Per Real Estate Consultants: Sue the HI. He has insurance!

[James H. Bushart]

Read this article from the Wall Street Journal real estate specialist...and read it very carefully.

How to File Complaints
Against Home Inspectors


By James R. Hagerty

Special to RealEstateJournal

Question: My husband and I recently purchased a house in Dallas, and within 2 1/2 months our home's foundation started to drop. Plumbers found a leak, then another and another. Five-thousand dollars later, they decided that they needed to replace at least 32 feet of sewage pipe; in the end, they decided to reroute the plumbing from one side of the house through the yard, which cost several more thousand dollars. In the meantime, our foundation problem worsened. Our insurance company called in an engineer. He found that the foundation problems were not due to any of the leaks. He explained that we should have this fixed before it gets worse and causes serious problems to the slab. Now we are having interior piers put in for $3,500. The previous owners supplied us with an engineering report that was only a month old stating that the foundation was stable and the movement was within the limits of state regulations. Our inspector deferred to foundation experts in his report. Our Realtor had a company come out to look at the house, and they said it looked fine. We feel as though we have purchased a lemon. Is there anyway of recovering any of the money we have spent on repairs?
-- Jennifer, Dallas


Jennifer: Your experience is a cautionary tale to those who think houses are risk-free investments. You seem to have done the right things but still ended up with a raw deal. Now it may be very hard for you to retrieve any of the money you've lost.

Ron Walker, general counsel of the Texas Association of Realtors in Austin, suggests that you first consider whether there is any evidence that the sellers concealed important information from you about the foundation. If they did, they could be held liable. But it could be very difficult to prove that they withheld information. Presumably, the sellers will say they knew nothing that wasn't disclosed to you -- and that may even be true.

A second question is whether the engineering firm or the inspector was negligent. If so, they could be held liable. Did the inspector agree to examine the foundation? If not, it will be very hard to blame the inspector. You were not the engineering firm's client, but that firm could have some liability to you if it knew that a buyer would be relying on its analysis and if that work was shoddy. Again, it probably would be hard to prove the engineers didn't perform their duty properly.

"On its face, it doesn't sound like a really strong situation" for you, Mr. Walker says. Still, if you believe the sellers concealed information or the experts blew it, you may have a case. Before taking this up with a lawyer, you would need to consider whether the compensation you might hope to obtain would justify what could easily be thousands of dollars in legal costs.

Inspectors' contracts with their customers typically include language disclaiming liability for problems with a house a buyer may discover later. That, however, doesn't mean you can't sue an inspector if he misses flaws that he should have been able to identify. Texas law sets minimum standards for inspectors, Mr. Walker says.

Another option for you: The Web site of the Texas Real Estate Commission (http://www.trec.state.tx.us/) explains how to file a complaint against an inspector.

The typical inspector spends $4,000 to $8,000 a year on errors-and-omissions insurance to cover possible claims from aggrieved customers, says Mallory Anderson, executive director of the National Association of Home Inspectors, based in Minneapolis.

Inspectors argue, with some justification, that they can't be expected to find everything. "We can only see what is visible and accessible," says Stephen Gladstone, president of the American Society of Home Inspectors, Chicago. If there is a crack in the wall of a closet jammed with heavy objects, he notes, the inspector can't be expected to see it. Mr. Gladstone says he has had only a few serious complaints in 21 years of inspecting. In a couple of cases, he says, he has refunded his fee -- not because he believes he was negligent, but because he wanted to help the customer.

In your case, it's possible that no one was at fault. Could shifting soil or weather conditions have caused unexpected stress on the foundation after the experts examined it?

Of course, it's important to choose your inspector carefully. Don't assume that someone recommended by your real-estate agent is the best bet. Ask friends for recommendations of inspectors known to be thorough and alert. Many states require licensing or registration of inspectors. If you're in one of those states, make sure your inspector is licensed or registered. If not, you may want to check whether the inspector belongs to a national organization, such as the National Association of Home Inspectors or the American Society of Home Inspectors.

-- Mr. Hagerty is a staff reporter for The Wall Street Journal. His "House Talk" column appears most Fridays on RealEstateJournal.com. E-mail him your questions about the residential real-estate market. Please include your first name and city and state. If your question is answered and posted, we will show your first name and city. Due to volume of mail received, we regret that we cannot answer every question.

Email your comments to rjeditor@dowjones.com.

[Randy D. Stufflebeem]

How did this end up that the reply turned mostly to the inspector which stated to get it further examined by an expert. It should of said the inspector did his job! And thank you, Mallory Anderson for advertising to sue us. This peice of work (for lack of better terms) is an executive director of NAHI? If this don't set the members off then they are completely in the dark at the very least. I wonder if this lady that represents NAHI understands the damage this could do. We can only hope the rest of the flock will stand up and take it to her.
Sorry just pi$$ed about this.Great post James.
Randy

[James H. Bushart]

Exactly....

The home inspector deferred the foundation to an expert. The real estate salesman arranged for the "expert" and an opinion was given to the client that appears to be errant.

Solution? Sue the inspector. Why? According to Mallory, because he is insured for that purpose.

[Kenneth F. Miller]

Un-F***'en- believable! She needs to be shot, and Mr Hagerty needs to be educated about NACHI, and re-educated about NAHI. Maybe an email to him with a link to the story about NAHI trying to influence ASTM.

