E&O Survey

[Paul Sabados]

That's an interesting scenario developing in Texas. Is there not already in place a program to reimburse any consurmer who's inspector was found negligent? Do not all home inspectors in Texas pay into this fund? From what I understand that the program has several hundred thousands dollars in it. To get funds back to the consumer suffering damages, they have to sucessfully win in the arbitration case or whatever review board or jury used in Texas right?

Now, Im betting that if they do win and recover from the fund, the only thing that they are getting is something close to the value of the damages. Not much for an attorney to get excited about. Whereas with E&O, my goodness, look at all of the other things that could be claimed like 50 different kinds of emotional problems that NEED to taken care of. So a $10,000.00 problem becomes a $100,000.00 problem and an attorney is going to get 35% or more.

My bet, the trial attorney's association is behind this 100% and pushing all of the buttons. I wouldn't be a bit surprised if many of people in the Real Estate Assoc aren't hiding in the closet and helping out in stealth mode.

What becomes of the Recovery Fund Program and the money just sitting there?

Squash it while you can.

Paul

[Michael R. Boyett]

Paul...I believe you are probably right on all accounts. With just a few days left in this legislative session and the mandatory E&O amendment tacked onto an otherwise popular bill then the likelihood of squashing this is pretty small. The bill will come up for final vote in the Senate sometime this week and, if I understand correctly, it's already passed the House. I'm headed to the Senate offices in the morning to deliver a couple of hard copy opposition letters but since these are from me and one other inspector then they will surely be looked upon as sour grapes, even though I have E&O but don't support the bill to make it mandatory.

[John Cahill]

Originally Posted by bkelly2

Not the poll question John, but I will play along.
What happens now to HI's in Texas that are found negligent by the board that have insurance? What happens to HI's now to HI's that do not have insurance?

Question 1:

If they have insurance and get a negligent and incompetant label the insurance claim is a done deal and they may loose their insurance.

Question 2

If they cooperate with TREC they get a fine and probated suspension. If they do not cooperate TREC can elevate the penalties to encourage a settlement.

TREC ruled an inspector negligent and incompentant for missing a drain stop in a tub. I could turn that into $1500 claim in a heartbeat. expert fees $800. Plumbing repairs $700. Easy.

[John Cahill]

Originally Posted by psabados

Is there not already in place a program to reimburse any consurmer who's inspector was found negligent?

My bet, the trial attorney's association is behind this 100% and pushing all of the buttons. I wouldn't be a bit surprised if many of people in the Real Estate Assoc aren't hiding in the closet and helping out in stealth mode.

Squash it while you can.
Paul

The recovery fund does not have enough money to make it worth an attorneys time. It is baloney consumer protection.

I agree, it is TAR and the lawyers behind this.

Impossible to squash at this time. They squashed us. However. . . . . experts are going to cash in on this big time. It will be an embarrassment to the bill sponsors.

[gkoehl]

Originally Posted by jcahill

The recovery fund does not have enough money to make it worth an attorneys time. It is baloney consumer protection.

I agree, it is TAR and the lawyers behind this.

Impossible to squash at this time. They squashed us. However. . . . . experts are going to cash in on this big time. It will be an embarrassment to the bill sponsors.

John & Mike

What about this-
Departure procedure
If we have to carry E&O (Bull's eye) insurance.
How about getting the client to sign a departure procedure in which they agree for us to use the NACHI SOP in place of the Texas SOP.
This would (in theory) remove us from the possiblity of TREC disipanary action\rulings; in that, the NACHI SOP (unlike the TREC SOP) is in-enforcable by TREC lawyers.

John, remember the meeting 3 months ago?
Departure may be the only way for us to survive the next turn of events.

Thought?

[Michael R. Boyett]

Minor problem in that we would then be in violation of our state license laws. Simple rule...if you are doing an inspection for a potential buyer or a seller in a real estate transaction then you are bound by TREC rules. TREC rules say we follow their SOP. If you want to keep your license you'll have to pay the piper or your insurance man whichever the case may be.

[Michael R. Boyett]

If you take the approximately 4,000 inspectors in Texas X approximately $2,500 per policy then that's $10,000,000 per year in premiums that some lucky insurance company stands to make. I'm in the wong business!

[gkoehl]

Originally Posted by mboyett

Minor problem in that we would then be in violation of our state license laws. Simple rule...if you are doing an inspection for a potential buyer or a seller in a real estate transaction then you are bound by TREC rules. TREC rules say we follow their SOP. If you want to keep your license you'll have to pay the piper or your insurance man whichever the case may be.

Then how do certian people get away with using a departure procedure which allows them to inspect to the ASHI SOP?

[Michael R. Boyett]

I have no idea, maybe John can explain.

[John Cahill]

Originally Posted by mboyett

I have no idea, maybe John can explain.

I'll post then repost this with comment

(c) Departure Provision. (1) An inspector shall exclude from the inspection any part, component or system which the inspector is not competent or qualified to inspect. (2) An inspector may exclude any part, component or system required for inspection by the standards of practice which is inaccessible, cannot be inspected due to circumstances beyond the control of the inspector, or the inspector's client has agreed is not to be inspected. (3) This departure provision does not prohibit an inspector from specializing nor require the inspector to specifically exclude other parts, components or systems not ordinarily considered a part of the inspector's specialty. However, the inspector shall comply with the standards of practice for the items being inspected. (4) If an inspector excludes any part, component or system listed in the standards of practice, other than one which the client has agreed is not to be inspected, the inspector shall: (A) advise the client at the earliest practicable time that the specific part, component or system will not be included in the inspection; and (B) state in any written inspection report that the excluded part, component or system was not inspected.

