When I first began presenting the Law and Disorder Seminar back in 2007, many of the inspectors in attendance would approach me afterwards and ask if they could retain my claim squashing services on a pre-paid basis - a pre-paid legal of sorts. While I appreciated the sentiment, I was very wary of providing such a service for a number of reasons. For one, I did not have any idea of how to price such a service or, indeed, what services to provide. Or what the inspectors’ expectations might be. So I simply said that it was not something that I had ever considered doing but would give the matter some thought.
Three years later, after having defeated over 150 claims aborning, I really did begin to give it some very serious thought. I thought about how truly ridiculous the overwhelming majority of claims against home inspectors are.
When I first started getting asked by home inspectors to respond to negligence claims being made by their former clients and/or their attorneys, every single one of them was dropped after I intervened and sent a responsive letter. After dispatching the sixteenth or seventeenth claim in succession, I thought that I was probably seeing a skewed sample. These absurd claims could not possibly represent the universe of home inspection negligence claims.
Later, when the number of consecutive successful claim interventions reached forty, I had a different thought. I no longer thought that the sample that I was seeing was skewed. What I was seeing was the sample. In other words, virtually every claim against home inspectors is without merit. And eminently defensible.
Now, four years and close to 200 successful interventions later, I am absolutely certain that I have figured it out. And so, last November, I began to offer my claim intervention services on a pre-paid basis.
At first, I offered it exclusively to those inspectors who had actually had to avail themselves of those services on an ad hoc hourly fee basis and the very enthusiastic response of those inspectors to the offer convinced me that this was definitely a service that home inspectors would support and that I was pricing the service fairly.
Now, I am opening the claim intervention service up to every inspector on a pre-paid basis. Please email me if you would like further information.
Thursday, March 31, 2011
Monday, March 28, 2011
The Importance of E&O Insurance
I am continuously surprised at the number of inspectors who do not carry professional liability insurance or, as it is popularly known, Errors and Omissions Insurance (“E & O”). When I ask inspectors who attend the Law and Disorder seminar whether or not they carry E & O insurance, between 40 and 60 percent of them say that they do not. That number is constantly diminishing, however, as more and more jurisdictions have introduced laws requiring that home inspectors become licensed and have made the carrying of E & O insurance a condition of licensure.
Some inspectors who do not carry E & O would, perhaps, like to carry it but simply do not conduct enough inspections to be able to afford it. Those inspectors generally leave the profession when carrying professional liability insurance becomes a condition of having a license.
Many others do not carry it because they think that it is “too expensive” and/or that it “paints a target on your back” - that is, it makes you more likely to be sued than if you had no insurance.
Whether or not a given product is “too expensive” is something that individual consumers have to determine for themselves after conducting a cost-benefit analysis and considering competing products.
Inspectors who elect to “go bare” should not, however, delude themselves into thinking that their not having professional liability insurance removes “the target” from their back.
In many ways, an uninsured defendant is a much easier “target” for an aggrieved claimant. For one thing, not having insurance, they are less likely to defend a suit and plaintiff can, thus, obtain a judgment against them by default. Even if they have viable defenses to the suit!! If they do defend, they have to make the calculus of whether it is more expensive to defend the suit or simply pay the plaintiff. And having an unpaid judgment on your credit report effectively makes you unbankable, a terrible position for a serious businessman to be in.
About three years after I began practicing law, I had a matter that brought me to small claims court in a neighboring municipality. The court’s docket was very crowded that day and I had to wait my turn behind several other attorneys, one of whom had a number of matters before the court and was taking one default judgment after another against no-show defendants on behalf of several institutional creditors.
In my naivete, I thought that he was on a fool’s errand and asked him afterwards what the point was of obtaining judgments against folks who were not likely to satisfy them. His reply opened my eyes and taught me that very few people are truly judgment-proof.
He told me that he had a file cabinet that was chock full of default judgments that he had obtained and that eventually these folks were going to want to buy a house or a car or refinance and will have to satisfy the judgment in order to do so. Of course, by then the judgment will have swelled with the addition of post-judgment interest.
“Not a day goes by,” he told me, “that I don’t get a call from one or more of these judgment-debtors who wants to satisfy the judgment.”
Some inspectors who do not carry E & O would, perhaps, like to carry it but simply do not conduct enough inspections to be able to afford it. Those inspectors generally leave the profession when carrying professional liability insurance becomes a condition of having a license.
Many others do not carry it because they think that it is “too expensive” and/or that it “paints a target on your back” - that is, it makes you more likely to be sued than if you had no insurance.
