I am very pleased to announce the opening of CalNACHI.

[Nick Gromicko]

http://www.nachi.org/calnachi2007.htm

[Joe Farsetta]

Congtats to the first HI org which establishes a fiduciary responsibility of the HI to their clients; CalNACHI.

All this while, I thought we were striving to keep the HIs butt out of hot water...

In practice, we may try and conduct the inspection as if we have a fiduciary responsibility, but this is a far cry from the establishment of said fiduciary via membership requirement ala COE. In fact, the HI has no such fiduciary responsibility, as this definition has legal and financial implications, each having far reaching financial (and possibly criminal) consequences.

Acting as if we have a fiduciary responsibility, and stating we have one (we claim we are, therefore we are) ate two different things. Once fiduciary responsibility has been established, the sky's the limit as far as lawsuits and awards. Check with your insurance carrier, and ask what this means to them, and possibly to you.

While CalNACHI has this as a requirement, InterNACHI does not. There is a reason.

In a state as litigous as California, who would stand for this in any org.?

[Nick Gromicko]

Joe, I'm lost, explain.

[John McKenna]

What did I miss?

[Joe Farsetta]

From CalNACHI's COE:

4. Members’ fiduciary responsibility is to their client(s), and information regarding the inspection report should not be shared with others without the clients’ consent.

First problem I see is that this is the first state org, incorporating NACHI in its name, which is free to re-write the COE and SOP. BTW, the SOP may contain language which is owned by Dr. Swift or his software concern. That nothwithstanding, the notion of fiduciary responsibility is far reaching. We are fighting here in NY to specifically remove such language from the State's proposed COE. There is case law here in NY supporting our position.

Here's a basic defnition:

fiduciary (fĭd`shēĕ'rē), in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. Among the common fiduciary relationships are guardian to ward, parent to child, lawyer to client, corporate director to corporation, trustee to trust , and business partner to business partner. In discharging a trust, the fiduciary must be absolutely open and fair.

Certain business methods that would be acceptable between independent parties dealing with one another "at arm's length" may expose a fiduciary to liability for having abused a position of trust.

As an example, in an ordinary business transaction the prospective purchaser of land need not inform the seller of an imminent rise in realty values, but one buying land from a partner must disclose such information. In many cases courts will treat an unexplained profit derived from a fiduciary relationship as an instance of constructive fraud.

Fraud, in law, means the willful misrepresentation intended to deprive another of some right. The offense, generally only a tort , may also constitute the crime of false pretenses. Frauds are either actual or constructive.

So, here's the real problem: Once a fiduciary responsibility has been established (or in this case admitted), performing a defficient inspection can easily morph into something much more serious. A bar has been established, and now the connotation of fraud accompanies the tort. This allows the plaintiff to introduce allegations and "evidence" supporting the allegation. The judge and jury are no longer looking at a defective foundation, they become part of a civil and perhaps criminal investigation, based on the severity of defect and damages tothe "unsuspecting" defendant.

Believe me, its something that should be FOUGHT against, not embraced. Even if the intention was to use a $25 word in a sentence, the true cost could be astronomical. Use of this word should be avoided by all HI orgs.

[Nick Gromicko]

Are you saying that fiduciary duty dilutes our natural impartiality... that they conflict in a sense? If that is what you are saying, I somewhat agree.

[Joe Farsetta]

Nick,

Fiduciary responsibility as a matter of law is something far different that our natural impartiality. It does not dillute it. To the contrary, it establishes a legal monster that could devour us for making an honest mistake, because it questions our impartiality, which now becomes the hammer.

Basic problems:

1, Defect not reported = question as to impartiality and acting in the clients best interest. Was it a mistake, or something more? What relationship do you have with the realtor or broker? How much do you pay them for referrals. You call it advertising, but is it more? Let's look. Let's twist the HIs words. Let's look at the program of HI referrals. Let's look at that short list of inspectors... As a fiduciary, was this a mistake or fraud?

2, If you wouldnt buy the house because of defects, and dont tell the client to stay away, you are not acting in the clients best inteest, as you have expertise he/she is relying on to make ther decision. This is a breach of your fiduciary responsibility. Before, you may or may not have said this to client. Now, as their fiduciary, you are obligated to tell them. Fail to do so=breach and possible fraud, especially if it was a realtor referral that got you the engagement.

These are but 2 quick illustrations... But, congrats to CalNACHI, as they are embracing phrases that can kill them, financially.

