InterNACHI

11 Steps That Help Home Inspectors Avoid Lawsuits

by Nick Gromicko, Founder
International Association of Certified Home Inspectors, Inc. (InterNACHI)
 
 
This article gives inspectors 11 easy, inexpensive steps to take to help prevent lawsuits.  It does not address different types of corporations, insurance, arbitration or collection-proofing... all topics for upcoming articles.
 
#1   Join InterNACHI, of course!
InterNACHI is the world's largest inspection trade association and its Standards of Practice can be pointed to as definitive.  Substantially abiding by InterNACHI's standards provides a strong defense against a claim that you failed to perform to a level of care or acceptable practice for the inspection profession.
Furthermore, InterNACHI's membership requirements are in addition to whatever your local, state or provincial government licensing and regulation may demand.  Membership is evidence that you are the type of inspector who voluntarily goes above and beyond the mininum requirements that merely allow you to legally operate in your area.
Not a member?  Click here to join.
#2   Incorporate.
You, as a shareholder in your incorporated inspection company, enjoy limited liability for the corporation's debts and judgments against the corporation.  No inspector should operate as a partner or sole proprietor... ever.
#3   Take every one of InterNACHI's online courses.
We all know that many claims against inspectors are frivolous.  Education and training won't prevent such suits from being filed, but education and training will help you prevail in court.  Each of InterNACHI's online courses produces a Certificate of Completion.  You should be prepared to produce all your certificates as evidence of your professionalism.  However, the dates of completion have to precede the date of the inspection in question, so complete them now.
Furthermore, education and training are key to performing high-quality inspections, which eliminates meritorious suits. 
 
Knowledge is a poweful tool you can use to stay out of court or win if you should find yourself there.
Click here to take InterNACHI's online inspection courses and download your Certiticates of Completion.
#4   If you are going to hire a helper, use a contract.

I prefer to hire helpers as independent contractors rather than employees.  A good independent contractor agreement makes it difficult for a helper to:

  • bind you or your inspection company into a contract;
  • incur any liability on your behalf;
  • claim rights associated with your publications, trade secrets, copyrights or trademarks;
  • reveal your confidential information, such as marketing ideas, business plans, pricing strategies, etc.;
  • steal your real estate agent database or solicit your clients;
  • compel you to pay his/her expenses, insurance premiums or taxes;
  • demand severance pay; or
  • later claim he/she was an employee or is owed money.
Click here to download an inspector independent contractor agreement.
#5   Turn away some consumers.
You don't have to accept work from everyone who wants to retain you.  If a client starts off difficult or unreasonable, it usually gets worse, not better.  While it may be hard to walk away from an inspection fee, it's sometimes cheaper in the long run. 
 
Furthermore, an added bonus to refusing to allow these consumers to become clients is that they become your competitors' clients.  Pity those competitors.
#6   Use InterNACHI's Pre-Inspection Agreement.
It is designed to work hand-in-hand with InterNACHI's Standards of Practice and includes:
  • a definition of the the scope of the inspection;
  • a disclaimer of warranties;
  • a limitation on liability, and a liquidated-damages provision;
  • a provision for payment of costs and attorney’s fees;
  • a “merger clause” stating that there are no promises other than those set forth in the agreement, and that all prior discussions are merged into the agreement;
  • a clause stating that any modification of the agreement must be in writing;
  • a forum selection clause so that any lawsuit must be filed in the county or district where the inspector has its principal place of business; and
  • a personal guaranty of payment if the client is a corporation or similar entity.
Click here to download InterNACHI's pre-inspection agreement.
#7   Purchase InterNACHI's "Stay Back" stop sign for $29.95.
In 2009, a home inspector opened a floor hatch to go down into a crawlspace to inspect it.  While inspecting, his client fell into the opening, breaking his arm in three places.  The client sued.  The suit claimed that the inspector was negligent for not putting up a "caution" sign.
 
Also in 2009, a home inspector was on the roof of a home he was inspecting.  A newer real estate agent decided to climb up the ladder to join the inspector.  She slipped, fell seven feet, and landed on top of the client who was steadying the ladder for the agent.  Both suffered injuries that required them to be hospitalized.  The client sued the inspector for not posting a sign to keep others off his ladder.
 
It gets worse.  An inspector was recently blamed for an unsafe condition that already existed.  During the review at the end of a home inspection, the inspector pointed out severely rotted deck planking.  The client walked out onto the deck to see what the inspector was talking about when the client's foot broke through the decking, causing minor injury.  The client didn't sue, but later complained to the real estate agent that the inspector should have kept everyone off the deck, once he discovered the issue.
 
The InterNACHI "Stay Back" stop sign does four things:
  • It shows you care about your clients' safety.
  • It reminds everyone that there are risks, especially to children, in attending an inspection.
  • It actually keeps your clients at a safe distance.
  • It demonstrates in court that you are not reckless. 
Our attorneys decided to use a "stop" sign rather than a "caution" sign, as "caution" implies to proceed (go ahead and climb the ladder), but with caution.
 
Click here to order the "Stay Back" stop sign.  $29.95.  And save the receipt as evidence that you are a responsible inspector!
#8   Write your reports properly with InterNACHI's library of narratives.
This library is the world’s largest collection of dedicated, industry-savvy home inspection narratives. These narratives were developed using a variety of sources, including the International Residential Code (IRC), technical data sheets, and systems specifications from various manufacturers' associations, installation manuals for a variety of building products, and various building science-related sites. Narratives are worded with safety in mind, and specific code is not quoted.
 
In addition to reducing the amount of time you spend filling out reports, the quality of your reports will improve, and you’ll enjoy greater protection from liability.
 
Click here to order InterNACHI's DVD of inspection narrative.  $99.00.

 
#9   Use InterNACHI's "Now That You've Had a Home Inspection" book.

The book is also written specifically to reduce your liability by reminding your clients that a home inspection does not reveal every defect that exists, that certain issues are outside the scope of a home inspection, and that a homeowner is now responsible for maintaining their home.  It works well with the Survey (below).

#10   Use InterNACHI's Client Satisfaction Survey.
Often, a dissatisfied client will describe their perception of your services to his/her agent, or worse... to a judge, inaccurately.  Procuring and maintaining a copy of this survey will bring them back to Earth, so to speak.  It is a handy document to have to present to a complaining agent, and can often end a legal action all by itself.  It is the next best thing to a deposition.  The Client Satisfaction Survey creates a factual record of the client’s version of events surrounding the inspection in the relevant time frame, thus inhibiting the client’s ability to change his story to fit the circumstances of a later claim. 
 
Click here to download the Client Satisfaction Survey.   And save every copy forever.

 
#11   If you settle a dispute with a client, get a signed release.
Right or wrong, in some cases, it makes sense to cut a deal with a complaining client to avoid a lawsuit. 
 
Never apologize.  An apology may be used to support a future claim that you were negligent.  If you have to pay to have a repair done to correct a defect your client claims you "missed," always ask for a handwritten letter of reference thanking you for quickly solving the issue.  Then take a stack of those letters back to the referring agent, brag about how you paid to keep your mutual client happy, and ask that the stack be passed out at the next real estate sales meeting.
 
Also, after you get the reference letter, get a release signed to end the issue forever.
 
 
 
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Deposition Preparation.
 
 

 
 

 
 
 
 
 
 

 
 
 

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