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.”
Showing posts with label claim stories. Show all posts
Showing posts with label claim stories. Show all posts
Thursday, March 17, 2011
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.
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.
Monday, February 28, 2011
When the Report Speaks for Itself
Since this blog launched in early December, I have received a steady stream of correspondence from home inspectors asking my opinion on a wide variety of topics related to home inspections. Frequently, these inquiries inspire a blog article. So keep them coming.
A while ago, I got an interesting question from a reader about an inspection conducted for a young couple. The mother of one of them was financing the contemplated home purchase and was a looming presence during the home inspection and the inspector had heard her opine that she didn’t like the house because it was “too small.” The couple was represented by a buyer’s agent and the inspector knew both the buyer’s agent and the seller’s agent professionally.
Afterwards, the inspector discussed the findings in detail with the couple who seemed to find the discovered deficiencies manageable and were allowing how they would go about rectifying them. That was on Friday.
The following Monday, the inspector got a call from the listing broker who was considerably put out because the buyer’s agent had just informed him that the couple was backing out of the deal, according to the buyer’s agent, because they were claiming that the inspection had uncovered defects that could lead to a catastrophic fire. The inspector then told the listing broker that there was nothing in the inspection report that would remotely imply anything of the kind. To make the listing broker’s confusion even further pronounced, the sellers had agreed to correct several of the discovered deficiencies and drop the price further.
Well, you don’t have to be Ellery Queen to ascertain why these buyers were defaulting on their agreement. And so the inspector told the listing broker about the mother-financier’s dislike of the house.
And the questions that the inspector had were: did this disclosure breach a professional confidence and is there a better way to handle such a situation in the future?
The answers are: “Yes” and “Yes”.
If the sellers were going to be repairing certain uncovered defects, as well as reducing the price, it is a mortal certainty that the listing broker already had a copy of the inspector’s report. They were not taking those measures in a vacuum.
So there was likely no breach of confidence in telling the listing broker that the catastrophic fire potentiality was, at best, fanciful. You can’t betray a confidence that doesn’t exist. So no harm, no foul there.
The disclosure of the mother-financier’s audible musings of displeasure as a putative extraneous cause of the deal-breaking, however, was, methinks, a bridge too far and could engender a torrent of legal unpleasantness for the inspector’s clients should the sellers be so inclined, including a suit in equity for specific performance. At a minimum, the buyers could forfeit their deposit. Not that I have any sympathy for them. The time to discover a property’s dimensional insufficiencies is well before making a purchase offer.
If a similar situation presents itself in the future, a prudent inspector should first ascertain whether the opposing party or his representative has already seen a copy of the inspection report and from whom. Then simply say “The report speaks for itself.”
A while ago, I got an interesting question from a reader about an inspection conducted for a young couple. The mother of one of them was financing the contemplated home purchase and was a looming presence during the home inspection and the inspector had heard her opine that she didn’t like the house because it was “too small.” The couple was represented by a buyer’s agent and the inspector knew both the buyer’s agent and the seller’s agent professionally.
Afterwards, the inspector discussed the findings in detail with the couple who seemed to find the discovered deficiencies manageable and were allowing how they would go about rectifying them. That was on Friday.
The following Monday, the inspector got a call from the listing broker who was considerably put out because the buyer’s agent had just informed him that the couple was backing out of the deal, according to the buyer’s agent, because they were claiming that the inspection had uncovered defects that could lead to a catastrophic fire. The inspector then told the listing broker that there was nothing in the inspection report that would remotely imply anything of the kind. To make the listing broker’s confusion even further pronounced, the sellers had agreed to correct several of the discovered deficiencies and drop the price further.
Well, you don’t have to be Ellery Queen to ascertain why these buyers were defaulting on their agreement. And so the inspector told the listing broker about the mother-financier’s dislike of the house.
And the questions that the inspector had were: did this disclosure breach a professional confidence and is there a better way to handle such a situation in the future?
The answers are: “Yes” and “Yes”.
If the sellers were going to be repairing certain uncovered defects, as well as reducing the price, it is a mortal certainty that the listing broker already had a copy of the inspector’s report. They were not taking those measures in a vacuum.
So there was likely no breach of confidence in telling the listing broker that the catastrophic fire potentiality was, at best, fanciful. You can’t betray a confidence that doesn’t exist. So no harm, no foul there.
The disclosure of the mother-financier’s audible musings of displeasure as a putative extraneous cause of the deal-breaking, however, was, methinks, a bridge too far and could engender a torrent of legal unpleasantness for the inspector’s clients should the sellers be so inclined, including a suit in equity for specific performance. At a minimum, the buyers could forfeit their deposit. Not that I have any sympathy for them. The time to discover a property’s dimensional insufficiencies is well before making a purchase offer.
If a similar situation presents itself in the future, a prudent inspector should first ascertain whether the opposing party or his representative has already seen a copy of the inspection report and from whom. Then simply say “The report speaks for itself.”
Monday, February 21, 2011
The Costs of Defending a Lawsuit (Part 2 of 2)
One of the more unpleasant experiences in life is answering your door and finding the county sheriff or one of his deputies on your doorstep asking if you are one of the defendants named in the copy of the Complaint that he is holding, a Complaint that has been filed by one of your home inspection clients who is claiming that you failed to uncover certain defects during your inspection and that lapse on your part is now costing him a lot of money to rectify.
This is especially disturbing when it is the first inkling that you have that this particular client had any beef with you whatsoever. This is, perhaps, the only time when no news is not good news. As I have written elsewhere on this website, while it is still possible for me to persuade the plaintiff’s attorney to voluntarily dismiss you from the suit, it is less likely when there has been a substantial calorie-burn on the attorney’s part. And it goes without saying, I trust, that it is impossible to do so once your insurance company has appointed defense counsel because their financial incentives are contra.
If voluntarily dismissal is thus foreclosed, you will soon discover that litigation is one of the most expensive endeavors known to exist. The problem with litigation in the context of a residential real estate transaction is that the aggrieved home buyer is operating in a target-rich environment. In the buyer’s mind, multiple parties could possibly be responsible for his troubles: the seller [in my experience, generally the most culpable because they so often do not disclose critical issues], the seller’s agent and broker, the buyer’s agent and broker and the home inspector and, if the inspector operates as a corporation, the inspector’s corporation.
With that many defendants, the Complaint itself is a megillah - multiple parties, multiple counts, hundreds of allegations. It can easily cost thousands of dollars just to respond to the Complaint. Then you have to respond to all the cross-claims that will surely be brought against you by other defendants.
Suffice to say that even the most routine matter is preposterously expensive. The more parties, the more expensive because you have to respond to all of their filings; serve them document discovery requests and respond to theirs; take depositions of the parties and their witnesses; defend your own deposition; and attend scheduling, settlement and pre-trial conferences. And you are charged for everything: travel, filing fees, copies, postage. All of that before you ever get near a courtroom.
Any wonder why insurance companies are so willing to throw you under the bus? And while that is often a win-win situation for them, it is always a lose-lose proposition for you.
They get rid of the case within your deductible or a multiple or two above it which they will recoup via surcharges on your subsequent renewals. You, on the other hand, a. are out your deductible [at a minimum]; b. have a scarlet letter “C” [for claim] on your chest; and c. will be paying hefty surcharges for a few years to a company that you are stuck with because their mishandling of your claim has made you persona non grata to every other insurer on the planet.
The trick is to get rid of the claim before it ever blossoms into a lawsuit, something I have done over 150 times in the last four-and-a-half years, including several cases where the first notice of claim was a lawsuit.
Fortunately, for home inspectors, there is a new insurer that is completely on board with my approach to responding to these ridiculous claims. For a quote visit: http://inspectors.locktonaffinity.com or call 800-803-9552
This is especially disturbing when it is the first inkling that you have that this particular client had any beef with you whatsoever. This is, perhaps, the only time when no news is not good news. As I have written elsewhere on this website, while it is still possible for me to persuade the plaintiff’s attorney to voluntarily dismiss you from the suit, it is less likely when there has been a substantial calorie-burn on the attorney’s part. And it goes without saying, I trust, that it is impossible to do so once your insurance company has appointed defense counsel because their financial incentives are contra.
If voluntarily dismissal is thus foreclosed, you will soon discover that litigation is one of the most expensive endeavors known to exist. The problem with litigation in the context of a residential real estate transaction is that the aggrieved home buyer is operating in a target-rich environment. In the buyer’s mind, multiple parties could possibly be responsible for his troubles: the seller [in my experience, generally the most culpable because they so often do not disclose critical issues], the seller’s agent and broker, the buyer’s agent and broker and the home inspector and, if the inspector operates as a corporation, the inspector’s corporation.
With that many defendants, the Complaint itself is a megillah - multiple parties, multiple counts, hundreds of allegations. It can easily cost thousands of dollars just to respond to the Complaint. Then you have to respond to all the cross-claims that will surely be brought against you by other defendants.
Suffice to say that even the most routine matter is preposterously expensive. The more parties, the more expensive because you have to respond to all of their filings; serve them document discovery requests and respond to theirs; take depositions of the parties and their witnesses; defend your own deposition; and attend scheduling, settlement and pre-trial conferences. And you are charged for everything: travel, filing fees, copies, postage. All of that before you ever get near a courtroom.
Any wonder why insurance companies are so willing to throw you under the bus? And while that is often a win-win situation for them, it is always a lose-lose proposition for you.
They get rid of the case within your deductible or a multiple or two above it which they will recoup via surcharges on your subsequent renewals. You, on the other hand, a. are out your deductible [at a minimum]; b. have a scarlet letter “C” [for claim] on your chest; and c. will be paying hefty surcharges for a few years to a company that you are stuck with because their mishandling of your claim has made you persona non grata to every other insurer on the planet.
The trick is to get rid of the claim before it ever blossoms into a lawsuit, something I have done over 150 times in the last four-and-a-half years, including several cases where the first notice of claim was a lawsuit.