Whether or not a given product is “too expensive” is something that individual consumers have to determine for themselves after conducting a cost-benefit analysis and considering competing products.
Inspectors who elect to “go bare” should not, however, delude themselves into thinking that their not having professional liability insurance removes “the target” from their back.
In many ways, an uninsured defendant is a much easier “target” for an aggrieved claimant. For one thing, not having insurance, they are less likely to defend a suit and plaintiff can, thus, obtain a judgment against them by default. Even if they have viable defenses to the suit!! If they do defend, they have to make the calculus of whether it is more expensive to defend the suit or simply pay the plaintiff. And having an unpaid judgment on your credit report effectively makes you unbankable, a terrible position for a serious businessman to be in.
About three years after I began practicing law, I had a matter that brought me to small claims court in a neighboring municipality. The court’s docket was very crowded that day and I had to wait my turn behind several other attorneys, one of whom had a number of matters before the court and was taking one default judgment after another against no-show defendants on behalf of several institutional creditors.
In my naivete, I thought that he was on a fool’s errand and asked him afterwards what the point was of obtaining judgments against folks who were not likely to satisfy them. His reply opened my eyes and taught me that very few people are truly judgment-proof.
He told me that he had a file cabinet that was chock full of default judgments that he had obtained and that eventually these folks were going to want to buy a house or a car or refinance and will have to satisfy the judgment in order to do so. Of course, by then the judgment will have swelled with the addition of post-judgment interest.
“Not a day goes by,” he told me, “that I don’t get a call from one or more of these judgment-debtors who wants to satisfy the judgment.”
Friday, March 25, 2011
Risk, Its Place in the Industry and How to Combat It
The recent earthquake that hit near Japan set me to thinking about emergency preparedness in general and disaster-preparedness, in particular. The earthquake-prone nation is being widely praised for the strength of its building codes which contemplate the need for buildings to be able to withstand these inevitable periodic massive shocks to their structural integrity. And by all accounts, all things considered, the minimal damage that was sustained by buildings in cities closest to the epicenter of the huge quake has vindicated the decision to implement those precautions.
Where I live, we seldom experience earthquakes, a fact that prompted the actor David Morse [St. Elsewhere] to move here with his Philly-born wife, after an earthquake destroyed their family home in California in 1994. And the ones we do experience tend to be at the lower end of the Richter Scale. I personally have never experienced one and apparently slept through one that took place here in the early ‘70s.
We do get our share of capricious weather, however - Nor’easters, blizzards, hurricanes and the occasional tornado - for which you do have to be prepared. As President Kennedy sagely observed, “The time to fix the roof is when the sun is shining.” The time to plan for disaster is before disaster strikes.
Risk management is the workman-like name that economists give to this hedging science. Most major corporations have entire departments devoted solely to minimizing the shock to earnings that might ensue, should some identifiable risk eventuate. And many of their techniques for doing so are quite sophisticated. Airlines, for example, hedge against spikes in the price of oil, a major component of their cost structure, by playing the oil futures market and thereby reducing the risk.
That is one of the four generally recognized methods of managing risk: risk reduction. The other methods are: avoiding the risk altogether, transferring it to another party and risk retention or accepting the risk. Home inspectors engage in all four of these strategies.
Many home inspectors will not perform certain types of inspections: pool inspections, for example, or termite inspections, or for certain kinds of clients: lawyers come to mind for some reason, thus avoiding that particular risk. Others purchase insurance with various deductibles, thus both transferring and reducing the risk at the same time. A tremendous number of inspectors - maybe even a majority - simply retain the risk, relying on their acknowledged skill and, perhaps, over-relying on the strength and enforceability of their inspection agreements to protect them.
The problem with the home inspection industry, of course, is that no matter what an inspector does, no matter how thorough he is, no matter how painstakingly she identifies and accurately reports issues, no matter how thoroughly and appropriately he disclaims responsibility for certain inaccessible systems, the home inspector is simply too tempting a target for that scapegoating troika: the client, the real estate agent and the repairman, all of whom have vested interests in getting the inspector to pay for needed repairs.
The good news is, as I have pointed out quite often elsewhere on this site, is that these generally ludicrous claims are eminently defensible. The bad news is that, if the inspectors who come to the Law and Disorder seminar can be credited, no one is all that enthusiastic about defending them. Especially, if it’s going to cost, you know, more than the deductible.
And that is the problem that I have identified with the home inspector E & O insurance market place and a major reason why so many inspectors are willing to take their chances going it alone. And who can blame them? If the insurer is not going to actively resist ridiculous claims, why bother having insurance? Better to set the money aside and conduct your own defense if the time comes.
