Nick Gromiko-Agreement Review

Nick,

I appreciate your time and expertise in the many inspection agreements you’ve reviewed and the fact you openly critique and post your comments. I’ve learned a great deal in reading such. Thank you! Additionally, for my own continued edification, I reviewed and studied tons of inspection agreements, studied the legal theory and aspects of exculpatory law, the essential components of a good contract, etc, etc. While this was a great exercise (time consuming and worthwhile, for me) in more deeply understanding various provisions, I kept coming back to your reviews and InterNACHI’s basic agreement, for it has all of the basic needed components for a sound contract related to our business. Therefore, I finally settled in, took your advice (posted many times,) and used the InterNACHI agreement as a base from which to begin working with in tailoring an agreement suited for my purpose and with an emphasis on certain provisions. You are welcome to challenge any of the provisions.

Thus, at your convenience, would you be so kind to firmly critique my inspection agreement, because my eyes and brain are dizzy from working and reviewing it. I thank you now for your time.

Above All Else Home Inspection, LLC
Inspection Agreement


**THIS AGREEMENT CONTAINS A LIMITATION OF LIABILITY ON THE PART OF THE HOME INSPECTION COMPANY. PLEASE READ IT CAREFULLY. THIS IS INTENDED TO BE A LEGALLY BINDING AGREEMENT. IF YOU DO NOT FULLY UNDERSTAND IT, SEEK THE ADVICE OF AN ATTORNEY BEFORE SIGNING. **


The address of the property is: ________________________________________________________________________.
Fee for the inspection is ____________________. INSPECTOR acknowledges receiving a deposit of
from CLIENT.
THIS AGREEMENT made this _______________ day of ________________________________________________, 20, by and between
Above All Else Home Inspections, LLC (hereinafter “INSPECTION COMPANY”) and the undersigned (“CLIENT”), collectively referred to herein as “the parties.” The Parties understand and voluntarily agree as follows:

