if they request a copy of your roof report, because they would use it to make a business decision. Or the roofer who uses your report for repairs, or the plumber, or ... you get the idea ...


It's possible to have more than one client, but the roofer, plumber, etc. don't count. You have no fudiciary obligation to the repair contractors. If the mortgage company and the insurance company both required the inspection to make thier individual business decisions, they would both be your client.

The person or business who USES the report does not determine who the client is, the contractual business agreement you have is with your client ... and they may SHARE that report with whomever they so choose.

Nope. If you have the buyer sign the contract in this case, he still is not your client in a legal sense. Who uses it is critical to who your client is, but the other half of the coin is who initiates / requires it in the first place. If a bank required a home inspection before making a loan on a particular house, the bank would be the client no matter who else was involved or how. This is exactly what happens in appraisal, every day of the week. It also applies to other professionals, like lawyers. If a lawyer is defending you in court, you are the client no matter who pays for it or signs his contract. You would be the one depending on his professional work product.


And the appraisals are ordered by, and used by, someone other than the 'buyer', the cost is then passed on to the 'buyer'.

Right, to a point. In some states the buyer has a legal right to pick the appraiser they want, and they frequently write a check for thr appraisal, but they are not the client. It's no different in the original example, the insurance company is initiating / requiring / ordering these inspections, not the buyer. The buyer is just doing the legwork.

HOWEVER, as a buyer, if you were my appraiser, and I was paying you, you had better think of me as your 'client', otherwise I will use another appraiser (and I have). See, that view depends on who the contractual arrangement is with. Whoever USES the report, appraisal, etc., does not determine who your client is.

In appraisal these things are part of federal law Jerry, based on a much larger body of legal precedence covering fuduciary relationships. The guy might treat you like the client, but he knows the score at the end of the day. When I took appraisal training they drilled this stuff in our heads...know who your client is. You can have anyone sign your contract, it doesn't make them your client in a court of law. The trick is to know who the true client is to start with, and get them to sign.


Originally Posted By: rzimmerman
This post was automatically imported from our archived forum.



Brian A. Goodman wrote:
This is from one of Robert Z's posts about the definition of "fee paid inspection", in one of those places I can't post to.


Brian,
Sorry about that. I intended this to be open to all. It was late and I did not realize that section was limited to some. My error.


--
Rob Z.
www.RZinspections.com

Originally Posted By: jpeck
This post was automatically imported from our archived forum.



[quote=“Brian A. Goodman”]
jpeck wrote:


The report is provided to the insurance company and copied to the buyer. These may or may not be part of a home inspection. For this scenario let?s assume it is a stand-alone report.

The report is provided to, in many cases, the homeowner, and they ARE the client. The insurance company USES your report.

Now, if you are contracting these inspections from the insurance company (and many are done this way) the client is the insurance company.


Sorry Jerry, legally speaking that just isn't true. The insurance company is initiating / requiring the inspection and will depend on your work product to make a business decision. That means your fudiciary obligation is to them, not the buyer. If you wound up in court the judge would have no confusion about it.


Brian,

It Depends.

I've had some clients (MY clients) have their insurance company fax a form to me to fill out, and IN THOSE CASES, the insurance company IS the client for that "report" (their form).

I've also had some clients (MY clients) send parts of my inspection report to the insurance company, who then used those parts of my report, and IN THOSE CASES, the buyer IS the client for that report, and they forwarded the information on to the insurance company.

You've got to go back and READ what I wrote.


You can't say that the insurance company IS ALWAYS the client. 'IT DEPENDS' ... is the best answer.


--
Jerry Peck
South Florida

Originally Posted By: Brian A. Goodman
This post was automatically imported from our archived forum.



Hi Robert,


I was also surprised that “General Inspection Discussion” was a one-way forum.


About the SOP thing...

Apparently there is no hard-and-fast definition of "fee-paid inspection", but if one were willing to stretch the loopholes to cover these very limited inspections the sky would be the limit in my opinion. I could go out to provide a third-party opinion on a roof for a homeowner, then write up a report disclaiming the entire rest of the house and say it was an inspection. If a client specifically asked to exclude a few things rather than include only a few things, I would say you were entitled to count it. This really just falls into the area where what the rules do not forbid runs into what the reasonable intent of the rules was in the first place, i.e. the letter of the law vs. the spirit of the law. Take the high road, the air is cleaner up there.



Originally Posted By: Brian A. Goodman
This post was automatically imported from our archived forum.



[quote=“jpeck”]


I've had some clients (MY clients) have their insurance company fax a form to me to fill out, and IN THOSE CASES, the insurance company IS the client for that "report" (their form).

I've also had some clients (MY clients) send parts of my inspection report to the insurance company, who then used those parts of my report, and IN THOSE CASES, the buyer IS the client for that report, and they forwarded the information on to the insurance company.

You've got to go back and READ what I wrote.

You can't say that the insurance company IS ALWAYS the client. 'IT DEPENDS' ... is the best answer.[/color]

I said the insurance company was the client in this case, not in all cases. Yes it depends, but not on who calls you up or signs your contract. It's whoever is initiating / requiring the inspection and depending on your work product to make a business decision. Others may use it (like a contractor), but they'd better not be depending on it because you owe them nothing under law.