Home Inspection Contracts for InterNACHI Member Use
InterNACHI's standard home inspection agreement is a form many InterNACHI members use as the basis for their own contracts with clients. InterNACHI attorney Mark Cohen says that this version offers inspectors greater legal protection. It is designed to work hand-in-hand with InterNACHI's Standards of Practice
and InterNACHI's Online Inspection Agreement System
. The updated version is available to InterNACHI members free of charge.
The following Agreements are FOR MEMBERS' USE ONLY:
The updated form contains important additions, but still consists of only a single page (English version). InterNACHI understands that a prospective client may become wary if an inspector asks them to sign a lengthy legal document.
Cohen, a lawyer with more than 30 years of experience in drafting and litigating contract disputes, says there are several important issues home inspectors should consider in drafting their contracts.
- defining the scope of the inspection;
- the fee for the inspection;
- when payment is due;
- a disclaimer of warranties;
- a limitation on liability and a liquidated damages provision;
- provision for payment of costs and attorney’s fees;
- whether to require arbitration in the event of a dispute;
- a “merger clause” stating that there are no promises other than those set forth in the agreement, and that all prior discussions are merged into the agreement;
- a clause stating that any modification of the agreement must be in writing;
- a forum selection clause so that any lawsuit must be filed in the county or district where the inspector has its principal place of business; and
- a personal guaranty of payment if the client is a corporation or similar entity.
Cohen cautions that laws vary from state to state, but believes the updated InterNACHI form provides a good starting point in any jurisdiction.
In addition to always using a written contract, Cohen urges home inspectors who have not incorporated to form a limited liability company (LLC) or subchapter S corporation because forming a separate entity offers some additional liability protection. Inspectors may also be able to reduce their self-employment taxes by doing business as an LLC or corporation.
Finally, Cohen urges inspectors to review their advertising and marketing materials with a critical eye to make sure they do not contain unfounded statements or claims that could provide the basis for a lawsuit by an unhappy client.
Mark Cohen received his law degree from the University of Colorado in 1983. He also earned a Masters of Law (LL.M.) from the University of Arkansas. After service as an Air Force JAG and Special Asst. U.S. Attorney, he entered private practice. His practice includes representation of creditors, drafting and reviewing contracts, and litigating contract claims. He has authored six articles in the American Jurisprudence "Proof of Facts" series, and is General Counsel for the International Association of Certified Home Inspectors. He is also the former Chairperson of the Board of Editors of The Colorado Lawyer magazine. He welcomes inquiries from home inspectors and is also available to work with local counsel in other states.
Mark Cohen, J.D., LL.M.
P.O. Box 19192
Boulder, CO 80308