Fortunately, there is now a better way. My success rate at terminating these claims aborning attracted the attention of a major insurance broker who completely supports and endorses my approach to claim containment and incorporated that approach into the E & O program that it designed for home inspectors. For more information and a quote call 800-803-9552 or visit http://inspectors.locktonaffinity.com.
Where I live, we seldom experience earthquakes, a fact that prompted the actor David Morse [St. Elsewhere] to move here with his Philly-born wife, after an earthquake destroyed their family home in California in 1994. And the ones we do experience tend to be at the lower end of the Richter Scale. I personally have never experienced one and apparently slept through one that took place here in the early ‘70s.
We do get our share of capricious weather, however - Nor’easters, blizzards, hurricanes and the occasional tornado - for which you do have to be prepared. As President Kennedy sagely observed, “The time to fix the roof is when the sun is shining.” The time to plan for disaster is before disaster strikes.
Risk management is the workman-like name that economists give to this hedging science. Most major corporations have entire departments devoted solely to minimizing the shock to earnings that might ensue, should some identifiable risk eventuate. And many of their techniques for doing so are quite sophisticated. Airlines, for example, hedge against spikes in the price of oil, a major component of their cost structure, by playing the oil futures market and thereby reducing the risk.
That is one of the four generally recognized methods of managing risk: risk reduction. The other methods are: avoiding the risk altogether, transferring it to another party and risk retention or accepting the risk. Home inspectors engage in all four of these strategies.
Many home inspectors will not perform certain types of inspections: pool inspections, for example, or termite inspections, or for certain kinds of clients: lawyers come to mind for some reason, thus avoiding that particular risk. Others purchase insurance with various deductibles, thus both transferring and reducing the risk at the same time. A tremendous number of inspectors - maybe even a majority - simply retain the risk, relying on their acknowledged skill and, perhaps, over-relying on the strength and enforceability of their inspection agreements to protect them.
The problem with the home inspection industry, of course, is that no matter what an inspector does, no matter how thorough he is, no matter how painstakingly she identifies and accurately reports issues, no matter how thoroughly and appropriately he disclaims responsibility for certain inaccessible systems, the home inspector is simply too tempting a target for that scapegoating troika: the client, the real estate agent and the repairman, all of whom have vested interests in getting the inspector to pay for needed repairs.
The good news is, as I have pointed out quite often elsewhere on this site, is that these generally ludicrous claims are eminently defensible. The bad news is that, if the inspectors who come to the Law and Disorder seminar can be credited, no one is all that enthusiastic about defending them. Especially, if it’s going to cost, you know, more than the deductible.
And that is the problem that I have identified with the home inspector E & O insurance market place and a major reason why so many inspectors are willing to take their chances going it alone. And who can blame them? If the insurer is not going to actively resist ridiculous claims, why bother having insurance? Better to set the money aside and conduct your own defense if the time comes.
Fortunately, there is now a better way. My success rate at terminating these claims aborning attracted the attention of a major insurance broker who completely supports and endorses my approach to claim containment and incorporated that approach into the E & O program that it designed for home inspectors. For more information and a quote call 800-803-9552 or visit http://inspectors.locktonaffinity.com.
Tuesday, March 22, 2011
Look at Me Now: The Defendants AREN'T Always Guilty
A week or so ago, I received an email invitation to attend Alumni Weekend at my law school alma mater, the Temple University Beasley School of Law. And because this is my class’ Silver Anniversary year, there is additional hoopla planned for us. Attached to the email was a list of all of the members of the class and their current contact information.
Glancing at the list, I was surprised at how large the class actually was on the one hand and how few of the names I actually recognized on the other. Our class includes a former US Congressman and a current one, senior partners at large Philadelphia law firms, Federal and State Court judges, top homicide prosecutors and criminal defense attorneys, and a surprising number of married couples. Who knew law school was such a “meet” market?
Law school, of course, is a much different experience than a resident college where you’re interacting with classmates continually: in class, in the dorms, in the dining hall, in the gym, on the quad and at off-campus student hangouts.
In law school, especially an urban school like Temple, where there was a substantial population of “returning” students, like me, with families and professional obligations, you don’t see much of your classmates outside of class. The minute that class is over, you’re out the door to attend to your other interests.
Where you did spend a lot of time with classmates, however, was in Clinical Programs. The one I participated in was the Defender Program that was administered by the Philadelphia Public Defender’s office. The idea was to give you some practical courtroom experience so that your knees would not be knocking together the first time you were representing a paying client in court.
