When purchasing a home, buyers often rely on the home inspector’s report regarding the state of the home one is buying. This report often is the basis for whether the buyer will proceed with the transaction, renegotiate the price, or avoid purchasing the home. The role of a home inspector is crucial in a real estate transaction. So what recourse does a home buyer have if the inspector fails to identify a critical issue with the home? What options does one have to recover the cost of repairs? An important element is the contract the buyer signed with the home inspector prior to the examination of the real estate.
What is in a Contract?
Before hiring a home inspector, it is likely that a written contract was signed by the buyers and the inspector. The inspector in the contract would have listed what would be inspected, whether any liability insurance is available, what the inspector will be liable for, and whether there is an exculpatory clause excluding liability. Inspectors may also include disclaimers in the contract regarding what areas would be inspected. Many only inspect what is clearly visible and will not examine areas that are hidden, such as the floors under carpets. Sometimes, the inspector may state that they will not enter an attic or other area that is not easily accessible.
It is important to hire an inspector who has a good reputation, has been vetted by others, works for a reputable company, and carries insurance for instances where there is liability. Also, it is important to review the contract presented so that an inspector does not include exculpation clauses and disclaimers that would excuse any liability for their faulty examination.
It is also important to hire an inspector that is not closely linked to the real estate agents and is totally independent. Many inspectors are closely tied to the real estate agents involved in the transaction and have a conflict of interest to provide a report that is positive. To avoid such conflict, it is important to hire an inspector that is independent.
What is Typically Inspected in a Home?
A general home inspection includes the following:
- Air conditioning
- Evidence of water leaks
- Attic, basement, and crawl spaces
A general home inspection does not include inspections of mold, termites, pests, detached structures, pools, hot tubs, and lawns. If buyers are interested in these, they will have to hire additional inspectors who specialize in these areas.
When is an Inspector Liable?
The inspector is liable if they fail to identify problems with any of the areas of the inspection that is included in the contract. An inspector usually provides a report with photographs documenting the areas that were inspected and the issues that were identified. The inspection report should be a good source of evidence if the inspector failed to catch something that is apparent to other inspectors in the field.
In Maryland, all contracts for home inspectors restrict their liability. If a person wishes to get a reimbursement, it is limited to the amount they paid for the inspection.
What are the Theories of Liability?
Some important theories to consider include:
Negligence: The inspector has a duty to do the job with care and reasonableness. One way to prove that the inspector was negligent is through evidence and testimony from other inspectors. This is often very difficult to prove after the buyer has moved into the house and discovers the problem later. Therefore, it is important to hire a reputable and thorough inspector.
Breach of Contract: The theory of liability includes proving that the inspector did not fulfill the obligations outlined in the contract. Having a written contract outlining the areas of inspection and what specific actions the inspector will take during the inspection are important. If the inspector fails to do everything in the contract, the inspector can be liable.
Professional Malpractice: Inspectors are held to a professional standard and are regulated by public agencies. An inspector that does not perform their job according to industry standards is liable for professional malpractice. The inspector may lose their license or incur penalties.
Fraud: Consumers are protected from fraud under various state and federal laws. Fraud involves any false statements made by inspectors.
Should I Contact the Insurance Company?
The first step for a buyer who realizes that the inspector may be responsible for failing to recognize a problem with the home, will be to contact the inspector’s insurance. The insurance company will either accept or deny the claim; however, depending on the contract, the insurance may or may not cover repairs. Often, the insurance only covers the fees paid to the inspector and not the actual repairs.
When Should I Pursue Legal Action?
If it is suspected that the inspector acted negligently, fraudulently, or recklessly, it may be prudent to seek advice from an experienced lawyer. An attorney can review the inspection contract, reports, and damages to evaluate the claims. Often, inspectors and insurance companies may be reluctant to deny claims when an attorney is involved and provide compensation to save costs and their reputation. Real estate litigation can be complicated, and a lawyer can help with any related issues.
Towson Real Estate Lawyers at Huesman, Jones & Miles, LLC Help Clients Pursue Legal Action Against Negligent Home Inspectors
Towson real estate lawyers at Huesman, Jones & Miles, LLC provide a range of real estate legal advice, from reviewing contracts, mortgage options, title, and breach of contract, among other issues. Our attorneys will provide timely legal advice to ensure maximum recovery for any damages. For a free consultation, complete our online form or call us at 443-589-0150. Located in Hunt Valley and Towson, Maryland, we serve clients throughout Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, Howard County.