Fortunately, for home inspectors, there is a new insurer that is completely on board with my approach to responding to these ridiculous claims. For a quote visit: http://inspectors.locktonaffinity.com or call 800-803-9552
Friday, February 18, 2011
The Costs of Defending a Lawsuit (Part 1 of 2)
As a frequent contributor to online inspection forums, I regularly get private email from professional home inspectors seeking my opinion on legal matters. Recently a reader wrote:
"Joseph, So, absent an E&O policy, inspectors are exposed to the realities of defending a claim, which in 98% of the cases you have seen, are without merit. What do you estimate the cost to the inspector are to defend themselves, considering court costs, attorney, depositions, etc?"
Fortunately, not every claim involves a lawsuit. Most claims begin life as a complaint from a disappointed client. And most experienced business persons have had to deal with customer complaints at one time or another in their careers, and have no problem whatsoever rectifying a legitimate complaint to the customer’s satisfaction.
The problem arises when the claim is not legitimate, a condition that obtains in 99% of all claims against home inspectors. You read that correctly. In four-and-a-half years, I have seen exactly 2 legitimate claims.
When a claim is not legitimate, it must be resisted. Politely. But firmly. Even when, as is often the case, “legal action” is threatened. Caving in to illegitimate claims is a terrible business model, especially in an industry that generates so many of them.
When “legal action” is threatened should you not knuckle under to your client’s preposterous demand, you may receive a demand letter from a local attorney or a summons from your local Small Claims Court. If the latter, you can generally get the claim dismissed due to lack of jurisdiction, as I discuss elsewhere on this site and if you’ve been following my advice regarding Arbitration Clauses.
If, instead, the "legal action" threat manifests itself via a demand letter from an attorney, say a prayer of thanksgiving. Why? Because the attorney is not emotionally involved in the case. He’s financially involved in the case. And the minute he learns from me that there’s no case; that there are multiple defenses to the claim; that his client has no damages; and that the defendant will vigorously defend the claim, that is generally more than enough disincentives to prompt him to advise his client to move on with his life. And they generally do.
Unfortunately, many claims begin life as a fully formed lawsuit and the first notice that an inspector gets of the claim is when the county sheriff knocks on his door and serves him with a lawsuit accusing him and a multitude of others of having harmed his former home inspection client.
That’s when the expenses begin. That discussion, next time.
"Joseph, So, absent an E&O policy, inspectors are exposed to the realities of defending a claim, which in 98% of the cases you have seen, are without merit. What do you estimate the cost to the inspector are to defend themselves, considering court costs, attorney, depositions, etc?"
Fortunately, not every claim involves a lawsuit. Most claims begin life as a complaint from a disappointed client. And most experienced business persons have had to deal with customer complaints at one time or another in their careers, and have no problem whatsoever rectifying a legitimate complaint to the customer’s satisfaction.
The problem arises when the claim is not legitimate, a condition that obtains in 99% of all claims against home inspectors. You read that correctly. In four-and-a-half years, I have seen exactly 2 legitimate claims.
When a claim is not legitimate, it must be resisted. Politely. But firmly. Even when, as is often the case, “legal action” is threatened. Caving in to illegitimate claims is a terrible business model, especially in an industry that generates so many of them.
When “legal action” is threatened should you not knuckle under to your client’s preposterous demand, you may receive a demand letter from a local attorney or a summons from your local Small Claims Court. If the latter, you can generally get the claim dismissed due to lack of jurisdiction, as I discuss elsewhere on this site and if you’ve been following my advice regarding Arbitration Clauses.
If, instead, the "legal action" threat manifests itself via a demand letter from an attorney, say a prayer of thanksgiving. Why? Because the attorney is not emotionally involved in the case. He’s financially involved in the case. And the minute he learns from me that there’s no case; that there are multiple defenses to the claim; that his client has no damages; and that the defendant will vigorously defend the claim, that is generally more than enough disincentives to prompt him to advise his client to move on with his life. And they generally do.
Unfortunately, many claims begin life as a fully formed lawsuit and the first notice that an inspector gets of the claim is when the county sheriff knocks on his door and serves him with a lawsuit accusing him and a multitude of others of having harmed his former home inspection client.
That’s when the expenses begin. That discussion, next time.
Monday, February 14, 2011
Thoughts on Thermal Imaging Devices and Visual Inspections
Joe - Could we get a legal view on the use of thermal imaging devices during home inspections. A number of guys are touting the relative blindness of those not using them in an effort to promote their new "x-ray vision."
“My opinion? As with any extra-sensory equipment, from electronic induction moisture meters to gas sensors, this technology is subject to many variables such as quality, on-site conditions and, last but not least, the ability of the inspector to accurately interpret the data. Further, I know of no precedent that requires a seller to act on these findings by allowing invasive follow up deconstruction to verify inside walls what was inferred by the inspector's report.
“Lastly, what added dimension of legal liability does the use of these devices open up to the home inspector?”
Many home inspectors have added thermal imaging to their menu of services in recent years in an effort to increase revenue in the wake of an inspection market devastated by the implosion of the underlying residential real estate market. This development has been fueled by the precipitous decline in the price of thermal imaging cameras, a circumstance that has, itself, engendered a technological arms race among home inspectors that has tended to undermine the advantage and market hegemony of the early adopters and will, almost certainly, through increased supply and competition, erode the ability of practitioners to maintain pricing discipline.
In the Law and Disorder Seminar, one of the skills that I encourage home inspectors to acquire is the ability to manage the expectations of their clients as to what they can reasonably expect to learn about a property from a limited, non-invasive, visual inspection. Most home buyers have absolutely no idea what a home inspection entails and to the extent that they do have an idea, it is generally unrealistic. I sometimes think that some of them believe that you are not only going to be able to detect everything that is currently wrong with the property but also everything that has ever been wrong with it and everything that ever will be wrong with it.
And that is one problem that I anticipate that the widespread adoption of thermal imaging by home inspectors is going to exacerbate. People’s already unrealistic expectations will become more so, especially if they have read some of the wildly exaggerated claims made about thermal imaging on many inspectors’ websites.
I do not believe that thermal imaging, in and of itself, will increase an inspector’s liability to a buyer, however. It is still, after all, a limited, non-invasive, visual inspection that is being conducted. If the thermal imaging reveals a reportable issue, take a photo of it and report it.
I can, however, foresee potential issues with a seller if an inaccurate interpretation of the data were to induce a buyer to abrogate an Agreement of Sale. Or if the seller does do verification deconstruction on the basis of a false positive.
The real problem that I foresee with a widespread adoption of thermal imaging by home inspectors is mission creep. Is thermal imaging going to become the new normal in home inspections? And are you going to be able to charge more for it, if everyone is doing it?
“My opinion? As with any extra-sensory equipment, from electronic induction moisture meters to gas sensors, this technology is subject to many variables such as quality, on-site conditions and, last but not least, the ability of the inspector to accurately interpret the data. Further, I know of no precedent that requires a seller to act on these findings by allowing invasive follow up deconstruction to verify inside walls what was inferred by the inspector's report.
“Lastly, what added dimension of legal liability does the use of these devices open up to the home inspector?”
Many home inspectors have added thermal imaging to their menu of services in recent years in an effort to increase revenue in the wake of an inspection market devastated by the implosion of the underlying residential real estate market. This development has been fueled by the precipitous decline in the price of thermal imaging cameras, a circumstance that has, itself, engendered a technological arms race among home inspectors that has tended to undermine the advantage and market hegemony of the early adopters and will, almost certainly, through increased supply and competition, erode the ability of practitioners to maintain pricing discipline.
In the Law and Disorder Seminar, one of the skills that I encourage home inspectors to acquire is the ability to manage the expectations of their clients as to what they can reasonably expect to learn about a property from a limited, non-invasive, visual inspection. Most home buyers have absolutely no idea what a home inspection entails and to the extent that they do have an idea, it is generally unrealistic. I sometimes think that some of them believe that you are not only going to be able to detect everything that is currently wrong with the property but also everything that has ever been wrong with it and everything that ever will be wrong with it.
And that is one problem that I anticipate that the widespread adoption of thermal imaging by home inspectors is going to exacerbate. People’s already unrealistic expectations will become more so, especially if they have read some of the wildly exaggerated claims made about thermal imaging on many inspectors’ websites.
I do not believe that thermal imaging, in and of itself, will increase an inspector’s liability to a buyer, however. It is still, after all, a limited, non-invasive, visual inspection that is being conducted. If the thermal imaging reveals a reportable issue, take a photo of it and report it.
I can, however, foresee potential issues with a seller if an inaccurate interpretation of the data were to induce a buyer to abrogate an Agreement of Sale. Or if the seller does do verification deconstruction on the basis of a false positive.
The real problem that I foresee with a widespread adoption of thermal imaging by home inspectors is mission creep. Is thermal imaging going to become the new normal in home inspections? And are you going to be able to charge more for it, if everyone is doing it?
Thursday, February 10, 2011
Using a Written Agreement to Dismiss Cases in Small Claims Court
If you operate a business in the United States of America, sooner or later you are going to end up in Small Claims Court, either as a plaintiff trying to collect on a delinquent account or as a defendant defending against the real and imagined grievances of your customers. So it is important to understand how Small Claims Courts operate.
Small Claims Courts exist to alleviate the logjam of civil suits that would otherwise be adding to the existing avalanche of cases that already clog our courts by removing those cases where less than, say, $10,000 is at stake. Most of the litigants in these forums are not represented by attorneys, though by procedural rules, corporations must be represented by an attorney. Since many home inspectors operate their businesses through corporations, they should be aware of this requirement, lest they be defaulted for failure to defend.