I made two enduring friendships in that 12-student practicum, one now a top homicide prosecutor and the other a top public defender, but what I remember most about my classmates was this one woman who, when the rest of us were dreaming of becoming center-fielders for the Brooklyn Dodgers even though we could not hit a curve ball, must have been pretending to defend her Barbie doll for killing her abusive Ken doll.
She never thought that any criminal defendant could ever possibly actually be guilty of the crime charged, a belief that never failed to engender a cascade of eye-rolling amongst the rest of us given that the vast majority of criminal defendants are, in fact, guilty as charged.
I’m trying to imagine what my classmates from that clinical program will be thinking about me when I tell them that the claims that I see being made against my home inspector clients actually never do have any validity.
Glancing at the list, I was surprised at how large the class actually was on the one hand and how few of the names I actually recognized on the other. Our class includes a former US Congressman and a current one, senior partners at large Philadelphia law firms, Federal and State Court judges, top homicide prosecutors and criminal defense attorneys, and a surprising number of married couples. Who knew law school was such a “meet” market?
Law school, of course, is a much different experience than a resident college where you’re interacting with classmates continually: in class, in the dorms, in the dining hall, in the gym, on the quad and at off-campus student hangouts.
In law school, especially an urban school like Temple, where there was a substantial population of “returning” students, like me, with families and professional obligations, you don’t see much of your classmates outside of class. The minute that class is over, you’re out the door to attend to your other interests.
Where you did spend a lot of time with classmates, however, was in Clinical Programs. The one I participated in was the Defender Program that was administered by the Philadelphia Public Defender’s office. The idea was to give you some practical courtroom experience so that your knees would not be knocking together the first time you were representing a paying client in court.
I made two enduring friendships in that 12-student practicum, one now a top homicide prosecutor and the other a top public defender, but what I remember most about my classmates was this one woman who, when the rest of us were dreaming of becoming center-fielders for the Brooklyn Dodgers even though we could not hit a curve ball, must have been pretending to defend her Barbie doll for killing her abusive Ken doll.
She never thought that any criminal defendant could ever possibly actually be guilty of the crime charged, a belief that never failed to engender a cascade of eye-rolling amongst the rest of us given that the vast majority of criminal defendants are, in fact, guilty as charged.
I’m trying to imagine what my classmates from that clinical program will be thinking about me when I tell them that the claims that I see being made against my home inspector clients actually never do have any validity.
Thursday, March 17, 2011
Dirty Harry and Home Inspection: You Don't Need to Pay
There's a scene in the original Dirty Harry movie that resonated with me when I first saw it and that I am frequently reminded of in my practice of advising home inspectors. Clint Eastwood, as Inspector Harry Callaghan, is hustling against a deadline set by a lunatic serial killer, based on the Zodiac killer that plagued San Francisco in the early ‘70s. Along the way to his rendez-vous with the killer, Harry is accosted by some street toughs whom he handles methodically despite being outnumbered. They keep coming back for more, however. Finally, exasperated by their perseverance, he whips out the huge .44 Magnum, sticks it in the face of one relentless punk and says “You don’t listen, do you, Asshole?”
Recently, one of the home inspectors who participates in my pre-paid claim response program had this unhappy experience. The inspector conducted the inspection in August and was accompanied by the client's agent on his rounds. He reported his findings in the normal fashion and everyone seemed to be happy with the results.
The client did not move into the home until some four months later and when she did, she thought that she smelled gas upon entering the property. She called the local utility which confirmed a gas leak and there then ensued an epic effort on the part of both the client and the real estate agent to dragoon the inspector into paying for the needed repairs.
As I have written elsewhere on this site, I think that refunding inspection fees every time a client experiences a bad result is a very bad habit to develop. I told the inspector that not only should he not be ratifying this unreasonable client’s delusional notions of culpability but that neither should the real estate agent. So he told the agent that he was not going to pay because he was not responsible and that furthermore, she should not be paying anything either.
But this yenta was relentless. Multiple email correspondence to both the real estate agent and the inspector with ccs to attorneys. The real estate agent - who just wanted the whole thing to go away - was putting none-too-subtle pressure on the inspector to pay for part of the repair - to split it with her - or at least refund the inspection fee. Never mind that a. detection of gas leaks is not part of a home inspection and b. neither the inspector nor the real estate agent smelled gas at any point in the two-plus hours it took to conduct the inspection. Notwithstanding that, the real estate agent ended up paying part of the repair bill. But the inspector continued to stonewall.
Finally, the client sent the inspector an ultimatum that threatened legal action lest he fail to acquiesce to her preposterous demand.