  1. INSPECTION COMPANY agrees to perform a visual inspection of the home/building and to provide CLIENT with a written report base thereupon (“Report”) identifying the defects that INSPECTION COMPANY both observed and deemed material. CLIENT acknowledges that the Report is only supplementary to and is not to be considered a substitute for a seller’s Property Condition Disclosure Statement. The INSPECTION COMPANY may offer comments as a courtesy, but these comments are not to be considered additional portions of the report.
  2. Unless otherwise inconsistent with this Agreement or not possible, INSPECTION COMPANY agrees to perform the inspection in accordance with the American Society of Home Inspectors Inc. (ASHI) standards of practice, as adopted and modified by Arkansas’ Home Inspector Registration Board (“AHIRB”), (“Standards”) and code of ethics, as adopted and modified by AHIRB, (“Code of Ethics”), which Standards and Code of Ethics are found online at http://www.ahib.org and specifically incorporated herein and made a material part hereof by reference. CLIENT understands that INSPECTION COMPANY is only required to report open and obvious defects that can be seen from visual inspection. The INSPECTION COMPANY shall have no obligation to make any inspection of or include in the Report any matter or thing not expressly required by the Standards or this Agreement.
  3. Unless otherwise indicated, The inspection and Report shall not be technically exhaustive and are not required to cover: Latent or hidden defects or deficiencies, Automatic gates; elevators or dumbwaiters; exterior detached lighting systems; Gas appliances such as interior or exterior grills, heaters (other than central heating units for the Residence), or lamps; Seismic safety, geological stability and soil conditions; surface grading, obstructions or drainage characteristics in or around the Residence; Proximity to airports, railroad tracks or other potential sources of nuisance; Indoor air quality; Possible presence of or danger from Mold, Asbestos, Radon Gas, Carbon Monoxiede, Lead, Lead Paint, Urea Formaldehyde, buried or above ground fuel storage tanks, soil contamination, dry-rot fungus or other indoor and outdoor environmental substances or hazards which may be harmful or potentially harmful to humans, pets or livestock; Recreational playground equipment or facilities (indoor or outdoor); Highly unique/technical complex systems or components; Water wells, septic systems, cisterns, adequacy of water supply, water softening or filtration devices, hot tubs, swimming pools, portable air conditioning units, or forced air furnace heating exchangers; Intercom systems; Central vacuum systems; Solar heating, lighting or electrical storage systems; Telephone, cable, low voltage, audio, data or computer systems or related wiring. Client is advised to contact a competent specialist if Client desires information, inspection, identification, or testing of the immediately foregoing excluded systems or components or any other system or component also excluded by this Agreement or Report. Air conditioning system will not be operated by INSPECTION COMPANY in outside temperatures of 65ºF or less or operate heat pump systems when ambient temperatures pose the potential for damage to any component of the system. Client agrees and understands that comment on any of the above does not amount to an inspection or opinion of any of the items commented upon.
  4. The inspection and Report are for the use of CLIENT only, who gives INSPECTION COMPANY permission to discuss observations with real estate agents, owners, repairpersons, and other interested parties. INSPECTION COMPANY shall be the sole owner of the Report and all rights to it. INSPECTION COMPANY accepts no responsibility for use or misinterpretation by third parties, and third parties who rely on it in any way do so at their own risk and release INSPECTION COMPANY (including employees and business entities) from any liability whatsoever. Any third parties who rely on the Report in any way also agree to all provisions in this Agreement. INSPECTION COMPANY’S inspection of the property and the Report are in no way a guarantee or warranty, express or implied, regarding the future use, operability, habitability or suitability of the home/building or its components. All warranties, express or implied, including warranties of merchantability and fitness for a particular purpose, are expressly excluded to the fullest extent allowed by law. The Report is not and should not be construed as a recommendation to purchase or not purchase the Residence, nor used as the primary determination of the Residence’s market value.
  5. INSPECTION COMPANY assumes no liability for the cost of repair or replacement of unreported defects or deficiencies either current or arising in the future. CLIENT acknowledges that the liability of INSPECTION COMPANY, its agents and/or employees, for claims or damages, costs of defense or suit, attorney’s fees and expenses arising out of or related to the INSPECTOR’S negligence or breach of any obligation under this Agreement, including errors and omissions in the inspection or the Report, shall be limited to liquidated damages in an amount equal to the fee paid to the INSPECTION COMPANY, and this liability shall be exclusive. CLIENT waives any claim for consequential, exemplary, special or incidental damages or for the loss of the use of the home/building even if the CLIENT has been advised of the possibility of such damages. The parties acknowledge that the liquidated damages are not intended as a penalty but are intended (i) to reflect the fact that actual damages may be difficult and impractical to ascertain; (ii) to allocate risk among the INSPECTION COMPANY and CLIENT; and (iii) to enable the INSPECTION COMPANY to perform the inspection at the stated fee.
  6. TECHNICALLY EXHAUSTIVE INSPECTION AVAILABLE: CLIENT is advised that there is a technically exhaustive inspection available with a lower liability limit of the visual inspection, and that a fee for this type of inspection could be $5,000.00 or more, depending on the home. The INSPECTION COMPANY will need to retain other specialists as necessary to prepare a technically exhaustive report. A request in writing for this service must be accompanied by a 50% deposit required to commence this inspection. If you wish this enhanced inspection please notify the inspector prior to the inspection and a new inspection date will be scheduled after an appropriate pre-inspection agreement is entered into.
  7. In the event of a claim against INSPECTOR, CLIENT agrees to supply INSPECTION COMPANY with the following: (1) written notification of adverse conditions within 14 days of discovery; and (2) access to the premises. Failure to comply with the above conditions will release INSPECTION COMPANY and its agents from any and all obligations or liability of any kind.
  8. Any litigation arising out of this Agreement shall be filed only in the Court having jurisdiction in the County in which the INSPECTION COMPANY has its principal place of business. In the event that CLIENT fails to prove any claims against INSPECTION COMPANY in a court of law, CLIENT agrees to pay all legal costs, expenses and fees of INSPECTION COMPANY in defending said claims.
  9. If any court declares any provision of this Agreement invalid, the remaining provisions will remain in effect. This Agreement represents the entire agreement between the parties. All prior communications are merged into this Agreement, and there are no terms or conditions other than those set forth herein. No statement or promise of INSPECTION COMPANY or its agents shall be binding unless reduced to writing and signed by INSPECTION COMPANY and CLIENT. No change shall be enforceable against any Party unless it is in writing and signed by the Parties. This Agreement shall be binding upon and enforceable by the Parties and their heirs, executors, administrators, successors and assignees. CLIENT shall have no cause of action against INSPECTION COMPANY after one year from the date of the inspection.
  10. Payment of the fee to INSPECTION COMPANY (less any deposit noted above) is due upon completion of the on-site inspection. The CLIENT agrees to pay all legal and time expenses incurred in collecting due payments, including attorney’s fees, if any. If CLIENT is a corporation, LLC, or similar entity, the person signing this Agreement on behalf of such entity does personally guaranty payment of the fee by the entity.
  11. In the event of a conflict between the terms and conditions herein and the Standards, the terms and conditions herein shall prevail. The terms and conditions herein shall also apply to any re-inspections or follow-up inspections of the Residence, if any and without regard to whether such is to inspect repairs or changed conditions since the time of the original inspection herein; provided however, INSPECTION COMPANY is not required to perform any re-inspection or follow-up inspection and reserves the right to charge Client an additional fee therefor, which fee may exceed the Inspection Fee.
    12.This Agreement is not transferable or assignable.
  12. Should any provision of this Agreement require judicial interpretation, the Court shall not apply a presumption that the term shall be more strictly construed against one party or the other by reason of the rule of construction that a document is to be construed more strictly against the party who prepared it.
  13. If applicable, include Special Instructions here:

CLIENT HAS CAREFULLY READ AND UNDERSTANDS THE FOREGOING, ACKNOWLEDGES RECEIPT OF (AND HAS READ) THE ASHI STANDARDS OF PRACTICE AND RECEIPT OF A COPY OF THIS AGREEMENT PRIOR TO INSPECTION.
CLIENT:________________________________________ INSPECTION COMPANY:___________________________
(Printed Name)
By:_____________________________________________ By:_______________________________________________
(Signature)
Date:___________________________________________ Date:_____________________________________________

I don’t see a need for this to be the BOLD and CAPITALIZED title of your document. If you want to remind the world that they are free to seek legal advice before signing something, remind them somewhere other than smack under the title of the document.

Also, your sentence says it is “intended” to be a legally binding agreement. It isn’t “intended” to be a legally binding agreement, it is a legally binding agreement.

In #1 you correctly use InterNACHI’s definition of a home inspection:

But then in #2 you redefine it to something different:

You certainly don’t want to use your second definition.

In #3 you state:

You can remove the words “immediately foregoing” from that sentence so that it covers systems and components excluded later in the agreement and by your state’s SOP as well…not just the ones you list in the agreement prior to this statement.

Also, after correctly capitalizing CLIENT in your agreement, you failed to in this sentence.

In #3 you state:

Change the word “in” to “if.”

In #3 you awkwardly state:

Delete this. This is repetitive as you already artfully stated it in #1 using InterNACHI recommended language:

In #4 you state:

Unnecessary language that doesn’t protect you anyway. Delete.

Cute, but a judge would see right through it. Furthermore, you likely failed to offer this option alongside your standard service in any of your marketing to your client, when it would be useful for him/her to know of this option. And even furthermore, the entire inspection industry regularly argues that a technically exhaustive inspection is nearly impossible. It’s a sleazy clause that will cause a judge to examine the rest of your agreement vigorously. It sets a bad tone in a courtroom. Dump it.