Most of these courts also require that litigants try to come to some settlement on their own by submitting to a mandatory mediation process. As discussed elsewhere in this blog, home inspector defendants should be very wary of mediation because a. their clients seldom have a valid claim and b. if they have been paying any attention whatsoever to me, they have a signed pre-inspection agreement with the plaintiff that requires that any dispute arising from the inspection be brought in arbitration, thus rendering Small Claims Court - or any court, for that matter - an inappropriate forum for this dispute.
Once the mediation charade has concluded, the litigants will then appear before the judge to present and argue their cases. Your demeanor at this time should be that of the totally poised professional that you are.
When the judge takes the bench, he generally has no idea what the case is about and, since Small Claims Court Complaints are generally light on particulars, reading the Complaint is unlikely to enlighten him in any meaningful way.
He should then ask the plaintiff if he has an Opening Statement. An Opening Statement is designed to give the finder of fact - in this case, the judge - an idea of what the dispute is about.
Your plaintiff might say something like this: “Your honor, I hired Mr. Home Inspector to inspect the house that I was buying and two months after I moved into the house, the heat pump stopped working. I called a heating contractor and he told me that the unit needed to be replaced at a cost of $3500 and that this is something that Mr. Home Inspector should have discovered when he inspected the house. So, I’m suing to recover the cost of the new heat pump.”
Now, hearing this nonsense will very likely set your teeth on edge but this is when you need to summon every self-control mechanism in your arsenal of character traits. Let your client say his piece because it will likely be the last thing that he gets to say on this day and because you are going to be walking out of there very shortly.
The judge will then turn to you and say “Mr. Home Inspector, do you have an Opening Statement?”
Here’s what you say:
“I do, Your Honor. And while I obviously dispute Mr. Client’s version of events, I wish to make a preliminary motion to dismiss Mr. Client’s Complaint because prior to performing my services for Mr. Client, he and I agreed in writing that any dispute arising from the inspection had to be submitted to arbitration by the American Arbitration Association. Therefore, I move the Court to dismiss plaintiff’s Complaint due to lack of jurisdiction.”
The judge will then ask if you have a copy of the Agreement with you - which, I hope it goes without saying, you had better have - and ask to see it. Since you will have resourcefully placed a Post-it with an arrow pointing to the Arbitration Clause and another with an arrow pointing to the plaintiff’s signature on the Agreement, the judge should then ask the plaintiff, if that is his signature on the agreement. When he sheepishly admits that it is, the next thing you should hear is the judge dismissing the case and telling the plaintiff that he has to bring this claim in arbitration.
Small Claims Courts exist to alleviate the logjam of civil suits that would otherwise be adding to the existing avalanche of cases that already clog our courts by removing those cases where less than, say, $10,000 is at stake. Most of the litigants in these forums are not represented by attorneys, though by procedural rules, corporations must be represented by an attorney. Since many home inspectors operate their businesses through corporations, they should be aware of this requirement, lest they be defaulted for failure to defend.
Most of these courts also require that litigants try to come to some settlement on their own by submitting to a mandatory mediation process. As discussed elsewhere in this blog, home inspector defendants should be very wary of mediation because a. their clients seldom have a valid claim and b. if they have been paying any attention whatsoever to me, they have a signed pre-inspection agreement with the plaintiff that requires that any dispute arising from the inspection be brought in arbitration, thus rendering Small Claims Court - or any court, for that matter - an inappropriate forum for this dispute.
Once the mediation charade has concluded, the litigants will then appear before the judge to present and argue their cases. Your demeanor at this time should be that of the totally poised professional that you are.
When the judge takes the bench, he generally has no idea what the case is about and, since Small Claims Court Complaints are generally light on particulars, reading the Complaint is unlikely to enlighten him in any meaningful way.
He should then ask the plaintiff if he has an Opening Statement. An Opening Statement is designed to give the finder of fact - in this case, the judge - an idea of what the dispute is about.
Your plaintiff might say something like this: “Your honor, I hired Mr. Home Inspector to inspect the house that I was buying and two months after I moved into the house, the heat pump stopped working. I called a heating contractor and he told me that the unit needed to be replaced at a cost of $3500 and that this is something that Mr. Home Inspector should have discovered when he inspected the house. So, I’m suing to recover the cost of the new heat pump.”
Now, hearing this nonsense will very likely set your teeth on edge but this is when you need to summon every self-control mechanism in your arsenal of character traits. Let your client say his piece because it will likely be the last thing that he gets to say on this day and because you are going to be walking out of there very shortly.
The judge will then turn to you and say “Mr. Home Inspector, do you have an Opening Statement?”
Here’s what you say:
“I do, Your Honor. And while I obviously dispute Mr. Client’s version of events, I wish to make a preliminary motion to dismiss Mr. Client’s Complaint because prior to performing my services for Mr. Client, he and I agreed in writing that any dispute arising from the inspection had to be submitted to arbitration by the American Arbitration Association. Therefore, I move the Court to dismiss plaintiff’s Complaint due to lack of jurisdiction.”
The judge will then ask if you have a copy of the Agreement with you - which, I hope it goes without saying, you had better have - and ask to see it. Since you will have resourcefully placed a Post-it with an arrow pointing to the Arbitration Clause and another with an arrow pointing to the plaintiff’s signature on the Agreement, the judge should then ask the plaintiff, if that is his signature on the agreement. When he sheepishly admits that it is, the next thing you should hear is the judge dismissing the case and telling the plaintiff that he has to bring this claim in arbitration.
Monday, February 7, 2011
Please Mr. Home Inspector, Will You Pay For My Renovation (Part 3 of 3)
After getting an indefinite extension of time to respond to the Complaint and, thus, eliminating any possibility of a default, I wrote to the inspector’s insurance company to timely advise it of the claim.
I enclosed a complete copy of the Complaint, a copy of my letter to the Plaintiffs’ attorney that delineated all the defenses to the Complaint together with a cover memorandum that explained that the attorney wanted time to discuss the matter with his clients and expressed my professional belief that the plaintiffs would voluntarily dismiss the inspector from the lawsuit.
I also suggested to the claims manager that the insurer refrain from appointing counsel for the time being to give the seed I had planted in the plaintiffs’ attorney’s mind time to germinate. In my experience, decisions by opposing counsel to do the right thing can take up to a month during which time you generally want to leave them alone - no sudden moves - with a gentle status inquiry every week or so.
Also, in my experience, they eventually do conclude that keeping defendants, who do not belong there, in the suit is a really terrible idea for the following reasons: one, you will not prevail against them and, two, their pesky habit of poking holes in your case against them often has the altogether annoying consequence of weakening your case against legitimate defendants.
Alas, in this case, the insurer did not take my suggestion and immediately appointed defense counsel. A year-and-a-half later, the inspector recently told me, the case is still unresolved. He did advise me, however, that the defense attorney was very grateful to have had all of the defenses laid out for her.
Therein lies the difference between the claim response techniques that I have pioneered and the approach followed by the legacy defense bar. My interest lies in getting rid of the case, usually before it ever blossoms into a suit. Their interest lies in keeping it going once it does.
I’ll be very surprised if the perseverance of these unmeritorious plaintiffs is not ultimately rewarded.
I enclosed a complete copy of the Complaint, a copy of my letter to the Plaintiffs’ attorney that delineated all the defenses to the Complaint together with a cover memorandum that explained that the attorney wanted time to discuss the matter with his clients and expressed my professional belief that the plaintiffs would voluntarily dismiss the inspector from the lawsuit.
I also suggested to the claims manager that the insurer refrain from appointing counsel for the time being to give the seed I had planted in the plaintiffs’ attorney’s mind time to germinate. In my experience, decisions by opposing counsel to do the right thing can take up to a month during which time you generally want to leave them alone - no sudden moves - with a gentle status inquiry every week or so.
Also, in my experience, they eventually do conclude that keeping defendants, who do not belong there, in the suit is a really terrible idea for the following reasons: one, you will not prevail against them and, two, their pesky habit of poking holes in your case against them often has the altogether annoying consequence of weakening your case against legitimate defendants.
Alas, in this case, the insurer did not take my suggestion and immediately appointed defense counsel. A year-and-a-half later, the inspector recently told me, the case is still unresolved. He did advise me, however, that the defense attorney was very grateful to have had all of the defenses laid out for her.
Therein lies the difference between the claim response techniques that I have pioneered and the approach followed by the legacy defense bar. My interest lies in getting rid of the case, usually before it ever blossoms into a suit. Their interest lies in keeping it going once it does.
I’ll be very surprised if the perseverance of these unmeritorious plaintiffs is not ultimately rewarded.
Thursday, February 3, 2011
Please Mr. Home Inspector, Will You Pay for My Renovation (Part 2 of 3)
So I wrote a rather lengthy letter to the plaintiffs’ attorney that explained in considerable detail exactly why he would be better off - and his clients would be immeasurably better off - without having the home inspector hammering away at length the manifold reasons why he was not responsible.
I first pointed out that the inspector had called out a lengthy litany of issues with the property, to wit: the roof was beyond its design life range and showing signs of deterioration; the gutters were clogged; the flashing was tarred; there was siding contact with the soil, a condition that could lead to the very issues of which his clients were then complaining; the exterior water had been shut off; there were settling cracks in the foundation; the toilet in the bathroom was loose; there were popped nails and tape separations throughout the interior; and efflorescence and condensation on the foundation walls.
Had any of the defects of which his clients were now complaining been extant and observable at the time of the inspection, I told him, they would have been reported by the inspector. That is the nature of a limited, non-invasive, visual inspection. One can only report what is observable at the time. Thus, the inspector was not negligent.
I then pointed out that his clients’ failure to follow up on the inspector’s findings and recommendations was, itself, negligent, a condition that would bar any recovery from the inspector.
I then explained that it could easily be demonstrated that his clients had lied about the termite “swarm”; that the video that he had magnanimously - if stupidly - included as an Exhibit to the Complaint not only completely exonerated the inspector but thoroughly impeached the credibility of his expert witness.