So, I finally had to explain to her that the inspector would not be paying for her repairs for the very compelling reason that he was not responsible for their provenance; that, under those circumstances, her threat of legal action had no cognizable foundation; and that, if she persisted in pursuing that spectacularly foolish strategy, she would most assuredly ultimately wish that she had not. I call it the “Dirty Harry letter.”
Recently, one of the home inspectors who participates in my pre-paid claim response program had this unhappy experience. The inspector conducted the inspection in August and was accompanied by the client's agent on his rounds. He reported his findings in the normal fashion and everyone seemed to be happy with the results.
The client did not move into the home until some four months later and when she did, she thought that she smelled gas upon entering the property. She called the local utility which confirmed a gas leak and there then ensued an epic effort on the part of both the client and the real estate agent to dragoon the inspector into paying for the needed repairs.
As I have written elsewhere on this site, I think that refunding inspection fees every time a client experiences a bad result is a very bad habit to develop. I told the inspector that not only should he not be ratifying this unreasonable client’s delusional notions of culpability but that neither should the real estate agent. So he told the agent that he was not going to pay because he was not responsible and that furthermore, she should not be paying anything either.
But this yenta was relentless. Multiple email correspondence to both the real estate agent and the inspector with ccs to attorneys. The real estate agent - who just wanted the whole thing to go away - was putting none-too-subtle pressure on the inspector to pay for part of the repair - to split it with her - or at least refund the inspection fee. Never mind that a. detection of gas leaks is not part of a home inspection and b. neither the inspector nor the real estate agent smelled gas at any point in the two-plus hours it took to conduct the inspection. Notwithstanding that, the real estate agent ended up paying part of the repair bill. But the inspector continued to stonewall.
Finally, the client sent the inspector an ultimatum that threatened legal action lest he fail to acquiesce to her preposterous demand.
So, I finally had to explain to her that the inspector would not be paying for her repairs for the very compelling reason that he was not responsible for their provenance; that, under those circumstances, her threat of legal action had no cognizable foundation; and that, if she persisted in pursuing that spectacularly foolish strategy, she would most assuredly ultimately wish that she had not. I call it the “Dirty Harry letter.”
Monday, March 14, 2011
The Six Claim Categories Are All Defensible
Rare is the Law and Disorder Seminar that does not have a few - and often several - casualties of war among the attending home inspectors - the multi-front war between them, their unreasonable and unrealistic clients, their referring real estate agents and, all too frequently, their insurance companies. They all seem to think that it is the inspector’s responsibility to “make things right”, even if he has no culpability whatsoever, which, in my experience, he almost never does. Here’s why.
Almost every claim that is brought against a home inspector will fall into one of the following six categories.
1. A claim for something that cannot possibly be determined by a home inspection: Boundaries, Title, Encumbrances and the like.
2. A claim for something that is outside the operative Standard of Practice: mold, underground tanks and the like.
3. A claim for something that was concealed at the time of the inspection: by furniture, carpeting, furniture, or finished work.
4. A claim for something that was disclaimed in the inspection report due to inaccessibility: roof covered by ice and snow, for example.
5. A claim for something that was discovered by the inspector and reported by him. Really!
6. A claim for something that was operating/functional at the time of the inspection but ceases to be so some time after the inspection.
And what those six categories of claims have in common is this: they are all eminently defensible. The problem is that clients and not infrequently their real estate agents, as well, often regard that as a mere technicality that should not prevent the home inspector from paying to have their underground storage tanks removed, their worn-out heat pumps replaced, or their backed-up septic tanks unclogged.
And, of course, it is one thing for clients and real estate agents to think that way, quite another for an insurance company to do so. Yet, that is the tale I hear time and time again from inspectors who come to the Law and Disorder seminar. Companies continue to pay bogus claims because it is “cheaper” than defending them. You don’t have to be Buckminster Fuller to conclude that that is a business model that is doomed to failure.
Yet that is the bizarro world that home inspectors inhabit.
Almost every claim that is brought against a home inspector will fall into one of the following six categories.
1. A claim for something that cannot possibly be determined by a home inspection: Boundaries, Title, Encumbrances and the like.
2. A claim for something that is outside the operative Standard of Practice: mold, underground tanks and the like.
3. A claim for something that was concealed at the time of the inspection: by furniture, carpeting, furniture, or finished work.
4. A claim for something that was disclaimed in the inspection report due to inaccessibility: roof covered by ice and snow, for example.
5. A claim for something that was discovered by the inspector and reported by him. Really!
6. A claim for something that was operating/functional at the time of the inspection but ceases to be so some time after the inspection.
