conflict of interest

1

I have read on this web page that its a conflict of interest to be a general contractor and a home inspector. Should we form two separate corporations and keep the two business separate?

I’m asking because while I have just recently passed my home inspection test, and I am now ready to move forward with this endeavor. However, in looking for a name and researching what other people have used, I have noticed that a lot of people are carpenters, contractors, maintenance/repairs and home inspectors.

I do not have a problem creating another corporation I just want to make sure that I do what is going to be best for both of my businesses. Any advice is greatly appreciated.

Tim

2

The InterNACHI member shall not perform or offer to perform, for an additional fee, any repairs or associated services to the structure for which the member or member’s company has prepared a home inspection report for a period of 12 months. This provision shall not include services to components and/or systems that are not included in the InterNACHI Standards of Practice.
Some things just do not go together.

From International Code of Ethics for Home Inspectors - InterNACHI http://www.nachi.org/code_of_ethics.htm#ixzz2etS4ZQzx

3

You can do both. Just do not do repairs on a home you previously inspected; and, IMO, don’t do them on the home ever.

After every inspection as I leave, I always hum the song “go on, take the money and run…”

4

Kevin,

I totally understand what you are saying. My questions is should I keep both business separate? I have been a General and Roofing Contractor for a while now. That business is already establish. Should I create a separate corporation for the Home Inspection???

Tim

5

BTW, My reason for asking is just to know if I need to keep the two business totally separate and not associated by name. I am not planning on working on any of the home inspections we do.

Tim

6

Separate. However, I would discuss that with your accountant, for protection reasons, so you can protect one company from another.

7

Yes I agree! I alluded to this when I said some things just don’t go together.

8

Thanks for the information. I will check with both my corporate attorney and my CPA. I really do not want any unnecessary headaches down the road. What can of protection are you talking about?

9

Do you remember the tax preparer commercial with plumber?

Don’t be known as the plumber that also does taxes. Keep the businesses separate.

10

If, during an inspection, you err and are about to be sued, you stand to lose a lot more if you have the two companies connected to each other. Separate and apart is your best protection of the assets you have accrued.

11

Lets say some time in the future you want to run only one Company easier to sell the other if they are not married to each other .

12

Tim, You can be both. You cant offer to perform work on a home you inspected for a year.

Here’s the thing, (I got this from Nick G.) you need to keep the businesses separate, or quit contracting to grow your inspection business. No good REA will want to refer a part time inspector, especially an inspector contractor. There’s a perceived conflict, so keep them separate.

I was in the same boat I was inspecting and doing contract work when I first joined NACHI, I had one business for both services. I got few referrals from new REA’s, I gave up contracting and went full time HI. My business took off. (this year I will likely make 6 figures).

If you are a full timer you’re more respected as a tradesman, a full time specialist home inspector instead of a jack of all trades master of none, also you spend your energy to grow that part of your company and it’ll grow.

So If you must keep doing contract work, do everything to separate the companies.

13

Meet Bob!

14

I would certainly recommend you have two separate companies. I am a licensed contractor and own a crawlspace encapsulation company as well as run my inspection company. The monies do not mix and I do not work on any homes that we inspect.