I also advised him that the claimed damages were vastly overstated and that the depreciation applicable to the forty-six year age of the home would diminish the damages to a de minimis level not worth crying about.
If that were not enough, I directed his attention to the fact that a recent and very well-reasoned lower court opinion held that the state home inspection licensing law had pre-empted all common law claims against home inspectors.
Finally, I advised him that even if the inspector had been negligent - which he had not been - and even if there were no recovery-barring contributory negligence, and even if his clients had actual damages, and even if a court had not ruled that the Home Inspector Licensing Law preempted his clients' claims, their recovery would be limited to the fee charged by the inspection.
Then I told him that, even though the case against the inspector was riddled with difficulties - the absence of negligence, the admissions by both the plaintiff and his expert that the damage was “hidden”, the contributory negligence problem, the contractual time limitation on bringing the suit, the recovery limitation, and the licensing law pre-emption - the case against the sellers had none of those difficulties. And I suggested that he drop the suit against the inspector and instead use the inspector as a fact witness for the plaintiffs against the sellers.
When I called the attorney after having given him a few days to digest the unwelcome news I had delivered, he seemed very amenable to doing the right thing and dismissing the claim against the inspector. He then requested time to “discuss the issues” with his clients and gave the inspector an indefinite extension of time in which to respond to the Complaint.
“Sure” I said, “take all the time you need.”
The result next time.
I first pointed out that the inspector had called out a lengthy litany of issues with the property, to wit: the roof was beyond its design life range and showing signs of deterioration; the gutters were clogged; the flashing was tarred; there was siding contact with the soil, a condition that could lead to the very issues of which his clients were then complaining; the exterior water had been shut off; there were settling cracks in the foundation; the toilet in the bathroom was loose; there were popped nails and tape separations throughout the interior; and efflorescence and condensation on the foundation walls.
Had any of the defects of which his clients were now complaining been extant and observable at the time of the inspection, I told him, they would have been reported by the inspector. That is the nature of a limited, non-invasive, visual inspection. One can only report what is observable at the time. Thus, the inspector was not negligent.
I then pointed out that his clients’ failure to follow up on the inspector’s findings and recommendations was, itself, negligent, a condition that would bar any recovery from the inspector.
I then explained that it could easily be demonstrated that his clients had lied about the termite “swarm”; that the video that he had magnanimously - if stupidly - included as an Exhibit to the Complaint not only completely exonerated the inspector but thoroughly impeached the credibility of his expert witness.
I also advised him that the claimed damages were vastly overstated and that the depreciation applicable to the forty-six year age of the home would diminish the damages to a de minimis level not worth crying about.
If that were not enough, I directed his attention to the fact that a recent and very well-reasoned lower court opinion held that the state home inspection licensing law had pre-empted all common law claims against home inspectors.
Finally, I advised him that even if the inspector had been negligent - which he had not been - and even if there were no recovery-barring contributory negligence, and even if his clients had actual damages, and even if a court had not ruled that the Home Inspector Licensing Law preempted his clients' claims, their recovery would be limited to the fee charged by the inspection.
Then I told him that, even though the case against the inspector was riddled with difficulties - the absence of negligence, the admissions by both the plaintiff and his expert that the damage was “hidden”, the contributory negligence problem, the contractual time limitation on bringing the suit, the recovery limitation, and the licensing law pre-emption - the case against the sellers had none of those difficulties. And I suggested that he drop the suit against the inspector and instead use the inspector as a fact witness for the plaintiffs against the sellers.
When I called the attorney after having given him a few days to digest the unwelcome news I had delivered, he seemed very amenable to doing the right thing and dismissing the claim against the inspector. He then requested time to “discuss the issues” with his clients and gave the inspector an indefinite extension of time in which to respond to the Complaint.
“Sure” I said, “take all the time you need.”
The result next time.
Monday, January 31, 2011
Please Mr. Home Inspector, Won't You Pay For My Renovation (Part 1 of 3)
When one has consulted on close to 200 home inspection claims, there is a powerful temptation to conclude that one has seen every goofy claim that there could possibly be and I was really beginning to think, back in the summer of 2009, that I had. Then I got a call from an inspector friend in a populous Mid-Atlantic state.
As sometimes happens, the first notice that the inspector had of the claim was when the county sheriff served him with the lawsuit. Now it is not impossible to persuade a lawyer to drop a claim against a home inspector once a lawsuit has been filed and I have succeeded in doing so a number of times but it is considerably more difficult once there has been a substantial calorie-burn on the part of the plaintiffs’ attorney, as there was in this particular case.
But before undertaking my own calorie-burn, I wanted to ascertain the plaintiffs’ attorney’s willingness to be persuaded. To my considerable delight, he vindicated my lofty notion of my personal charm by agreeing to forebear taking any adverse action against the inspector until I had assembled a compelling litany of reasons why he should drop the case against the inspector.
Then I took a closer look at the Complaint which revealed that what the Plaintiffs were aggrieved by was the inspector’s alleged failure to detect termite damage that the plaintiffs, themselves, did not discover until 11 days shy of a year after the original inspection.
Leaving aside the fact that you have to wonder how apparent this problem really was when the folks living in the house do not notice anything for close to a year but what was really remarkable about the Complaint, itself, was that it contained not only dispositive proof that the termite damage had been concealed at the time of the inspection but also assertions by plaintiffs that could not possibly be true, thus, impeaching their credibility in their very own words.
For reasons that I hope I live long enough to understand, there are a lot of lawyers who must think that they have to prove their cases in their Complaints. And so they include, as exhibits to the Complaint, every shred of evidence in their possession in the apparent belief that it makes their case more compelling. The reality is that it seldom does and, in an astonishingly large number of cases, can actually be quite damaging to the plaintiff’s case. It certainly was in this one.
For one thing, in their Complaint, the plaintiffs maintained that they “first learned of the severe termite infestation and . . . damages on or about March 8, 2009” when the plaintiff husband discovered “over five-hundred (500) swarming termites” in the lower level laundry room.
There’s one problem with that averment. It does not comport with the well-established behavioral ecology of termites. Termites require high temperatures and long days in order to “swarm”, two conditions that did not obtain in the date range averred.
Far more devastating, however, was the plaintiffs’ lawyer’s decision to include, as an Exhibit to the Complaint, a digital video disc of the plaintiffs’ “discovery” of the termite infestation that conclusively demonstrated that the damage could not have been discovered in a limited visual inspection. Indeed, the plaintiff husband, himself, twice remarks on the video that “I can’t believe it was all hidden.” Plaintiffs’ expert engineer also agrees with that observation, saying “ I can’t believe how they [the sellers] hid [the damage].”
Later in the video, the husband further opines that “There were no signs whatsoever!” And, again, the expert engineer agrees with that observation, stating “Yeah, [unintelligible] I call it [unintelligible]. That’s what people do.”
Those colloquies between the plaintiff and his expert witness demonstrated beyond peradventure that the damage was effectively concealed from both the plaintiffs and their inspector. They further demonstrated that the infestation would have remained “all hidden” because “there were no signs whatsoever” for ages had the plaintiffs not decided to remodel their home and that they were, in fact, not “victims” of a negligent inspection but bald-faced opportunists looking to stick the inspector with the tab for the renovation.
To be continued.
As sometimes happens, the first notice that the inspector had of the claim was when the county sheriff served him with the lawsuit. Now it is not impossible to persuade a lawyer to drop a claim against a home inspector once a lawsuit has been filed and I have succeeded in doing so a number of times but it is considerably more difficult once there has been a substantial calorie-burn on the part of the plaintiffs’ attorney, as there was in this particular case.
But before undertaking my own calorie-burn, I wanted to ascertain the plaintiffs’ attorney’s willingness to be persuaded. To my considerable delight, he vindicated my lofty notion of my personal charm by agreeing to forebear taking any adverse action against the inspector until I had assembled a compelling litany of reasons why he should drop the case against the inspector.
Then I took a closer look at the Complaint which revealed that what the Plaintiffs were aggrieved by was the inspector’s alleged failure to detect termite damage that the plaintiffs, themselves, did not discover until 11 days shy of a year after the original inspection.
Leaving aside the fact that you have to wonder how apparent this problem really was when the folks living in the house do not notice anything for close to a year but what was really remarkable about the Complaint, itself, was that it contained not only dispositive proof that the termite damage had been concealed at the time of the inspection but also assertions by plaintiffs that could not possibly be true, thus, impeaching their credibility in their very own words.
For reasons that I hope I live long enough to understand, there are a lot of lawyers who must think that they have to prove their cases in their Complaints. And so they include, as exhibits to the Complaint, every shred of evidence in their possession in the apparent belief that it makes their case more compelling. The reality is that it seldom does and, in an astonishingly large number of cases, can actually be quite damaging to the plaintiff’s case. It certainly was in this one.
For one thing, in their Complaint, the plaintiffs maintained that they “first learned of the severe termite infestation and . . . damages on or about March 8, 2009” when the plaintiff husband discovered “over five-hundred (500) swarming termites” in the lower level laundry room.
There’s one problem with that averment. It does not comport with the well-established behavioral ecology of termites. Termites require high temperatures and long days in order to “swarm”, two conditions that did not obtain in the date range averred.
Far more devastating, however, was the plaintiffs’ lawyer’s decision to include, as an Exhibit to the Complaint, a digital video disc of the plaintiffs’ “discovery” of the termite infestation that conclusively demonstrated that the damage could not have been discovered in a limited visual inspection. Indeed, the plaintiff husband, himself, twice remarks on the video that “I can’t believe it was all hidden.” Plaintiffs’ expert engineer also agrees with that observation, saying “ I can’t believe how they [the sellers] hid [the damage].”
Later in the video, the husband further opines that “There were no signs whatsoever!” And, again, the expert engineer agrees with that observation, stating “Yeah, [unintelligible] I call it [unintelligible]. That’s what people do.”
