by Nick Gromicko, CMI®
A client asserting claims against a home inspector may rely on a variety of legal theories, including negligence, breach of contract, and misrepresentation. This article explains the four elements a plaintiff must prove to prevail in a negligence claim. Understanding these will help inspectors to better understand how to reduce their risk of being found negligent.
The plaintiff must prove that the inspector owed a duty to him. The duty may be created and defined by a contract, a statute, or the standard of care in the industry. In common law, every person has a duty to exercise ordinary care in all activities to prevent foreseeable risks. Even if no duty would ordinarily exist, a person who voluntarily undertakes to do something must exercise ordinary care in doing it. (Even though you have no duty to provide a free inspection to a relative, if you assume that duty you must carry it out properly).
An inspector has a duty to comply with all applicable laws and regulations, but some state laws do not define any additional duties inspectors owe to clients. Put differently, not all states have statutes that specifically define the standard of care. Therefore, it is vital that the written contract define the additional duties assumed by the inspector. If the client and inspector both understand the scope of the duties owed disputes are far less likely.
The best thing an inspector can do to protect himself is insist that the client sign a written contract BEFORE the inspection. The contract should explain what the inspector will and will not do. The standard InterNACHI contract explains that the inspector will perform the inspection in accordance with InterNACHI’s current Standards of Practice at https://www.nachi.org/sop.htm. The inspector should provide a copy of the SOP to the client or encourage the client to review them online before signing the contract.
Generally, the inspector works for the prospective buyer. A seller may sometimes threaten to sue an inspector for negligence because of statements in the inspector’s report, but this threat is often hollow because the inspector’s duty is to his client, not to the seller or real estate agent.
Generally, the existence of a duty is a question of law, meaning the judge – not the jury – decides whether the inspector owed a duty to the client.
Once the plaintiff proves the existence of a duty he must prove the inspector breached that duty. In other words, the plaintiff must show that the inspector was negligent. Because it is impossible to prescribe definite rules in advance for every combination of circumstances that may arise, the question of whether the inspector breached a duty is usually a question for the trier of fact (the jury in a jury trial, or the judge in a non-jury trial).
One way the inspector can reduce the risk of being found negligent is to prepare a thorough report summarizing what he did and all his relevant observations. If the inspector identifies defects he should list them in the report and inform the client of the possible consequences. If the inspector recommends repairs or additional inspection by a specialist, he should state that in the report. The inspector should take plenty of photos during the inspection as they may be useful if litigation ensues.
Even if the plaintiff proves that the inspector owed a duty and breached that duty, the plaintiff must also demonstrate that the breach was the cause of the claimed damages. The test traditionally used to determine cause is the “but for” test. Under this approach, the inspector’s conduct is a cause if the damages would not have taken place but for the inspector’s breach of the duty owed.
Think of it this way. If an inspector breaches his duty by failing to perform a proper electrical inspection, but the client is complaining about the cost of replacing the roof, the inspector’s breach of his duty was not the cause the client’s damages.
The “but for” test works well, but there is one situation where it fails. If two causes combine to bring about an event, either of which would have been sufficient to cause the damages, many courts ask whether the defendant’s breach of duty was a “substantial factor” in bringing about the damages. If so, the inspector’s negligence will be considered a cause of the claimed damages.
It is important to remember that even in situations where a home inspector has been negligent, other parties, including the buyer, may have also been negligent. For instance, suppose an inspector lists a defect in his report, fails to fully inform the buyer of the possible consequences of this defect, but advises the buyer to hire an expert to follow up on the defect. If the buyer fails to hire an expert, the buyer may be at least partly at fault for failing to heed the inspector’s recommendation. When more than one party has been negligent, many states now require courts and juries to allocate a percentage of fault to each negligent party.
If the plaintiff establishes the first three elements of a negligence claim he must still prove that he was damaged, and he must prove the amount of his damages. Damages in a negligence suit against a home inspector will often be the costs incurred in correcting defects the inspector failed to find. However, there have been cases where an unhappy client claimed he would not have purchased a property had the inspector performed a proper inspection and, in these cases, the claimed damages may be much greater.
The goal of allowing an award of damages is to make the plaintiff whole – to restore him to the situation he was in before the negligent act or omission. One issue to be alert to is claims that seek to make the plaintiff better off than he would have been but for the inspector’s negligence. For example, if an inspector fails to mention defects in a roof that is ten years old and the roof must be replaced, the plaintiff is not entitled to a brand new roof, but is only entitled to damages equal to a non-defective roof that is ten years old.
The law recognizes direct damages and consequential damages. Direct damages include damages such as cost of repair or replacement. Consequential damages may include damages since as loss of productivity or loss of profits resulting, for example, from the inability to use a home office. In many states an inspector can limit his liability for damages to direct damages and disclaim any responsibility for consequential damages. In some states or provinces an inspector may be able to limit his liability to the amount paid for the inspection.
Download your free copy of SLEEP WELL: A Home Inspector’s Guide to Managing Risk