And what those six categories of claims have in common is this: they are all eminently defensible. The problem is that clients and not infrequently their real estate agents, as well, often regard that as a mere technicality that should not prevent the home inspector from paying to have their underground storage tanks removed, their worn-out heat pumps replaced, or their backed-up septic tanks unclogged.
And, of course, it is one thing for clients and real estate agents to think that way, quite another for an insurance company to do so. Yet, that is the tale I hear time and time again from inspectors who come to the Law and Disorder seminar. Companies continue to pay bogus claims because it is “cheaper” than defending them. You don’t have to be Buckminster Fuller to conclude that that is a business model that is doomed to failure.
Yet that is the bizarro world that home inspectors inhabit.
Friday, March 11, 2011
The Five Stages of Claim Grief: Denial, Anger, Bargaining, Depression, Acceptance
A few weeks ago, I had a conversation with a home inspector in Connecticut. The inspector was trying to neutralize a claim by a former client over asbestos contamination issues with a property that he had inspected some months previous.
Now, as a general matter, the determination of environmental hazards and toxins is some distance outside of extant home inspection standards of practice (“SOP”) and Connecticut, which has its own state home inspection SOP, is no exception. Unfortunately, Connecticut is no exception only because the Connecticut Department of Consumer Protection issued a letter clarifying the fact that notwithstanding the fact that the law, itself, states that inspectors are required to inspect for and report asbestos, in reality they do not have to. Thus, as elsewhere, Nutmeggers are in the very best of hands.
In the event, the inspector did in fact observe, photograph and report asbestos in this ancient dwelling even though he did not have to and, in addition, opined that this dwelling, having been constructed in asbestos’s salad days, very likely had even more asbestos than he was able to observe in a limited, non-invasive, visual inspection and that his client should, thus, seek a further, more thorough determination of the presence of this lethal contaminant by another professional possessing the requisite skill.
Most of this website's readers should be able to guess how this movie ends.
Despite the inspector’s having advised her that the home contained asbestos, advised her that it very likely had even more asbestos than even the inspector was able to determine - even though he did not even have to - and advised her in the strongest possible terms to have a more thorough investigation of this potential health and environmental hazard by a skilled professional, she not only ignored that sage advice, she didn’t even read the inspector’s report. Ever.
Now she wants the inspector to pay for remediation. So the inspector has been going back and forth with her trying to explain all the reasons that he’s not responsible and making no headway whatsoever. So, one of his colleagues, a Law and Disorder Seminar alumnus, referred him to me.
I told him that, in my experience, these home inspection claims never have any validity and the reasons why that is universally the case. He wanted to know what it is that I do. I told him that most folks who make claims against home inspectors go through a version of the Five Stages of Grief: Denial, Anger, Bargaining, Depression and, finally, Acceptance.
First, they can’t believe this calamity is happening to them. Then, after some contractor throws the home inspector under the bus, they’re angry at the home inspector for not making them read the inspection report. Then, they begin to bargain. With the Contractor. Who tells them that the home inspector is responsible for their problems, probably has insurance and should be the one to pay to resolve the issue and, if they can get the real estate agent to pay for some or all of it, well, it doesn’t get any better than that. Depression when they discover that the inspector is not going to pay for something he didn’t cause.
Then, I told him, I get them to Acceptance.
Now, as a general matter, the determination of environmental hazards and toxins is some distance outside of extant home inspection standards of practice (“SOP”) and Connecticut, which has its own state home inspection SOP, is no exception. Unfortunately, Connecticut is no exception only because the Connecticut Department of Consumer Protection issued a letter clarifying the fact that notwithstanding the fact that the law, itself, states that inspectors are required to inspect for and report asbestos, in reality they do not have to. Thus, as elsewhere, Nutmeggers are in the very best of hands.
In the event, the inspector did in fact observe, photograph and report asbestos in this ancient dwelling even though he did not have to and, in addition, opined that this dwelling, having been constructed in asbestos’s salad days, very likely had even more asbestos than he was able to observe in a limited, non-invasive, visual inspection and that his client should, thus, seek a further, more thorough determination of the presence of this lethal contaminant by another professional possessing the requisite skill.
Most of this website's readers should be able to guess how this movie ends.
Despite the inspector’s having advised her that the home contained asbestos, advised her that it very likely had even more asbestos than even the inspector was able to determine - even though he did not even have to - and advised her in the strongest possible terms to have a more thorough investigation of this potential health and environmental hazard by a skilled professional, she not only ignored that sage advice, she didn’t even read the inspector’s report. Ever.
Now she wants the inspector to pay for remediation. So the inspector has been going back and forth with her trying to explain all the reasons that he’s not responsible and making no headway whatsoever. So, one of his colleagues, a Law and Disorder Seminar alumnus, referred him to me.