Those colloquies between the plaintiff and his expert witness demonstrated beyond peradventure that the damage was effectively concealed from both the plaintiffs and their inspector. They further demonstrated that the infestation would have remained “all hidden” because “there were no signs whatsoever” for ages had the plaintiffs not decided to remodel their home and that they were, in fact, not “victims” of a negligent inspection but bald-faced opportunists looking to stick the inspector with the tab for the renovation.
To be continued.
Friday, January 28, 2011
The Law of Damages (Part 2 of 2)
To be an effective advocate for his clients, a lawyer often needs to call upon skills quite apart from a thorough working knowledge of the substantive and procedural law. And if he practices in the northeastern section of the country, as I do, one skill that he will find to be of inestimable utility is a working knowledge of Yiddish. And, particularly so, if he is an Irish-Catholic.
With that bit of information as background, let us return to the most recent post, briefly. Please recall that I had responded to a claim from a home inspector’s client by informing the client that he had no claim because the inspector had executed his duty to him in a professionally reasonable manner, that the client had acted unreasonably in light of the inspector’s findings and that, in any case, his damages were, at best, de minimis.
A week or so later, I received a letter from the client’s lawyer. After reading the attorney’s letter, I immediately telephoned the attorney and greeted him thus:
“Wayne, it’s Joe Ferry.” Pause. “What . . . are you doing . . . with this farkakte case?”
His reaction was exactly what I expected. Like every other Jewish lawyer on whom I have essayed that gambit, he started laughing like hell. For two reasons. One, he knows that this is a very weak case. Two, he cannot believe that this son of Erin is telling him exactly how crappy it is in Yiddish!
Then, thrown thoroughly off balance by that disarmingly accurate assessment of his case, he immediately started walking back the size of the claim.
“Look”, he began, “I know that he’s not entitled to a new roof . . .”
Now at the time, there was a video on NACHI TV of me talking about the Law and Disorder seminars that were then upcoming. I told him to watch the video and call me back.
When he called back, he said “So. You handle these claims all over the country.” I told him that I did and, furthermore, if the claim actually had merit, I would be the first person to suggest to my client that it be settled.
He then asked me to see if my client was willing to throw “any money” to settle. I said that I would ask.
I asked the inspector if he was willing to give his ex-client “anything to go away.”
He replied “Joe, I trust you. I’m willing to give this guy up to $1,000 to go away.”
So I wrote to “Wayne” and basically repeated the letter that I had sent to his client: we were not negligent; you were negligent; even if we were, which we weren’t and even if you weren’t, which you were, you don’t have any damages . . . BUT . . . blah, blah, blah . . . GOOD WILL GESTURE . . . blah, blah, blah . . . CLOSURE, here’s $500.
When I proof-read the draft of that letter, I suddenly had a WTF moment! If we were not negligent AND he was negligent AND he doesn’t have any damages . . . WHY ARE WE GIVING HIM ANYTHING?
So I didn’t.
I re-wrote the final paragraph thus:
“For $350, a home inspector does not take a house apart and put it back together again. No reasonable person expects that. My client put your client on notice of issues with this property that should have prompted him to seek a more intrusive inspection. His decision not to do so was unreasonable in light of those findings and would bar all recovery under familiar principles of the Law of Negligence. Accordingly, his claim is rejected.”
I never heard from “Wayne” or his client, again.
With that bit of information as background, let us return to the most recent post, briefly. Please recall that I had responded to a claim from a home inspector’s client by informing the client that he had no claim because the inspector had executed his duty to him in a professionally reasonable manner, that the client had acted unreasonably in light of the inspector’s findings and that, in any case, his damages were, at best, de minimis.
A week or so later, I received a letter from the client’s lawyer. After reading the attorney’s letter, I immediately telephoned the attorney and greeted him thus:
“Wayne, it’s Joe Ferry.” Pause. “What . . . are you doing . . . with this farkakte case?”
His reaction was exactly what I expected. Like every other Jewish lawyer on whom I have essayed that gambit, he started laughing like hell. For two reasons. One, he knows that this is a very weak case. Two, he cannot believe that this son of Erin is telling him exactly how crappy it is in Yiddish!
Then, thrown thoroughly off balance by that disarmingly accurate assessment of his case, he immediately started walking back the size of the claim.
“Look”, he began, “I know that he’s not entitled to a new roof . . .”
Now at the time, there was a video on NACHI TV of me talking about the Law and Disorder seminars that were then upcoming. I told him to watch the video and call me back.
When he called back, he said “So. You handle these claims all over the country.” I told him that I did and, furthermore, if the claim actually had merit, I would be the first person to suggest to my client that it be settled.
He then asked me to see if my client was willing to throw “any money” to settle. I said that I would ask.
I asked the inspector if he was willing to give his ex-client “anything to go away.”
He replied “Joe, I trust you. I’m willing to give this guy up to $1,000 to go away.”
So I wrote to “Wayne” and basically repeated the letter that I had sent to his client: we were not negligent; you were negligent; even if we were, which we weren’t and even if you weren’t, which you were, you don’t have any damages . . . BUT . . . blah, blah, blah . . . GOOD WILL GESTURE . . . blah, blah, blah . . . CLOSURE, here’s $500.
When I proof-read the draft of that letter, I suddenly had a WTF moment! If we were not negligent AND he was negligent AND he doesn’t have any damages . . . WHY ARE WE GIVING HIM ANYTHING?
So I didn’t.
I re-wrote the final paragraph thus:
“For $350, a home inspector does not take a house apart and put it back together again. No reasonable person expects that. My client put your client on notice of issues with this property that should have prompted him to seek a more intrusive inspection. His decision not to do so was unreasonable in light of those findings and would bar all recovery under familiar principles of the Law of Negligence. Accordingly, his claim is rejected.”
I never heard from “Wayne” or his client, again.
Monday, January 24, 2011
The Law of Damages (Part 1 of 2)
Whenever I read the Letters to the Editor of the New York Times or my local newspaper, the Philadelphia Inquirer, I often find myself wondering whether mathematics is still a requirement for graduation from high school. The overwhelming majority of those correspondents appear to truly believe with every fiber of their being that it is entirely possible for the government to provide massive new entitlement programs to tens of millions of previously unentitled individuals without increasing the size of government or affecting the national economy in any meaningful way.
Similarly, whenever a home inspector engages me to neutralize an unhappy client and I read the demand letter from the claimant’s attorney, I often find myself wondering whether the nation’s law schools are still teaching the Law of Damages. Consequently, I am continuously finding myself in the position of having to give short tutorials to professional colleagues on exactly what level of damages their clients might be entitled to in the altogether highly unlikely event that their claims have any merit in the first instance.
A couple of years ago, one of my inspector clients inspected a sixty-something year-old house and reported that the roof was “near the end of its life expectency” and really would need to be replaced in the not too distant future. As it happened, excessive clutter prevented any meaningful inspection of the attic. In fact, all the inspector was really able to do was to pop his head into the space and shine his flashlight around.
Sometime after taking possession, the buyer found that the roof was leaking in a spot just beyond the farthest rafter in the attic which the inspector could not have seen due to the attic’s inaccessibility at the time of the inspection.
The client sent the inspector a letter demanding a new roof and the inspector asked me to respond. I told the client “Fuhgeddaboudit!”
First of all, the inspector told you that the roof needed to be replaced. Secondly, he couldn’t get into the attic to inspect it and disclaimed any responsibility for that. Third, even if he had been negligent - which he wasn’t - you would not be entitled to a new roof. All that you would be entitled to is to have the “leak” repaired - a process that might require the replacement of a one square foot section of shingles. Finally, the cost of replacing that one square foot section would have to be depreciated by the sixty-something year age of the roof. In other words, next to nothing.
Sadly, he didn’t fuhgeddaboudit and a week or so later I heard from his lawyer.
That story next time.
Similarly, whenever a home inspector engages me to neutralize an unhappy client and I read the demand letter from the claimant’s attorney, I often find myself wondering whether the nation’s law schools are still teaching the Law of Damages. Consequently, I am continuously finding myself in the position of having to give short tutorials to professional colleagues on exactly what level of damages their clients might be entitled to in the altogether highly unlikely event that their claims have any merit in the first instance.
A couple of years ago, one of my inspector clients inspected a sixty-something year-old house and reported that the roof was “near the end of its life expectency” and really would need to be replaced in the not too distant future. As it happened, excessive clutter prevented any meaningful inspection of the attic. In fact, all the inspector was really able to do was to pop his head into the space and shine his flashlight around.
Sometime after taking possession, the buyer found that the roof was leaking in a spot just beyond the farthest rafter in the attic which the inspector could not have seen due to the attic’s inaccessibility at the time of the inspection.
The client sent the inspector a letter demanding a new roof and the inspector asked me to respond. I told the client “Fuhgeddaboudit!”
First of all, the inspector told you that the roof needed to be replaced. Secondly, he couldn’t get into the attic to inspect it and disclaimed any responsibility for that. Third, even if he had been negligent - which he wasn’t - you would not be entitled to a new roof. All that you would be entitled to is to have the “leak” repaired - a process that might require the replacement of a one square foot section of shingles. Finally, the cost of replacing that one square foot section would have to be depreciated by the sixty-something year age of the roof. In other words, next to nothing.
Sadly, he didn’t fuhgeddaboudit and a week or so later I heard from his lawyer.
That story next time.
Thursday, January 20, 2011
What You Need to Know About Pre-Sale Inspections
Reader Gary Baldridge writes: I have heard many comments on the pros and cons of pre-sale inspections and what liability may differ from doing a buyer inspection."
Now that sellers are being encouraged to obtain professional home inspections prior to listing their properties for sale, a development that I not only applaud but also believe will become increasingly popular and commonplace, home inspectors need to be careful of potentially exposing themselves to liability to non-client third parties.
