Washington State and contract limitation of liability

[Stephen W. Stanczyk]

I talked to the Department of Agriculture today. There had been notice put out that many inspectors have a limitation of liability in their contracts that limit the amount of a claim to the actual price of the inspection.

The State of Washington in it's infinite wisdom has determined that this limitation of liability is a violation of State law regarding the required Bond, E&O or funding used to obtain a Structural Pest Inspector's license.

The SPI license is required for inspecting any real property, whether it is a SFR, duplex, four-plex, warehouse, restaurant or whatever when it is involved in a real estate transaction or possible real estate transaction. This is not meant to say that the SPI portion cannot be farmed out, which has already been determined as allowable.

The Department of Agriculture has attorneys working on language that can be added to your contract to allow the limitation of liability to remain in force for all portions of your inspection, except those covered by the SPI law in the Revised Code of Washington and Washington Administrative Code.

More news to follow as it becomes available.

[James H. Bushart]

One more reason to do "home inspections" instead of "SPI" inspections.

[Harold E. Miller]

It is kind of funny that it has finally occurred to someone at the state that there has been a limitation of liability clause in the pest reports. Here is an example of the clause from the WSCPA Complete Wood Destroying Organism Inspection Report.

LIMITATION OF LIABLILITY

In accordance with the provisions of the Revised Code of Washington (RCW) 15.58.450, this report relates to a single sale, transfer, exchange, or refinance
and is not transferable to and may not be relied upon by parties involved in any subsequent sale, transfer, exchange, or refinance of the same property.
The findings listed within this report are determined by the inspector based on a visual inspection conducted in accordance with Washington Administrative Code
(WAC) 16-228-2005 through 2045 and are subject to the limitations within this report, the standards listed below, and as modified by any and all associated reports
attached.
The above inspecting firm and inspector endeavor to perform their services in a professional manner consistent with the care and skill ordinarily exercised by structural
pest inspection professionals. The inspecting firm will re-perform any services not meeting this standard without additional compensation. In any case, the inspecting
firm’s total liability is hereby limited to amounts paid to the inspecting firm for the inspections made of the inspected structure. The inspecting firm will not be liable
for any special, incidental, punitive or consequential damages, whether foreseen or unforeseen, regardless whether liability is based on breach of contract, breach of
express or implied warranty, negligence, strict liability, tort or otherwise.

I have read and understand the above limitations and the Inspection Standards and authorize the above named inspection

firm to conduct this inspection subject to the limitations and conditions therein.

Client’s Signature:________________________________________ _______________ Date: ______________
This report is not valid until the Client who pays for the report signs and dates the form where provided to acknowledge the inspecting
firms Limitation of Liability provided herein.

[cbuell]

Harold, according to the WSDA the WSPCA (which is in no way related to the WSDA) form would not comply with the requirements of the law. My insurance company just said to add to my contract that the "liability being limited to the cost of inspection" does not apply to issues reported-on that fall under the requirements of the WSDA.

[Harold E. Miller]

So is the WSDA going to amend the current law (WAC) to say we can't have the limitation of liability in our agreements?
.......I don't remember ever reading that in the WACs.

Charles, while the WSPCA and the WSDA are seperate entity's, the WSCPA membership does it's best to comply with the state's laws and works closely with WSDA personnel to provide relevant training, and information for SPI's. I see a strong relationship between the two entity's.

That is why I am surprised that this issue has come up. The limitation of liability clause has been around longer than my 11 years in business. Probably over 20 years.

[cbuell]

I think that some things just "fall through the cracks" and would expect to see the WSPCA form changed soon.