Inspection agreement wording clarification needed

[Dan Merrell, CMI]

9. The Inspection and report are performed and prepared for the sole and exclusive use and possession of the Client. No other person or entity may rely on the report issued pursuant to this Agreement. In the event that any person, not a party to this Agreement, makes any claim against Inspector, its employees or agents, arising out of the services performed by Inspector under this Agreement, the Client agrees to indemnify, defend and hold harmless Inspector from any and all damages, expenses, costs and attorney fees arising from such a claim.

Our client (perspective buyer) called and said that the above wording (from the Inspection Agreement between him and us) is preventing him from disclosing the Inspection Report to the seller. He signed a realators condition agreement stating if the repairs were more than 1% of the selling price that he must disclose the agreement as proof. He poses the situation that if the seller sues us for the things we documented in the report that the above wording is saying that he (the client) is responsible for all the costs.
Please advise as to what your experience is on this if any. Thanks. accuhome@shaw.ca

[Nick Gromicko]

The seller can't sue you because the seller has no standing. The seller isn't your client. You have no duty to the seller.

Your client allowing the seller to merely see the inspection report doesn't change that and doesn't give the seller any right to rely on the report.

[Dan Merrell, CMI]

Thanks Nick for responding. The client is nervous because of the wording in section 9 suggests if they try to sue because they challenge or disagree with what we have in the report that influenced him from walking away from the deal - that all expenses will be paid by him. He poses the scenerio that if they challenge us in a court because of the lost sale that he will be paying fees according to the wording in the agreement above? He wants us to waive section 9 of the agreement in writing. What would you do?

[dmcauley]

A signed contract is a signed contract. The client accepted and signed the contract. Therefore, it is not up for negotiation. Did you go over this with your attorney and did an attorney, who deals in real estate, write teh contract. That would be where you get the legal answer to your question.

[mnahrgang]

Originally Posted by dmerrell

Thanks Nick for responding. The client is nervous because of the wording in section 9 suggests if they try to sue because they challenge or disagree with what we have in the report that influenced him from walking away from the deal - that all expenses will be paid by him. He poses the scenerio that if they challenge us in a court because of the lost sale that he will be paying fees according to the wording in the agreement above? He wants us to waive section 9 of the agreement in writing. What would you do?

I would tell him essentially what Nick said. But, I would not change the agreement in this case. The buyer may use the information however he chooses. However if that involved giving the information to the seller and the seller sues you over it, then the buyer is accepting responsibility for that. The seller wouldn't likely win, but the buyer assumes the risk.

You might want to consider telling your client that if he wishes to remove this clause it significantly increases your risk and liability and you deserve to be compensated for that. Maybe double the fee.

Like Nick said, the seller has no case, so it's highly unlikely anyway.

[Nick Gromicko]

Like Nick said, the seller has no case, so it's highly unlikely anyway.

Exactly, you are causing your client grief over something that can't occur anyway.

Who wrote your agreement?

Why don't you just use InterNACHI's agreement? Walk into the light: www.nachi.org/documents.htm

[Dan Merrell, CMI]

Thanks Nick - it is not an InterNachi agreement - and we were not aware that agreements were available here - this is our first day using the forums here and but I thank you all. Yes, we are changing the agreements we use (came with the software report system) to the InterNachi ones.

[Nick Gromicko]

came with the software report system

That's probably the core issue. InterNACHI has full-time, in-house attorneys who understand the inspection industry inside and out. Stay on the ranch.

[Dan Merrell, CMI]

Or rather... welcome to the ranch!

[Joe Farsetta]

The clause is fine. It exists, in one way or another in most agreements. If it wasnt there, I'd provide similar language to insert.

The seller may disclose whatever he wishes. The purpose is really so that the Client cant sell the report to someone else and have them rely on it as if you performed the inspection for them.

Your duty is to your Client. Unless you lied in your report which was so bad that the client walked, they have no standing to come after you for anything.

[Nick Gromicko]

The seller purchasing a home inspector's report from the buyer doesn't improve the seller's standing against the inspector. The inspector's duty is still solely to his client.

If my client wants to blow up my inspection report, post it on a billboard along side a highway and charge passerbys $14.95 to look at it, I wouldn't care.