[John Cahill]

Originally Posted by jcahill

(c) Departure Provision. (1) An inspector shall exclude from the inspection any part, component or system which the inspector is not competent or qualified to inspect.

This could include any poorly defined or ambiguos SoP requirement. For example, your not required to inspect to code but you must report "proper" combustion air. Hmmm, so what do you do? You request a legal interpretation from TREC then depart from the provision until TREC answers.

Another example: Inspector shall report conditions that "may" affect foundation. Define conditions that "may". Until then I depart from this.

Inspectors can ask a ot of questions of TREC regarding interpretations. That is why we were trying to pass a concise SoP that empowered inspection professionals to write their own company policy. That is shot down. We must ask TREC to interpret becasue our opinion is not enforceable per General Counsel.

Originally Posted by jcahill

(2) An inspector may exclude any part, component or system required for inspection by the standards of practice which is inaccessible, cannot be inspected due to circumstances beyond the control of the inspector, or the inspector's client has agreed is not to be inspected.

Easy enough

Originally Posted by jcahill

(3) This departure provision does not prohibit an inspector from specializing nor require the inspector to specifically exclude other parts, components or systems not ordinarily considered a part of the inspector's specialty. However, the inspector shall comply with the standards of practice for the items being inspected.

OK

Originally Posted by jcahill

(4) If an inspector excludes any part, component or system listed in the standards of practice, other than one which the client has agreed is not to be inspected, the inspector shall: (A) advise the client at the earliest practicable time that the specific part, component or system will not be included in the inspection; and (B) state in any written inspection report that the excluded part, component or system was not inspected.

This is the important wording. There are two options in this.

1) You can depart from anything without client approval as long as you give advance notice and state it in the report appropriately.
2) IF however the client gives approval you can depart without advance notice or putting it in the report.

I am fairly certain Past Chairman Foster departed from the SoP in its entirety. Write a letter to TREC and ask him. He is on committee now.

I believe it is possible to use NACHI SoP but I would expect resistance from TREC. The best thing to do is create an example and ask for written permission. I am certain they will rewrite the rule if a lot of people do that. But then rewriting the rule denies the consumer choice. Its a pickle.

The fun thing is your still bound by the E&O because departure is part of Section G. But, interpretation of the SoP falls into NACHI hands and not TREC Enforcement. TREC will hate that.

My advice is be very careful about doing full departure. Better to do partial departure with client permission. For example: Your selling a job: I do the TREC inspection but I depart from comparing your home to code in any manner. In your report you state in the furnace section "Inspector departs from inspecting for proper combustion air per a code reference. The inspector looks for obvious performance related results of improper combustion air provisions."

The current SoP are loaded with traps. Maybe I'll teach a seminar on how to avoid some of them.

Conclusion: Consult an attorney before following any of these ideas. I guarantee one thing. TRECs job is to protect the consumer and that means "get you".

I sat with my wife yesterday and decided to stop production inspection as soon as I can. It may take a year or so but I am leaving. I will do inspection coaching and litigation work.

[James H. Bushart]

Originally Posted by jcahill

What I am trying to get at is "do states with mandatory e&o have more law suits?"

These statistics are held and closely guarded by the insurance companies.

While E & O premiums are calculated by region, based upon the payouts in these regions, no one will admit to knowing how many lawsuits are actually filed, go to court, and/or result in judgment by the court versus out of court settlement.

What you are left with is the WAGs (wild-***** guesses) of the vendors peddling their anti-litigation products. From these, you are to expect 1/3, 1/4th or all home inspectors to be sued within (a) the next twelve months to (b) their careers.

Good luck.

[James H. Bushart]

Here is a point to ponder....

When an inspector inspects and reports by the state mandated SOP, he should expect the state to back him up on complaints that fall within that protected guideline.

If he is insured, his policy does not cover him for (a) items not covered by the SOP, and (b) items not inspected in accordance with the SOP.

Thus, mandatory E&O in a state that has a mandated SOP is redundant.

[gkoehl]

Thanks for the info John, and I hate to see you go.

Here is the thing-
To use the Towers & Perrins E&O through NACHI
The Terms of use states you have to use the NACHI Inspection Agreement
The NACHI inspection agreement states that the inspection is performed to current NACHI standards (SOP).

I am unsure if Towers & Perrins would allow for any alteration of the NACHI Inspection Agreement. Especially changing it to TREC SoP, in effect putting enforcement into the hands of TREC Enforcment.

So- inorder to get the E&O
I would have to depart from the SoP to remain compliant to state law.
And since Towers & Perrins does offer E&O coverage in the state of Texas, TREC would have to pass a ruling which said that I could not use T&P for E&O.

And if I must have E&O (required by the state) and the carrier I want to use requires I use the NACHI agreement, and the NACHI agreement states I preform my inspection to the current NACHI SOP, and TREC allows a departure procedure from the SOP-

How could TREC (a state org.) stop you from doing that- They don't have to like it (But they made the rules).

[Michael R. Boyett]

Originally Posted by gkoehl

The Terms of use states you have to use the NACHI Inspection Agreement

Mine doesn't.