Normally, actors are only potentially liable to individuals to whom they owe a duty of care. Motorists, for example, owe a duty of care to their passengers, other motorists and their passengers and bicyclists and pedestrians. They fulfill that duty by obeying traffic laws and conventions, maintaining their vehicles in a safe condition, maintaining adequate insurance and driving carefully.
When performing a service for a client pursuant to a contract, a service provider would normally owe a duty, and thus be potentially liable for professional lapses, only to her client. She fulfills that duty by performing her duties in a professional manner.
However, a service provider could also be held liable to third-parties if her negligence could foreseeably cause harm to others as, for example, when an auto mechanic’s negligence causes the unexpected failure of her client’s brakes resulting in injuries to an innocent third-party. That potential for being sued by unknown third-parties is why bartenders will refuse to serve obviously intoxicated customers, take away their car keys and call taxis for them.
When performing a home inspection for a buyer, a home inspector normally would only owe a duty and thus, be potentially liable, to his buyer-client for issues that she “unreasonably” fails to discover and/or report - that is, she failed to discover them but should not have - and that failure - that unreasonable professional conduct - caused her client damages. That’s certainly fair enough. I don’t know any professional home inspectors who have a problem with that.
A potential problem arises, however, when someone with whom the home inspector does not have a contract claims to have been harmed by the alleged negligence of the inspector. I recently had a case in Philadelphia involving an inspector who had performed an inspection for a young husband and wife in their twenties who were buying their first home. Some eighteen months later he got served with a lawsuit by the father of the wife claiming that he had conducted a negligent inspection that had caused this man damages.
The couple had apparently failed to qualify for a mortgage and so a new Agreement of Sale was drawn that listed the wife’s father as the sole purchaser and more than a year later, this purchaser, a stranger to the home inspection contract, was claiming that the inspector had failed to discover certain issues that were causing him damages.
Pretty ridiculous, right?
Sure but the problem is quite common and generally arises when the home inspector’s client exercises his right to terminate the Agreement of Sale based upon the inspector’s findings. When the property goes back on the market, the real estate agent will often hand the inspector’s report to a new prospect who does buy the property and then wants to sue the inspector some time down the road when problems inevitably arise.
The problem can be muted somewhat by prominently noting that only the individuals who hired the inspector may rely on the inspector’s findings and that anyone else who relies on his report does so at their own peril. The inspector my still get sued but will easily be able to demonstrate that the subsequent buyer’s reliance on the report was "unreasonable."
And that brings us to Gary's question regarding pre-listing inspections conducted on behalf of a seller. The purpose of these types of inspections is to make the seller aware of issues that he either needs to correct or disclose to a potential buyer or perhaps both. The idea is to reduce the seller’s exposure to suit, not to reduce the buyer’s anxiety.
Hence, to avoid any surprises, Inspectors should make sure that their pre-listing inspection clients know that this report is for their information only and that they may not use it to allay their buyers’ anxiety. Pre-listing inspection agreements should also stress this point and include a provision requiring the seller to defend and indemnify the inspector should a buyer subsequently claim that he relied on the inspection report to his detriment.
Now that sellers are being encouraged to obtain professional home inspections prior to listing their properties for sale, a development that I not only applaud but also believe will become increasingly popular and commonplace, home inspectors need to be careful of potentially exposing themselves to liability to non-client third parties.
Normally, actors are only potentially liable to individuals to whom they owe a duty of care. Motorists, for example, owe a duty of care to their passengers, other motorists and their passengers and bicyclists and pedestrians. They fulfill that duty by obeying traffic laws and conventions, maintaining their vehicles in a safe condition, maintaining adequate insurance and driving carefully.
When performing a service for a client pursuant to a contract, a service provider would normally owe a duty, and thus be potentially liable for professional lapses, only to her client. She fulfills that duty by performing her duties in a professional manner.
However, a service provider could also be held liable to third-parties if her negligence could foreseeably cause harm to others as, for example, when an auto mechanic’s negligence causes the unexpected failure of her client’s brakes resulting in injuries to an innocent third-party. That potential for being sued by unknown third-parties is why bartenders will refuse to serve obviously intoxicated customers, take away their car keys and call taxis for them.
When performing a home inspection for a buyer, a home inspector normally would only owe a duty and thus, be potentially liable, to his buyer-client for issues that she “unreasonably” fails to discover and/or report - that is, she failed to discover them but should not have - and that failure - that unreasonable professional conduct - caused her client damages. That’s certainly fair enough. I don’t know any professional home inspectors who have a problem with that.
A potential problem arises, however, when someone with whom the home inspector does not have a contract claims to have been harmed by the alleged negligence of the inspector. I recently had a case in Philadelphia involving an inspector who had performed an inspection for a young husband and wife in their twenties who were buying their first home. Some eighteen months later he got served with a lawsuit by the father of the wife claiming that he had conducted a negligent inspection that had caused this man damages.
The couple had apparently failed to qualify for a mortgage and so a new Agreement of Sale was drawn that listed the wife’s father as the sole purchaser and more than a year later, this purchaser, a stranger to the home inspection contract, was claiming that the inspector had failed to discover certain issues that were causing him damages.
Pretty ridiculous, right?
Sure but the problem is quite common and generally arises when the home inspector’s client exercises his right to terminate the Agreement of Sale based upon the inspector’s findings. When the property goes back on the market, the real estate agent will often hand the inspector’s report to a new prospect who does buy the property and then wants to sue the inspector some time down the road when problems inevitably arise.
The problem can be muted somewhat by prominently noting that only the individuals who hired the inspector may rely on the inspector’s findings and that anyone else who relies on his report does so at their own peril. The inspector my still get sued but will easily be able to demonstrate that the subsequent buyer’s reliance on the report was "unreasonable."
And that brings us to Gary's question regarding pre-listing inspections conducted on behalf of a seller. The purpose of these types of inspections is to make the seller aware of issues that he either needs to correct or disclose to a potential buyer or perhaps both. The idea is to reduce the seller’s exposure to suit, not to reduce the buyer’s anxiety.
Hence, to avoid any surprises, Inspectors should make sure that their pre-listing inspection clients know that this report is for their information only and that they may not use it to allay their buyers’ anxiety. Pre-listing inspection agreements should also stress this point and include a provision requiring the seller to defend and indemnify the inspector should a buyer subsequently claim that he relied on the inspection report to his detriment.
Monday, January 17, 2011
Is Your E&O Insurance Company Stuck on Stupid?
One of my home inspector clients in California recently wrote to me about a claim that was being brought by a client for whom he had performed an inspection about three months earlier. The client was experiencing some leaks due to recent heavy rains. The leaks were discovered only after removing baseboard and flooring to do some remodeling. After opening the walls they found that the leaks were due to the fact that the vapor barrier had been torn in several areas.
A review of the inspection report demonstrated that the inspector had noted that “stains were observed at baseboard, dry at time of inspection, unable to determine cause, advise review with seller.” Photos of the area taken at the time of the inspection completely support the inspector's position.
The clients were quite upset and were unwilling to grasp the fact that, since the defect was not visible during the inspection, the inspector was not liable. They subsequently threatened to file suit if the inspector did not refund the fee.
Since he was clearly not responsible for the clients' problem, he refused to refund the fee and the client followed through on the threat and filed a claim in small claims court.
In addition to being an extremely capable professional, the inspector is also a sophisticated businessman who carries E&O insurance for this very contingency and he reported the claim, as required, to his insurer.
Unfortunately for this inspector, his insurance company - a major player in the home inspection professional liability insurance market - is both brain-dead and stuck on stupid.
The inspector understandably wants to defend the claim because a. the claim is completely defensible and b. he doesn't want to lose his deductible which is substantial.
The clients are demanding $6500 and the insurer has offered $1500 - easy for it to do, since that is well within the insured's deductible.
The inspector wants to defend the claim himself and the insurer has taken this position: The inspector can withdraw the claim and handle it himself. However, if he wins and the plaintiffs appeal to a higher court and he then seeks coverage from the insurer, the insurer will treat it as a late report and deny coverage under the policy.
The inspector forwarded to me the insurer's response for my information. I wrote back to the inspector:
"Why [this insurer] would even consider offering $1500 to settle a claim that has absolutely NO merit whatsoever is a locus classicus of the very thing that is wrong with the home inspector professional liability insurance marketplace, to wit, a facile willingness to throw money at bogus claimants as long as it is within the insured's deductible and a pathological unwillingness to take meritless cases to verdict, if doing so would cost more than knuckling under to meritless claims.
"For [this insurer] to present you with the Hobson's choice of a. personally defending a completely meritless claim in order to save your deductible and, thereby, ensuring that, if the claimant appeals the verdict, [the insurer] will deny coverage or b. allow [the insurer] to dangle your deductible in front of these meritless claimants to rid itself on any responsibility is the quintessence of bad faith."
Fortunately, home inspectors no longer have to find themselves in this situation. In August of 2009, program administrator Lockton Affinity, an affiliate of Lockton Companies, LLC, the largest independently-owned commercial insurance broker in the world, approached me about developing a professional liability program exclusively for Home Inspectors. The program launched in April of 2010 and the insurer, whose financial strength is rated A+ XV by A. M. Best, completely supports the bogus claim preemption techniques that I have perfected over the last four years.
If you are enrolled under the Lockton Affinity program for Errors & Omissions Insurance, you are assured that I will be the one responding in the first instance to any claim filed against you. For a quote visit: http://inspectors.locktonaffinity.com or call 800-803-9552.
A review of the inspection report demonstrated that the inspector had noted that “stains were observed at baseboard, dry at time of inspection, unable to determine cause, advise review with seller.” Photos of the area taken at the time of the inspection completely support the inspector's position.
The clients were quite upset and were unwilling to grasp the fact that, since the defect was not visible during the inspection, the inspector was not liable. They subsequently threatened to file suit if the inspector did not refund the fee.