[Randy D. Stufflebeem]

Originally Posted by kmiller1

Un-F***'en- believable! She needs to be shot, and Mr Hagerty needs to be educated about NACHI, and re-educated about NAHI. Maybe an email to him with a link to the story about NAHI trying to influence ASTM.

Agreed Kenneth
Get enough on board maybe we can get a retraction or a little more investigative reporting instead of this fly by the seat of your pants crap, as usual.
James, I truley hope this will bring a lot of responses as it should. Should be an interesting conversation. By the way, I just got my renewal notice for insurance today. Seriously thinking about cutting the amount way down. For all my services it is around $5250.00 a year. What a rip off!
Randy

[Brian E. Kelly]

Odd article indeed. Engineering firms generally also carry E&O insurance.

[Randy D. Stufflebeem]

Staff reporter for the WSJ. That should have reached a couple million folks! Now isn't that just peachy.
Randy

[Carl H. Lederhaus]

Apparently Mallory must have her head up her butt to recommend that the inspector should be sued. I am glad we have Nick.

[John McKenna]

Sounds like an engineer came out (from the insurance company) and
confirmed the fist inspectors findings about the foundation.

The Realtor's company (2nd inspector?) might be holding the bag on this
one. If the 2nd guy wrote an easy report to please the Realtor, then why
should I feel sorry for him? I think he will be the one being sued.

I get called out to help clients nail the easy boy inspectors all the time.
Easy inspectors cause a lot of pain. I think the first inspector is clear.

Is it wrong to sue a company that did you wrong? Are we going
to all say now that none of us will ever sue anyone for doing us
wrong? I am not going to promote frivolous law suites, but I am
not going to condemn someone who gots screwed by the
Realtors negligent inspector #2. Why not go after the Realtor and
the first engineer too? Did I miss something.?

BTW... if a client shows you an engineers report that say the
foundation is OK... don't accept his findings. Overrule him
if needed. I have seen plenty of engineers who work for the
Realtors too.

It really does not matter if an article is written on how to sue
an inspector. I think most people have figured out they can
sue anyone, if it warrants it. Most people already expect
professionals to carry some kind of insurance anyway.

We may not like it, but we are never going back to the
days of no rules, no laws, and no responsibility. The
HI industry is coming of age and will follow the path
of more oversight. I may not like it, but I am not
living in the fantasy that it will not happen. It's coming.

[James H. Bushart]

John....you need to get off of whatever medication you are on that has given you the delusions that have prompted your posts in the last week or so.

The home inspector, here, recommended an expert review and report. That is all. This review was handled by the real estate salesman and (of course) found there to be no problems with the foundation.

So far, only you and Mallory Anderson have suggested the home inspector to be at fault.

This happened, by the way, in your very strictly controlled and licensed state. Your advocating additional "oversight" is absolutely absurd.

[John McKenna]

Originally Posted by jbushart

John....you need to get off of whatever medication you are on that has given you the delusions that have prompted your posts in the last week or so.

The home inspector, here, recommended an expert review and report. That is all. This review was handled by the real estate salesman and (of course) found there to be no problems with the foundation.

I agree. The Realtors "company" may be the "inspector #2" who is really
the subject of the problem (not the fist home inspector who did his job).
The word "company" leaves us a little outside the loop, but the fact that
an engineer was brought in later leads me to suspect that the Realtors
"company" is actually an inspector #2 and is the now holding the bag.
(not the 1st inspector who did his job correctly).

So far, only you and Mallory Anderson have suggested the home inspector to be at fault.

I suggested that the 2nd inspector (company) is the one at fault.
(unless the word "company" means engineer, but I am not sure on this
point, but suspect that "company" means inspector #2).

This happened, by the way, in your very strictly controlled and licensed state. Your advocating additional "oversight" is absolutely absurd.

I advocate that the second company (which I take to mean a second
inspector) is at fault and would be open to liability.... as well as
the Realtor (if they worked together in a wrong way) and the
first engineer (who said there was nothing wrong).

I feel that inspector #1 is not guilty.

Does that make it clear now.

I also stated that I do not think it is the correct view that
inspectors should be immune from all liability... in so
many words.

[Randy D. Stufflebeem]

My point John was the article was mainly about the home inspector. Mallory is an idiot! The home inspector done his job and should have got an "atta boy" instead of the ways you can sue the inspector. Since the home inspector seems to be the only one to call out the issue then why am I not understanding your rationale. Yes, I see you said the home inspector did good, basically, in your second post. Does it not make you mad that at the very least an exec from another HI organization basically says just sue the inspector. Not to say the thousands of WSJ readers that have the opportunity to read it for which a green light may have went off in somes heads saying "Wow I can find something to sue our inspector, surely I can find something wrong". We don't need to advertise it when the home inspector did his job and this Mallory kook did just that. Lawsuits in this country are easy enough to file and get a favorable judgment in this country.
Randy

[Randy D. Stufflebeem]

Never mind my post John, I think I understand you now. Sometimes one needs to read something twice before understanding.
Randy

[John McKenna]

Originally Posted by rstufflebeem

Never mind my post John, I think I understand you now. Sometimes one needs to read something twice before understanding.
Randy

OK... It was my fault for not making myself clear enough.

[Gary L. Porter]

I think a company came out means engineer