I told him that, in my experience, these home inspection claims never have any validity and the reasons why that is universally the case. He wanted to know what it is that I do. I told him that most folks who make claims against home inspectors go through a version of the Five Stages of Grief: Denial, Anger, Bargaining, Depression and, finally, Acceptance.
First, they can’t believe this calamity is happening to them. Then, after some contractor throws the home inspector under the bus, they’re angry at the home inspector for not making them read the inspection report. Then, they begin to bargain. With the Contractor. Who tells them that the home inspector is responsible for their problems, probably has insurance and should be the one to pay to resolve the issue and, if they can get the real estate agent to pay for some or all of it, well, it doesn’t get any better than that. Depression when they discover that the inspector is not going to pay for something he didn’t cause.
Then, I told him, I get them to Acceptance.
Monday, March 7, 2011
Arbitrators Don't Need to Know the Business
A question that comes up fairly frequently at the Law and Disorder Seminars when I am extolling the virtues of requiring disputes to be settled in Arbitration is whether or not there should be a requirement that the arbitrator be “familiar with the home inspection business.” And many home inspectors have such requirements in the Arbitration Clauses of their Agreements.
As I have written elsewhere on this site, home inspectors have a very dim view of the American legal system and do not expect to get a fair shake. So some of them, in an effort to level the pitch or stack the deck - choose your own metaphor - have inserted this additional requirement into their Agreements.
What I tell them is this: when I was in the Army, forty-some years ago - yeah, I know, I don’t look that old - the Uniform Code of Military Justice had recently been revised to give Enlisted Men who were facing Courts-Martial the right to have one Enlisted Man on the Court-Martial panel. The change was widely hailed as a victory for Enlisted Men [and Women]. The reality for those exercising this “right” was that the Enlisted Man selected to fulfill it was always some cranky senior NCO with a chest festooned with decorations and a lengthy series of service stripes on his sleeve.
It didn’t take long for Enlisted Men to realize that they were much better off with a baby-faced Lieutenant who would actually listen to the evidence before making up his mind.
If you have ever had occasion to read any of the many home inspection message boards extant on the web, you will not fail to notice that there is no shortage of testosterone or pride in their personal work-product among regular contributors to those boards. Would you want any of those folks - the moral equivalent of the cranky senior NCO - acting as your arbitrator? I didn’t think so. That’s also the demographic that populates State Home Inspection Licensing Boards, as well. And you most definitely would not want any of those folks as your arbitrator.
The truth is that in every Court House in every County in this country on every day of the week, juries of laymen are making decisions on matters far more complicated and serious than a residential home inspection: medical malpractice cases, murder cases, securities violations, anti-trust - you name it.
How do they do that? By listening to the proffered evidence presented by the opposing advocates, making factual determinations based on their common sense and then applying the law to those facts.
Your non-home inspector arbitrator will be able to do the same thing and he will not, at the end of the day, be congratulating himself for being a much more thorough inspector than you are.
As I have written elsewhere on this site, home inspectors have a very dim view of the American legal system and do not expect to get a fair shake. So some of them, in an effort to level the pitch or stack the deck - choose your own metaphor - have inserted this additional requirement into their Agreements.
What I tell them is this: when I was in the Army, forty-some years ago - yeah, I know, I don’t look that old - the Uniform Code of Military Justice had recently been revised to give Enlisted Men who were facing Courts-Martial the right to have one Enlisted Man on the Court-Martial panel. The change was widely hailed as a victory for Enlisted Men [and Women]. The reality for those exercising this “right” was that the Enlisted Man selected to fulfill it was always some cranky senior NCO with a chest festooned with decorations and a lengthy series of service stripes on his sleeve.
It didn’t take long for Enlisted Men to realize that they were much better off with a baby-faced Lieutenant who would actually listen to the evidence before making up his mind.
If you have ever had occasion to read any of the many home inspection message boards extant on the web, you will not fail to notice that there is no shortage of testosterone or pride in their personal work-product among regular contributors to those boards. Would you want any of those folks - the moral equivalent of the cranky senior NCO - acting as your arbitrator? I didn’t think so. That’s also the demographic that populates State Home Inspection Licensing Boards, as well. And you most definitely would not want any of those folks as your arbitrator.
The truth is that in every Court House in every County in this country on every day of the week, juries of laymen are making decisions on matters far more complicated and serious than a residential home inspection: medical malpractice cases, murder cases, securities violations, anti-trust - you name it.