Since he was clearly not responsible for the clients' problem, he refused to refund the fee and the client followed through on the threat and filed a claim in small claims court.
In addition to being an extremely capable professional, the inspector is also a sophisticated businessman who carries E&O insurance for this very contingency and he reported the claim, as required, to his insurer.
Unfortunately for this inspector, his insurance company - a major player in the home inspection professional liability insurance market - is both brain-dead and stuck on stupid.
The inspector understandably wants to defend the claim because a. the claim is completely defensible and b. he doesn't want to lose his deductible which is substantial.
The clients are demanding $6500 and the insurer has offered $1500 - easy for it to do, since that is well within the insured's deductible.
The inspector wants to defend the claim himself and the insurer has taken this position: The inspector can withdraw the claim and handle it himself. However, if he wins and the plaintiffs appeal to a higher court and he then seeks coverage from the insurer, the insurer will treat it as a late report and deny coverage under the policy.
The inspector forwarded to me the insurer's response for my information. I wrote back to the inspector:
"Why [this insurer] would even consider offering $1500 to settle a claim that has absolutely NO merit whatsoever is a locus classicus of the very thing that is wrong with the home inspector professional liability insurance marketplace, to wit, a facile willingness to throw money at bogus claimants as long as it is within the insured's deductible and a pathological unwillingness to take meritless cases to verdict, if doing so would cost more than knuckling under to meritless claims.
"For [this insurer] to present you with the Hobson's choice of a. personally defending a completely meritless claim in order to save your deductible and, thereby, ensuring that, if the claimant appeals the verdict, [the insurer] will deny coverage or b. allow [the insurer] to dangle your deductible in front of these meritless claimants to rid itself on any responsibility is the quintessence of bad faith."
Fortunately, home inspectors no longer have to find themselves in this situation. In August of 2009, program administrator Lockton Affinity, an affiliate of Lockton Companies, LLC, the largest independently-owned commercial insurance broker in the world, approached me about developing a professional liability program exclusively for Home Inspectors. The program launched in April of 2010 and the insurer, whose financial strength is rated A+ XV by A. M. Best, completely supports the bogus claim preemption techniques that I have perfected over the last four years.
If you are enrolled under the Lockton Affinity program for Errors & Omissions Insurance, you are assured that I will be the one responding in the first instance to any claim filed against you. For a quote visit: http://inspectors.locktonaffinity.com or call 800-803-9552.
Monday, January 10, 2011
Follow Your Standard of Practice
Something that I emphasize quite heavily in the Law and Disorder seminar is the importance of adhering to whatever Standard of Practice you happen to be following when you are conducting your inspection. In fact, it is one of the six key strategies that I teach for diminishing a home inspector's chances of being sued successfully.
I do not know how often inspectors have occasion to read their SOPs but I read them quite often in order to respond to the demand letters that my home inspector clients have received from their clients or their clients’ lawyers. And one thing that you cannot help noticing when you read those SOPs as often as I do is this: there are an awful lot of sentences in the SOPs that begin thus: “The home inspector is not required to:” followed by a whole host of matters for which the home inspector is not responsible.
Anyone who has ever attended the seminar will remember my saying, “Stay within the lines. The lines are your friends.” It is a line from an old Toyota automobile commercial from the early ‘90s that no one ever seems to recall. I only remember it, I suppose, because I once had a tennis partner who always seemed to be saying that to me, generally when one of my errant 100 mph returns went sailing over the opponents’ base line.
The reason I advise inspectors to “stay within the lines” - the SOP - is because in order to establish that the inspector had been negligent in conducting his inspection, a claimant has to show that the inspector did not act “reasonably”, that is, he did not perform his inspection in the manner that a “reasonable” inspector would have. In other words, he would have to demonstrate that the inspector failed to follow his own SOP.
A frequently asked question at the seminars is what effect does exceeding the SOP in one area or another potentially have on an inspector’s liability. The answer is: it increases it. Exceeding the SOP can and often does make you responsible for something that you otherwise would not have been.
So always follow your SOP. Your SOP is your friend.
I do not know how often inspectors have occasion to read their SOPs but I read them quite often in order to respond to the demand letters that my home inspector clients have received from their clients or their clients’ lawyers. And one thing that you cannot help noticing when you read those SOPs as often as I do is this: there are an awful lot of sentences in the SOPs that begin thus: “The home inspector is not required to:” followed by a whole host of matters for which the home inspector is not responsible.
Anyone who has ever attended the seminar will remember my saying, “Stay within the lines. The lines are your friends.” It is a line from an old Toyota automobile commercial from the early ‘90s that no one ever seems to recall. I only remember it, I suppose, because I once had a tennis partner who always seemed to be saying that to me, generally when one of my errant 100 mph returns went sailing over the opponents’ base line.
The reason I advise inspectors to “stay within the lines” - the SOP - is because in order to establish that the inspector had been negligent in conducting his inspection, a claimant has to show that the inspector did not act “reasonably”, that is, he did not perform his inspection in the manner that a “reasonable” inspector would have. In other words, he would have to demonstrate that the inspector failed to follow his own SOP.
A frequently asked question at the seminars is what effect does exceeding the SOP in one area or another potentially have on an inspector’s liability. The answer is: it increases it. Exceeding the SOP can and often does make you responsible for something that you otherwise would not have been.
So always follow your SOP. Your SOP is your friend.
Thursday, January 6, 2011
Follow-Up Inspectors: Don't Ruin Your Credibility
I get a lot of mail from home inspectors offering their services, should the need ever arise, as expert witnesses in negligence cases against home inspectors. Fortunately, I never have a need for their expertise because the cases that I get asked to squash almost all go away secondary to a compellingly written letter that explains a. why the claimant has no case, despite what his expert claims; b. why, even if he had a case, he has no damages: c. why, even if he had a case and had damages, his claim would be barred because of his own conduct; d. why, even if he had a case and had damages and his claim were not barred due to his own conduct, his recovery would be contractually limited; e. that the claim, if brought, will be vigorously defended; and f. the retaliatory action that will ensue following the certain defeat of the claim.
Nevertheless, I do get to see a lot of reports from would-be “experts” for claimants. Usually, these individuals are not experts at all - that is they were not hired to give an “expert opinion” on established facts. They are merely professionals re-inspecting the same property several weeks and often several months after the original inspection and not infrequently after the massive destructive probing that first allowed the defect to be, literally, “uncovered”.
By and large, they have done no spadework whatsoever, such as reading the original inspection report, ascertaining weather conditions in the weeks preceding the original inspection and subsequent thereto, ruling out other causative factors, ascertaining the condition of the property at the time of the original inspection or even mentioning the Standard of Practice that is implicated in the case.
And there is nothing these would-be experts like more than impugning the competence of the original inspector. Their reports are riddled with absurd credibility-destroying observations like this one made in a case I squashed in Washington state: “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
Really? Well, if that’s the case, Mr. Expert, shouldn’t the presumably very “untrained observers” who had been living in the house lo, those many years have not “overlooked” the “magnitude of floor structure damage” and noted it in their sellers’ disclosures? Or - here’s an idea - shouldn’t they have repaired it while they, themselves, were living in the house?
What this would-be expert should have done after seeing the “magnitude of damage” that “would have been difficult to overlook” by even the “most untrained observer” is ask himself this question: how the hell did this inspector ever miss this defect? what could have prevented this inspector - duly licensed by the State of Washington - from seeing this defect? Was it concealed somehow? Were there any signs that would warrant invasive probing? Was the area accessible at the time of the original inspection?
As a follow-up inspector you have to recognize that you are inspecting an entirely different house than the original inspector. The vast majority of claims against home inspectors, in my experience, are for after-discovered defects that were concealed at the time of inspection but are not concealed when inspector # 2 conducts his inspection.
And the real problem for inspector # 2 - and the poor sap who hires him - is the nigh universal inability of such "experts" to resist such credibility-destroying dudgeon as “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
If you're the "expert" inspector and you're uncovering "obvious" defects, someone is definitely leading you into a pick. And you should make sure that your "expert" report is laden with disclaimers so you don't undermine your credibility with reckless statements about the original inspector's ability because chances are that, had you been the original inspector, you very well might have been prevented from seeing them, too.
Nevertheless, I do get to see a lot of reports from would-be “experts” for claimants. Usually, these individuals are not experts at all - that is they were not hired to give an “expert opinion” on established facts. They are merely professionals re-inspecting the same property several weeks and often several months after the original inspection and not infrequently after the massive destructive probing that first allowed the defect to be, literally, “uncovered”.
By and large, they have done no spadework whatsoever, such as reading the original inspection report, ascertaining weather conditions in the weeks preceding the original inspection and subsequent thereto, ruling out other causative factors, ascertaining the condition of the property at the time of the original inspection or even mentioning the Standard of Practice that is implicated in the case.
And there is nothing these would-be experts like more than impugning the competence of the original inspector. Their reports are riddled with absurd credibility-destroying observations like this one made in a case I squashed in Washington state: “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
Really? Well, if that’s the case, Mr. Expert, shouldn’t the presumably very “untrained observers” who had been living in the house lo, those many years have not “overlooked” the “magnitude of floor structure damage” and noted it in their sellers’ disclosures? Or - here’s an idea - shouldn’t they have repaired it while they, themselves, were living in the house?
What this would-be expert should have done after seeing the “magnitude of damage” that “would have been difficult to overlook” by even the “most untrained observer” is ask himself this question: how the hell did this inspector ever miss this defect? what could have prevented this inspector - duly licensed by the State of Washington - from seeing this defect? Was it concealed somehow? Were there any signs that would warrant invasive probing? Was the area accessible at the time of the original inspection?
As a follow-up inspector you have to recognize that you are inspecting an entirely different house than the original inspector. The vast majority of claims against home inspectors, in my experience, are for after-discovered defects that were concealed at the time of inspection but are not concealed when inspector # 2 conducts his inspection.
