TREC authorizes MoveInCertified's Pay Per View inspection report project.

[Nick Gromicko]

TREC has no prohibition on offering an inspection report to parties other
than your client (for a fee or otherwise), as long as you have your client's
consent.

You are probably familiar with Section 535.220(e)(7) of the TREC Rules,
which prohibits inspectors from disclosing inspection results of client
information without the client's prior consent. However, if you have your
client's written consent to sell the report, you may do so.

We hope this information is helpful to you.

Devon V. Bijansky
Staff Attorney
Enforcement Division
(512) 465-3960
fax (512) 465-3962

[John McKenna]

This is true.

[Nick Gromicko]

John, thanks for getting us this pre-approval.

[John McKenna]

Originally Posted by gromicko

John, thanks for getting us this pre-approval.

Now we need to know how the E&O providers will deal with reports
that are sold to various people. It would seem that they should not
care, because lots of people see the report anyway, wheather it
is freely handed out or sold.

[John Cahill]

(7) Inspectors shall not disclose inspection results or client information without prior approval from the client. Inspectors, at their discretion, may disclose observed immediate safety hazards to occupants exposed to such hazards when feasible.

This rule was written with this in mind.

1) What is the client's right to the report information? They paid for it. The Ethics Committee decided, with the advice of legal, that the client does have a vested interest in the product. However that interest should not preempt an inspector from commenting about safety items judged immediate to occupants. Thus the rule.
1.1) A client is not obligated to provide a report copy to the seller or any agent. The client has the most control over transfer of product.
2) The requirement to obtain prior approval can be written or oral. Of course written would protect the inspector more. Most inspectors just build the language into the contract.
3) Some inspectors indicate the report is not transferable. There are different strategies in doing this that I won't go into. The success of this depends on the nature of the problem and judge. Inspectors have been held responsible to 3rd parties they never met or got paid by.
4) Each insurance company handles this differently. Bottom line is if a 3rd party wants to sue the inspector they can.
5) If a MoveinCertifed report is distributed and there is an error, any error, a complaint can be filed at TREC by anyone. TREC will investigate the report as strictly as if it were done for a specific consumer.
6) The program is easy to abuse although the risk is minimal. Client see's a Moveincertifed report; places contract on home; next inspector finds big problem that MoveInCertifed missed; Client can ask MoveIncertifed inspector to pay for 2nd inspection and any contract related expenses. Why? Client relied on incorrect report and the Inspector violated the State law; acted negligently and incompetantly; they have E&O. Guaranteed success in small claims, especially if you get your TREC ruling 1st. Like I said unlikely and predatory but it can be done without breaking a sweat.
7) Ok Ok OK maybe someone might say the Moveincertifed report above could not be relied on. Perhaps but that still does not save their bacon from TREC. TREC investigation pays no attention to who the report was prepared for. Did you comply or not comply? So now the strategy changes "Would the inspector pay $500 to avoid a TREC investigation?" I would.

The MoveinCertified program is a marketing opportunity, however I would consult my insurnace company first. The problem might be the requirement of a pre-inspection agreement to validate insurance coverage. This could, to some extent, be handled with some wording in the "Certified" inspection report.

It just depends on what the inspector misses and how serious it was. If the inspector blows a big item and a 3rd party relies on the MoveInCertified advertising the inspector could take the bullet.

There other other Rules at TREC that have / don't have impact on this program. First of all is the inspector doing an inspection pursuant to a Real Estate transaction. If not he is not bound by TREC and the report can advise a future buyer to get a TREC inspection. Hmmm but if your not doing a home inspection are you covered by your insurance?

I do listing inspections but I do not call them Certified and I use strategies to defer liability.

All word games.

[Nick Gromicko]

From a liability standpoint, doing MoveInCertified inspections for sellers has much less liability than doing a regular inspection for a buyer for many reasons:

1. The definition of MoveInCertified is far less than what an inspector is held to in a regular inspection anyway, which reduces inspector liability.

2. The time between the inspection and the date the buyer moves in is lengthened which reduces inspector liability.

3. A re-inspection is recommended and often performed which reduces inspector liability.

4. The inspector does not determine if the home is MoveInCertified, the seller does, which reduces inspector liability.

5. The seller often contributes to the report and assumes some duty to disclose, which reduces inspector liability.

6. The inspector's client is the seller (the folks moving OUT of the home), not the buyer (the folks moving IN). Who do you want to work for from a liability standpoint... someone moving out of the home you inspected or someone moving in? No brainer.

[John McKenna]

I like the MIC program and TREC did say that a seller can give permission
for an inspector to release the report to others.

I also went back and ask TREC about the fact that the inspector will provide a
MIC yard sign and wil be selling the report to many buyers and wanted to know
if this could cause legal problems in the future. Below is their response.

(I will respond to your question on the assumption that you have already
taken into account Section 535.220(e)(7) of the TREC Rules. You indicated
last week that you would obtain the client's written consent before
attempting to sell an inspection report.)

