TAREI OAG Fund

[Barry Adair]

I received this from TAREI (see leter below) and believe this may be the last opportunity for our voices to be heard.
I for one will contribute hundreds now to avoid paying mandated thousands the rest of my career.
I have or will be forwarding the letter to all NACHI and ASHI members and advise you do the same.


Esteemed Colleagues,

As previously stated to the general membership, the ramifications of SB914 will forever change the Inspection Industry in Texas. TREC has already implemented an interim policy on June 4th to precede with E & O requirements effective September 1st. They have also requested an opinion from the Office of the Attorney General (OAG) regarding:
“Whether an applicant for a home inspector license is required to carry general liability insurance, professional liability insurance, or both”.

Considering the specific language of the Texas Occupation Code sec. 1102 Subchapter G (page 39), the three key words that, in my opinion, will more than likely require the OAG to render its opinion as to the type of insurance being E & O are: “Incompetence, Negligence & Deceit”. All TREC Commissioners at their June 4th Meeting were in agreement.

That said, this will set a precedent for all licensed Professionals in Texas on insurance matters. This precedent will obviously cost a conservative estimate of 500 Texas Inspectors their livelihoods. If E & O is obtainable, the costs will be passed on to Consumers but, more importantly E & O insurance simply does not protect the Consumers of real estate.

So, what do we as an Industry do? Considering the posting of Gov. Rick Perry on June 15th, his comments give us hope. More importantly, the Governor’s own words give us “teeth”. Teeth to pursue litigation to obtain a temporary restraining order (TRO) from the OAG. If successful, I am told that a permanent injunction can be obtained relatively easily.

On June 4th, I requested Andrea to send out an email to all Chapter Chairmen to poll their respective Chapter memberships around the state regarding possible donations. With all the replies and believe me, a strong number was received, the numbers in support of financial pursuit thru the OAG was approximately 70% “in favor”.

Yes, we had a few members who were adamant of not pursuing but, I have fiduciary obligation to the Association and our membership to vehemently pursue. And what about the remaining voices of the Inspection Industry not affiliated with TAREI?

Considering the fact that TAREI is known as “the voice” of the Inspection Industry in this state, shouldn’t we all take a stand? Does this not affect every single Inspector in this state? Short answer…a resounding “YES”.

I could spend another couple of hours on this email but…tick, tick, tick. Time is of the essence to pursue. Your Board is simultaneously working on several emergency-based projects due to the amendment to SB914 for its members.

·We are currently working on a “standardized” Pre-Inspection Agreement
·We are currently working with numerous E & O Carriers to obtain the best possible rates for its members
·We are interviewing Attorneys who have experience with dealing directly with the OAG
·We are about to start the initial steps on filing the Lawsuit to hopefully eliminate the required E & O
As you can see, this has been a truly monumental task for this Board. At the San Antonio Conference, walk up, give them a handshake and a word of thanks. Trust me, we’ve earned it.

I have requested a separate account be setup thru our financial institution for these donations. This account is “earmarked” for OAG litigation purposes only. As per the email on June 4th, we are looking for donations starting at $ 100 but will accept any offerings. The monies sent to the TAREI office should include information such as: TAREI-OAG Fund, or OAG Fund at the bottom so we disperse every penny into this Special account.

Budgeting. We have received various opinions as to the approximate costs. The estimates provided to date on the TRO is ranging from $ 7,500-$ 10,000. The permanent injunction is truly an “unknown” considering we are chartering new waters with this type of suit. But again, considering the fact that the OAG will have to defend this position, it is my opinion if and when the TRO is issued, a permanent injunction should follow shortly and, without a great deal of additional expense. But we are only guessing at the total costs on a permanent injunction at this time.

Your donations are needed now . Once a Law Firm is selected, a Retainer will be forthcoming. Then, the ball is rolling. Please take the steps necessary to protect yourself and your Industry.

