by Nick Gromicko, CMI®
InterNACHI strongly encourages all inspectors to use a written inspection agreement to prevent misunderstandings. InterNACHI's online, signable inspection agreement system affords inspectors a great deal of legal protection. An inspector should insist that the client sign the agreement before the inspection; an agreement signed after the inspection may not protect the inspector at all.
There are times when it is not feasible to ask the client to sign an agreement. For instance, the client may reside in a different state and be working with a local real estate agent. If the agent is going to sign the agreement on behalf of the client, the inspector should ask the agent if the client has authorized the agent to sign the agreement. If the agent says that he or she is authorized, the inspector should have the agent write “Authorized Agent” under the agent’s signature. If the agent has a written contract with the client, the inspector could also ask for a copy of it; often, it will contain language authorizing the agent to retain a home inspector. If no such contract is available, the inspector might also consider calling or emailing the client to verify that the agent is authorized to retain the inspector.
Even when an inspector fails to confirm the real estate agent’s authority with the client, the concepts of apparent authority and implied authority may offer a way to hold the client to the terms of the agreement.
The concept of apparent authority applies when the client causes the inspector to believe that the client authorized the agent to sign the agreement on the client’s behalf. For example, a fax or email from the client simply referring to the inspector may be sufficient.
A similar concept is that of implied authority. In addition to any express authority the client gives the agent, the law is that the agent also has implied authority to perform acts that are customary in the relevant trade or business. Because the client retained the real estate agent to assist in finding a suitable home, there is a strong argument that the agent has implied authority to sign an inspection agreement on the buyer’s behalf.
There have been several court battles in which the client contended that the agent lacked authority to sign an inspection agreement. The courts that have considered this issue have generally rejected such efforts to avoid the requirements of the agreement. The courts have relied on the doctrine of apparent or implied authority. For instance, in Church v. Fleishour Homes, Inc., 874 N.E.2d 795 (Ohio App. 5 Dist. 2007), the Ohio Court of Appeals ruled that the purchasers of a home were bound by an arbitration clause contained in an agreement that their real estate agent signed on their behalf. Similarly, in Carroll v. Bergen, 57 P.3d 1209 (Wyo. 2002), the Wyoming Supreme Court held that where a buyer had entered into an Exclusive Right-to-Buy Contract with a real estate agent, the agent had actual and implied authority to enter into a binding inspection agreement.
InterNACHI believes the better practice is to have the client sign the inspection agreement; however, if this is not feasible, the concepts of apparent authority and implied authority will likely allow the inspector to hold the client to the terms of the agreement signed by the agent.
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