Also, I do have a problem with the premise of the establishment of a separate and distinct COE and SOP which does not embrace the InterNACHI versions of same. One canot be a member of InterNACHI or NACHI without abiding by the existing COE, and compliance with the SOP. Ours is the over-riding standard, and must be recognized as such.

I also have a philisophical problem if the CalNACHI SOP contains protected langualge owned by others. If and when it becomes part of the public domain, we could possibly embrace it, providfing it does not establish an arbitrary standard for the purpose of doing so. We should also be very careful that the establishment of said new 'Standard" does not undermine efforts NACHI had made through the years with insurance carriers with regard to E&O.

An argument was once made that the NACHI SOP was flawed and incomplete. I would argue that insurance carriers embrace it, and to my knowledge, no datum currently exists which established said alleged defficiencies resulting in more frequent or higher awards in litigation resulting fromthe use of the NACHI SOP. If no correlation exists, then the argument against it is without merit, which I have always believed it was.

If the NACHI tag was not part of this new HI org, I could care less. Will a PV competetitor be able to incorporate the CalNACHI SOP in its software free of sharge, or will royalties or other fees of any type be due for use of said verbiage. NACHI should not embrace any such policy. We have been inclusionary, not exclusionary.

BAck to fiduciary responsibility. BAD for inspectors to acknowledge or establish said relarionship. Let's put a bigger gun to our heads. Will CalNACHI give every new member a t-shirt with a target on its back, saying "sue me"?

[Nick Gromicko]

Are you saying that an inspector is torn if he is required to be BOTH impartial (treat all parties equally regardless of who pays for the report) AND at the same time be required to have a fiduciary duty to his client (act in only his client's best interest)?

[Nick Gromicko]

The reason I brought it up is that we had a member who had a client that wanted his inspector to write up the report so that the house appeared to be in really bad shape, even though it wasn't. The client argued that the inspector had a "fiduciary duty" to him to help him squeeze more money out of the seller. The inspector argued that he was impartial and that his report, even though being paid for by his client, would read the same regardless of whomever hired him.

[Joe Farsetta]

There is a line between acting in the clients interest, and mis-stating facts. In fact, the inspector has no fiduciary responsibility to his client, only the duty to remain fair and impartial.

why would anyione want the duties of a fiduciary to be argued against him in ANY circumstance?

In CalNACHI's case, the establishment of fiduciary responsibility is spelled out in the COE, which is a condition of membershiop in the org. This is wrong-headed.

[John McKenna]

Originally Posted by gromicko

The reason I brought it up is that we had a member who had a client that wanted his inspector to write up the report so that the house appeared to be in really bad shape, even though it wasn't. The client argued that the inspector had a "fiduciary duty" to him to help him squeeze more money out of the seller. The inspector argued that he was impartial and that his report, even though being paid for by his client, would read the same regardless of whomever hired him.

Yup... been there and seen that.

[Joe Farsetta]

John,

Do you have a fiduciary duty (in the true legal sense)?

Do you have a duty to remain impartial and fair?

Could some of the more self-serving terms we include in our inspection agreements be deemed unenforceable when we have a fiduciary responsibility? Can we simply disclaim things any more. Will our legal defensed become useless because of the fiduciary duty we have voluntarily established?

The requirement, and statement of inclusion, is bogus. CalNACHI members... my advice is to get rid of this language. Who wrote it?

[John McKenna]

Originally Posted by jfarsetta

John,

Do you have a fiduciary duty (in the true legal sense)?

Do you have a duty to remain impartial and fair?

I was onced warned by the powers that be, to make sure
I do not make any recommendations for repair, unless I
can back it up.

Do no harm.... to buyer or seller... just the facts.

[James H. Bushart]

Originally Posted by jfarsetta

Do you have a fiduciary duty (in the true legal sense)?

Only if the Plaintiff's attorney is allowed to introduce your CALNachi Code of Ethics as evidence in your trial.

Originally Posted by jfarsetta

Do you have a duty to remain impartial and fair?

It would appear that this duty to remain impartial and fair exists for all home inspectors in all states, with the exception of CALNachi members. They have a duty to provide a report that will benefit their client...be it the seller or the buyer.

This leads to the next logical question...which is, is the CALNachi member in violation of the NACHI COE when he complies with this portion of the CALNachi COE?

[Keith Swift, PhD.]

Joe is actually quoting from an "old" document that, unfortunately, still appears on the web, but I'm damn glad he caught it. The COE's have been months in the working and the word fiduciary" was in fact deleted about three weeks ago on the advice of California attorney Tom Buckley.