How do they do that? By listening to the proffered evidence presented by the opposing advocates, making factual determinations based on their common sense and then applying the law to those facts.
Your non-home inspector arbitrator will be able to do the same thing and he will not, at the end of the day, be congratulating himself for being a much more thorough inspector than you are.
Thursday, March 3, 2011
Strengthen Pre-Inspection Agreements to Avoid Lawsuits
One of the techniques that I stress in the Law and Disorder Seminar for reducing one's potential for being successfully sued is for home inspectors to strengthen their Pre-Inspection Agreements with clauses that narrow a claimant’s ability to bring a claim by designating contractually the exact circumstances under which the inspector will be amenable to suit.
One of those circumstances is the venue wherein a claim may be brought. As a home inspector, or any business performing services pursuant to a contract, you never want to be in any state or federal court. And for a myriad of reasons.
For one thing, in the context of a residential real estate inspection, any lawsuit is bound to involve multiple parties, a circumstance that is guaranteed to increase the cost and decrease the likelihood of resolution. For another, the cost for the plaintiff to get into court is low. Filing fees for plaintiffs are pretty modest. The cost to you to get out of court, on the other hand, will be quite high. Not only will you have the plaintiff to contend with but your fellow defendants, as well. And while the plaintiff may be very agreeable to letting you out of the suit, your fellow defendants, who will have filed their own cross-claims against you, may not be.
Most home inspectors of my acquaintance have already figured this out and, so, have clauses in their Pre-Inspection Agreements that mandate that all disputes arising from the inspection must be brought in Arbitration. If your client’s attorney has read his client’s Pre-Inspection Agreement, he knows that he will not be able to join you in with the seller, the seller’s agent and broker and his client’s agent and broker. He’ll have to prosecute the case in two separate venues, which he will be loathe to do. Especially if he has heard from me the manifold reasons why you have no liability.
Problems arise, however, when the attorney does not know that there is an Arbitration Clause in the Pre-Inspection Agreement or as is often the case that there even is a Pre-Inspection Agreement and goes ahead and includes the home inspector as a named defendant. In those cases, the more reasonable attorneys will generally - though not always - agree to voluntarily dismiss the claim against the home inspector upon hearing from me a compelling litany of reasons why that would be in his and his client’s best interests.
Another problem that has affected home inspectors adversely is that the Arbitration entity that their Pre-Inspection Agreements mandate be used may have gone out of business, thereby invalidating their Arbitration Clauses altogether, and putting the home inspector back into the mix with all the other defendants. And from that predicament, no one can extract the inspector.
To be on the safe side always name the American Arbitration Association as your required arbitrator. Its website is http://www.adr.org.
One of those circumstances is the venue wherein a claim may be brought. As a home inspector, or any business performing services pursuant to a contract, you never want to be in any state or federal court. And for a myriad of reasons.
For one thing, in the context of a residential real estate inspection, any lawsuit is bound to involve multiple parties, a circumstance that is guaranteed to increase the cost and decrease the likelihood of resolution. For another, the cost for the plaintiff to get into court is low. Filing fees for plaintiffs are pretty modest. The cost to you to get out of court, on the other hand, will be quite high. Not only will you have the plaintiff to contend with but your fellow defendants, as well. And while the plaintiff may be very agreeable to letting you out of the suit, your fellow defendants, who will have filed their own cross-claims against you, may not be.
Most home inspectors of my acquaintance have already figured this out and, so, have clauses in their Pre-Inspection Agreements that mandate that all disputes arising from the inspection must be brought in Arbitration. If your client’s attorney has read his client’s Pre-Inspection Agreement, he knows that he will not be able to join you in with the seller, the seller’s agent and broker and his client’s agent and broker. He’ll have to prosecute the case in two separate venues, which he will be loathe to do. Especially if he has heard from me the manifold reasons why you have no liability.
Problems arise, however, when the attorney does not know that there is an Arbitration Clause in the Pre-Inspection Agreement or as is often the case that there even is a Pre-Inspection Agreement and goes ahead and includes the home inspector as a named defendant. In those cases, the more reasonable attorneys will generally - though not always - agree to voluntarily dismiss the claim against the home inspector upon hearing from me a compelling litany of reasons why that would be in his and his client’s best interests.
Another problem that has affected home inspectors adversely is that the Arbitration entity that their Pre-Inspection Agreements mandate be used may have gone out of business, thereby invalidating their Arbitration Clauses altogether, and putting the home inspector back into the mix with all the other defendants. And from that predicament, no one can extract the inspector.
To be on the safe side always name the American Arbitration Association as your required arbitrator. Its website is http://www.adr.org.
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