Nick: “remind them somewhere other…”

The question then is: Is it necessary, at all, to remind them anywhere? If so, then where? Thank you.

In #11 you state:

That is a freakin’ mess. Here, I rewrote it for you:

  1. In the event of a conflict between the terms and conditions herein and the Standards, the terms and conditions herein shall prevail. The terms and conditions herein shall also apply to any re-inspections or follow-up inspections including inspections of repairs or conditions that changed since the original inspection. INSPECTION COMPANY may not be compelled to perform any re-inspection or follow-up inspections and reserves the right to charge CLIENT additional fees for additional inspections INSPECTION COMPANY agrees to perform.

LOL. So you really think a judge is going to disregard the rule of construction that states that a document is to be construed more strictly against the party who prepared it… because you got your client to agree to it in a document you prepared? C’mon. Get rid of this. It has to be the funniest thing I’ve ever read in an inspection agreement.

[QUOTE Gromicko]
If you want to remind the world that they are free to seek legal advice before signing something, remind them somewhere other than smack under the title of the document.

The question then, is it necessary, to remind them at all that they are signing a legal document with a limitation on liability? If so, or if that’s a preference to some, then where to place it?

Arkansas doesn’t use the current ASHI Standards of Practice and it is prohibited by law in your state to refer your clients to it. You must, by law in your state, refer them to the state-modified version of ASHI’s SOP which were effective October 15, 2006. Those 8-year old goofy standards are the standards of practice to be followed by persons conducting home inspections in Arkansas by law.

Back in 2006 they were the same, but ASHI has made numerous modifications since then and so their standards and the ones you have to abide by in Arkansas are no longer one and the same.

Hope that helps.

Reminder to other members: I’m happy to review your agreement (provided it isn’t just InterNACHI’s recommended agreement) as well. Just post it in this forum on a new thread.

[QUOTE Gromiko]
Arkansas doesn’t use the current ASHI Standards of Practice and it is prohibited by law in your state to refer your clients to it. You must, by law in your state, refer them to the state-modified version of ASHI’s SOP which were effective October 15, 2006. Those 8-year old goofy standards are the standards of practice to be followed by persons conducting home inspections in Arkansas by law. Back in 2006 they were the same, but ASHI has made numerous modifications since then and so their standards and the ones you have to abide by in Arkansas are no longer one and the same.

True. Arkansas does not use the ASHI 2014 Standards of Practice. Thus, I will be providing them a copy of the 2006 Standard. Additionally, in #2, I reference “(ASHI) standards of practice, as adopted and modified by Arkansas’ Home Inspector Registration Board (“AHIRB”), (“Standards”)…”

[QUOTE Gromiko]
Hope that helps.

Yes, thank you for your time. Greatly appreciated. If I had my way about it, I’d be completely operating under InterNACHI’s SOP! I’ll leave the rest of my thoughts on that unspoken, with regard to the “old guard.”

Suffice to say, I say: “InterNACHI rocks in all areas…”

Notice bold above: “It has to be the funniest thing I’ve ever read in an inspection agreement.”

Not true. Reference an inspection agreement you previously reviewed that has same exact language in provision #12. Guess you did not see this or it wasn’t the funniest think you ever read in an inspection agreement at that point in time. LOL!!

Doesn’t the interNACHI agreement have this same language?

  1. Should any provision of this Agreement require judicial interpretation, the Court shall not apply a presumption that the term shall be more strictly construed against one party or the other by reason of the rule of construction that a document is to be construed more strictly against the party who prepared it.

Yep, our members want it in there. Take it out. It is absurd.

You can’t ask a judge to disregard the rule of construction that states that a document is to be construed more strictly against the party who prepared it… with a clause you prepared and inserted in the very document you don’t want it to apply to. It’s totally nutty.