As you know, the Texas Real Estate Commission is the licensing and
regulatory agency for Texas real estate brokers, salespersons, inspectors,
residential service companies, and timeshare developers. Our jurisdiction
is limited to taking disciplinary action against a licensee when it could be
proved that the licensee violated a provision of The Real Estate License Act
or the Rules of the Commission. Our agency cannot give private legal advice
and cannot comment on the rights or obligations of non-licensees in real
estate transactions.

I am, therefore, unable to respond fully to the question of whether the
scenario you have proposed might "cause the Inspector legal problems later."
However, you should know that the Commission is required by law to accept
complaints from anyone who wishes to file one (not only the inspector's
client), so the report's greater visibility could potentially lead to an
increase in complaints. Because conditions in a property may change from
month to month, week to week, and even day to day, I could imagine that an
inspector might be accused of misrepresenting the condition of a home if a
defect were later found to exist, even if the defect was not present (or not
evident) at the time of the inspection.

Licensees considering participating in this program may wish to contact
their own legal counsel for advice about any increased liability they may
face.

Devon V. Bijansky
Staff Attorney
Enforcement Division

They did not say it could not be done, but
simply said that the fact that more people
are seeing the report and therefore it increases
the potential for complaints. Anyone can
file a complaint, but not all complaints
have the same weight... IMHO.

[Nick Gromicko]

Even if 10,000 people see your report, only one of them can buy the home ultimately. 9,999 people wandering around with copies of your report for a home they aren't buying ads zero additional liability.

[John Cahill]

TREC statute:
§ 1102.103. PROFESSIONAL INSPECTOR LICENSE REQUIRED. A person may not act as a professional inspector in this state for a buyer or seller of real property unless the person holds a professional inspector license under this chapter.

John,
When does an owner become a seller?

- When the thought comes to mind?
- When they call an agent?
- When they list with an agent?
- When they enter into a contract?

You are not required to be licensed by TREC if the owner is not an official seller.

Did you know a remodeling company can provide improvement opinions on property condition? Just get a TRCC remodeler license and make proposals.

[John Cahill]

Originally Posted by gromicko

Even if 10,000 people see your report, only one of them can buy the home ultimately. 9,999 people wandering around with copies of your report for a home they aren't buying ads zero additional liability.

I agree Nick but if the product is a TREC inspection it will fall under the new E&O rules and a certain risk must be at least discussed. I think it can be modified easily to reduce risk. We will make it a project at www.prismrca.com for Texas NACHI members. An upcoming seminar will discuss this topic.

Here is an idea

Listing inspections are GREAT advertising. Nick is right. If possible promote your service in homes less than 5 years old built by good builders in well regulated code areas. Your report will be neat, clean and much lower risk than doing a 1966 home. A great result might be the next customer will be buying a younger home resulting in an easier inspection for you (in most cases).

[John McKenna]

Originally Posted by jcahill

TREC statute:
§ 1102.103. PROFESSIONAL INSPECTOR LICENSE REQUIRED. A person may not act as a professional inspector in this state for a buyer or seller of real property unless the person holds a professional inspector license under this chapter.

John,
When does an owner become a seller?

- When the thought comes to mind?
- When they call an agent?
- When they list with an agent?
- When they enter into a contract?

You are not required to be licensed by TREC if the owner is not an official seller.

Did you know a remodeling company can provide improvement opinions on property condition? Just get a TRCC remodeler license and make proposals.

TREC says that the intent to sell is enough to be considered a seller.

As to contractors offering home improvement ideas ... that does not even
come close to doing a full home inspection and providing a written
report.

We can create what if this and what if that all day... but I don't want to
drift from the thread.

[John McKenna]

Originally Posted by gromicko

Even if 10,000 people see your report, only one of them can buy the home ultimately. 9,999 people wandering around with copies of your report for a home they aren't buying ads zero additional liability.

Good point.

[Nick Gromicko]

What 9,999 potential buyers wandering around with an actual sample of the product (a report) you the inspector produces, each about to need a home inspector in your market area does do... is... well... target marketing beyond your wildest dreams.

[John Cahill]

Originally Posted by jmckenna1

We can create what if this and what if that all day... but I don't want to drift from the thread.

I encourage you to stay under Chapter G's risk of an inevitable "negligent and incompetant" tag, especially with mandatory E&O. So let's not drift. How many MoveInCertifieds have you done and how is it working for you? How are you presenting your material to gain attention? How do you measure results? Eager to hear about it.

[John Cahill]

Originally Posted by gromicko

What 9,999 potential buyers wandering around with an actual sample of the product (a report) you the inspector produces, each about to need a home inspector in your market area does do... is... well... target marketing beyond your wildest dreams.

Actually the average house in this area had about 10 to 40 names on the showing list before getting sold but I get and agree with your point. Of course lately, the showing list is about 2 names a week. That will improve again.

Another benefit of this is it allows a new inspector to get experience with less Realtor pressure or hurry.