Thank you.
Sincerely,
Daniel F. South
TAREI President 2007-2008

Mail donations to:
TAREI OAG Fund

P.O. Box 90745
Austin, Texas 78709-0745

Phone: 512-370-1977 E-mail: andrea@tarei.com

[James H. Bushart]

When considering the ramifications of mandatory E&O, the obvious demise of the immediate "500" inspectors who would be put out of business is just the start.

E&O carriers have the right (and the likelihood) of dropping you after paying a claim on your policy. After being dropped by one carrier, the likelihood of finding another (at least, at an affordable premium) becomes nil. Many future inspectors will be forced out of business by their first greedy client who can recognize the advantage of "deep pockets".

Mandatory E&O benefits trial lawyers, not consumers.

[John McKenna]

OK... lets say that this E&O deal goes through in Texas.
(I am NOT for it)

and... Lets say that insurance carriers start dropping inspectors
after the first claim (thus making it hard for the inspector to stay
in business with higher and higher rates).

Does anyone know of an insurance company that does not
raise their rates for someone who is charged with a frivolous
complaint?

[James H. Bushart]

Inspectors who are dropped will find a hard time finding coverage at any rate.

Consider this....we, as inspectors, make the distinction between "frivolous" and "genuine" suits. Insurance companies simply distinguish between claims that are made...and those they must pay.

An inspector who has the propensity for claims being made against his policy, frivolous or not, is a major risk to a carrier, regardless of the merit of those claims.

[Barry Adair]

My intent of posting this was not to discuss the merits or pitfalls of E&O.

That horse has been ridden hard and died numerous times on other threads.

I am trying to unite NACHI, ASHI, TAREI, and the independent inspector community at large to support the appropriate LEGAL course of action. Before this becomes the law of the land Sept. 1, 2007

In the words of the Gov. "The legislature did not properly consider the effects this will have on the market, and how it will make the American Dream more expensive. At the same, I couldn't justify the elimination of a vital regulatory agency despite this onerous clause."

This could very well play into the favor of the inspectors case for omission of the E&O and implementation of general liability insurance as the law was written.

[Barry Adair]

BTW, there will be a New Insurance Requirements for Home Inspectors "Inspector Roundtable" presented by TAREI at 5:30 p.m. Friday, July 13, 2007 at the San Antonio Airport Hilton

Hilton San Antonio Airport
611 NW Loop 410, San Antonio, Texas, United States 78216
Tel: 1-210-340-6060 Fax: 1-210-377-4674
http://maps.hilton.com/mq2/mqserver....,,,1227047465,

Note: The map and directions are informational only. Please verify specific routes. The map and directions shown are provided as a guide for your convenience. Get Driving Directions to Our Hotel

Directions from local airports

[Dan Bowers, CMI]

Several years ago about 250-300 ASHI members sued ASHI & BOD for instituting an action that the membership had not approved and specifically voted against. The BOD passed it anyway.

The lawsuit went on for over a year. ASHI used their D&O Insurance to pay their legal defenses. The members suing (supported heavily by several ASHI Chapters) spent over $100k in that year on their half of the lawsuit. It adds up quickly.

By the way - the irony was the money to pay the D&O Insurance (like all other business expenses) came out of the membership dues paid by the members. Screwed twice.

[Barry Adair]

Originally Posted by dbowers

Screwed twice.

Dan,

You're such a potty mouth

There are approx. 4,000 licensed inspectors in Texas

If I've done the math correctly that would only be $25-$30 per licensed Texas inspector, using your number. A very small price compared to the current outcome proposed.

[Dan Bowers, CMI]

Barry -
Many ASHI members in the lawsuit donated $200-$500 each to the cause. As in any group others talked a lot but sent no $$$$$$$$$$$

Then came the killer - they were fighting their own dues dollars on the other side.

[Nolan Kienitz]

Barry,

Now that the meeting is over do you have any nuggets that you can put in a bullet list for the membership?