And the real problem for inspector # 2 - and the poor sap who hires him - is the nigh universal inability of such "experts" to resist such credibility-destroying dudgeon as “the magnitude of floor structure damage to this home would have been difficult to overlook during an inspection, even to the most untrained observer”.
If you're the "expert" inspector and you're uncovering "obvious" defects, someone is definitely leading you into a pick. And you should make sure that your "expert" report is laden with disclaimers so you don't undermine your credibility with reckless statements about the original inspector's ability because chances are that, had you been the original inspector, you very well might have been prevented from seeing them, too.
Monday, January 3, 2011
How This Niche Became a Voice for All Home Inspectors
A couple of years ago, Lady Agag (my lovely wife) and I were invited to a cocktail party that was being held at a restaurant in the Chestnut Hill section of Philadelphia. The restaurant was actually closed that evening to all but those who had been invited to the party. The hosts of the party had “won” it by outbidding others at a silent auction to benefit Norwood-Fontbonne Academy, the private Catholic grade school that our two boys had attended.
Because of that provenance, the guests were, by and large, well-established habitants of the middle-class with a vast overrepresentation of lawyers. Lady A and I, about fifteen years senior to the gathering’s statistical mode, were clearly skewing the assemblage geezerish. Nevertheless, due to our surpassing young-at-heartness and preternatural gregariousness, we were warmly received by our fellow guests.
I was introduced to a couple, whose male component I had been reliably informed, was also a lawyer. After establishing that I was a colleague, he asked me what sort of law I practiced. My spontaneous response surprised even me.
“I’m a cult figure in a niche industry” I answered. It was a response that not only has the twin attributes of being both whimsical and accurate, but absolutely mandates explication.
Here it is.
The day before Thanksgiving in 2006, I received a call from a home inspector in Florida who had just received a demand letter from an attorney representing one of his clients that was seeking damages from an inspection that he had conducted some 22 months before. He wanted to know what to do.
I asked him if he had E & O Insurance. He said that he now had it but did not have it then. He then asked if this was something that I could handle or did he need to get a lawyer in Florida. My mind reeled at the thought of this inspector having to seek an attorney in Florida at random, explain to him exactly what a home inspection is - and isn’t - and then explain why he was not responsible for the claimed damages. So I said “Why don’t you send me the demand letter together with your pre-inspection agreement and your inspection report? After I review those documents, I’ll be in a better position to advise you.” So he did.
I got the documents the day after Thanksgiving. After reading the attorney’s letter, which was rather substantial and included a supporting report by a subsequent inspection company, I noted all of the issues that his client was aggrieved by.
I then took up the inspector’s original report to read and began to experience déjà vu all over again. Every issue that the claimant was complaining about had been pointed out by the inspector in his report.
I was incredulous and called the inspector and said “This is unbelievable. Everything that they’re complaining about, you found!!” He said, “I know.”
So I suggested that he let me write a letter to the attorney which I would run by him. If he liked the letter, I would send it out and charge him for my time accordingly. If he didn’t like the letter, I would not charge him and he could find his own attorney in Florida.
The home inspector loved the letter that I had written and it went out on December 1, 2006. We never heard from that attorney again. Following that success, I began to hear from home inspectors all over the country asking for my help in responding to the ridiculous demands that were being made upon them by former clients.
Close to 200 claims later, I am batting .970 at terminating them with just a letter.
Because of that provenance, the guests were, by and large, well-established habitants of the middle-class with a vast overrepresentation of lawyers. Lady A and I, about fifteen years senior to the gathering’s statistical mode, were clearly skewing the assemblage geezerish. Nevertheless, due to our surpassing young-at-heartness and preternatural gregariousness, we were warmly received by our fellow guests.
I was introduced to a couple, whose male component I had been reliably informed, was also a lawyer. After establishing that I was a colleague, he asked me what sort of law I practiced. My spontaneous response surprised even me.
“I’m a cult figure in a niche industry” I answered. It was a response that not only has the twin attributes of being both whimsical and accurate, but absolutely mandates explication.
Here it is.
The day before Thanksgiving in 2006, I received a call from a home inspector in Florida who had just received a demand letter from an attorney representing one of his clients that was seeking damages from an inspection that he had conducted some 22 months before. He wanted to know what to do.
I asked him if he had E & O Insurance. He said that he now had it but did not have it then. He then asked if this was something that I could handle or did he need to get a lawyer in Florida. My mind reeled at the thought of this inspector having to seek an attorney in Florida at random, explain to him exactly what a home inspection is - and isn’t - and then explain why he was not responsible for the claimed damages. So I said “Why don’t you send me the demand letter together with your pre-inspection agreement and your inspection report? After I review those documents, I’ll be in a better position to advise you.” So he did.
I got the documents the day after Thanksgiving. After reading the attorney’s letter, which was rather substantial and included a supporting report by a subsequent inspection company, I noted all of the issues that his client was aggrieved by.
I then took up the inspector’s original report to read and began to experience déjà vu all over again. Every issue that the claimant was complaining about had been pointed out by the inspector in his report.
I was incredulous and called the inspector and said “This is unbelievable. Everything that they’re complaining about, you found!!” He said, “I know.”
So I suggested that he let me write a letter to the attorney which I would run by him. If he liked the letter, I would send it out and charge him for my time accordingly. If he didn’t like the letter, I would not charge him and he could find his own attorney in Florida.
The home inspector loved the letter that I had written and it went out on December 1, 2006. We never heard from that attorney again. Following that success, I began to hear from home inspectors all over the country asking for my help in responding to the ridiculous demands that were being made upon them by former clients.
Close to 200 claims later, I am batting .970 at terminating them with just a letter.
New Problem For HIs: Disgruntled Sellers
I am starting to see a disturbing number of claims brought against home inspectors by non-client home sellers who are blaming home inspectors for the failure of their clients to follow through on the Agreement of Sale as a consequence of the inspector's findings. I am hoping that this trend is secondary to the very depressed real estate market that we are currently experiencing and will not survive beyond the eventual market recovery.
Some of these frustrated sellers completely lose control of their senses and foolishly decide to vent their fury at the home inspector in inappropriate ways. In one case, for example, the aggrieved home seller filed a complaint against the home inspector with the state board that oversees the licensure of home inspectors claiming that the home inspector had “several false finding and inaccurate statements of the existing condition on his home. In your report you stated a retaining wall was on his property which is not, you also reported an HVAC unit as hazard when it is in excellent working condition. You further listed termite infestation which owner states there is no infestation.” Sic.
Needless to say, for a home inspector this can be an agita-inducing development. And one that has to be squashed with extreme prejudice. As a professional, you can not indulge a hothead home seller who is making false accusations about you before a licensure board. And this inspector did not.
I wrote to the seller’s attorney and advised him that, although his client may have been disappointed that the result of the inspector’s report - which had catalogued the property’s myriad defects - was that the inspector’s client exercised his right to abrogate the Agreement of Sale, the seller’s ill-advised and vindictive filing of a false complaint against the inspector was an inappropriate way of venting his anger.
I also pointed out that, if the complaint was not immediately withdrawn with prejudice, it would also prove to have been a very foolish and expensive indulgence on the seller’s part, as well, because of the magnitude of damages that are available to business professionals in defamation cases.
The letter had an immediate sobering effect on both the seller and his attorney who faxed me upon receipt a letter advising me that the complaint would be withdrawn.
Some of these frustrated sellers completely lose control of their senses and foolishly decide to vent their fury at the home inspector in inappropriate ways. In one case, for example, the aggrieved home seller filed a complaint against the home inspector with the state board that oversees the licensure of home inspectors claiming that the home inspector had “several false finding and inaccurate statements of the existing condition on his home. In your report you stated a retaining wall was on his property which is not, you also reported an HVAC unit as hazard when it is in excellent working condition. You further listed termite infestation which owner states there is no infestation.” Sic.
Needless to say, for a home inspector this can be an agita-inducing development. And one that has to be squashed with extreme prejudice. As a professional, you can not indulge a hothead home seller who is making false accusations about you before a licensure board. And this inspector did not.
I wrote to the seller’s attorney and advised him that, although his client may have been disappointed that the result of the inspector’s report - which had catalogued the property’s myriad defects - was that the inspector’s client exercised his right to abrogate the Agreement of Sale, the seller’s ill-advised and vindictive filing of a false complaint against the inspector was an inappropriate way of venting his anger.
I also pointed out that, if the complaint was not immediately withdrawn with prejudice, it would also prove to have been a very foolish and expensive indulgence on the seller’s part, as well, because of the magnitude of damages that are available to business professionals in defamation cases.
The letter had an immediate sobering effect on both the seller and his attorney who faxed me upon receipt a letter advising me that the complaint would be withdrawn.
Monday, December 20, 2010
How to Use the Disclaimer
One of the tools and techniques that I teach in the Law and Disorder seminar and that I encourage home inspectors to incorporate into their practice is the appropriate use of the disclaimer. While home inspectors and other real estate professionals know that there are many, many issues implicated in a home buying decision that are not going to be addressed or uncovered by a home inspection, their clients are almost universally unaware of that.
For example, a home inspection is not going to determine a property’s boundaries or whether appropriate permits for additions or improvements had been obtained. Nor will it address title or zoning issues. Or any of a myriad of other matters. Easements, covenants and the like.
Consequently you have to disclaim any responsibility for those issues. These are issues that are common to all properties.
You also have to disclaim responsibility for issues that are idiosyncratic to this property. The roof may have been covered by ice and snow. Therefore, you would have to disclaim any ability to offer an opinion on the roof.
Oftentimes, many areas of the home are inaccessible. Access to the attic or garage may be obstructed by an accumulation of stored items that inhibit visibility. Crawlspaces may have insufficient clearance.
If you are effectively prevented from inspecting any area of the property, you need to note it, corroborate your finding with photos and disclaim responsibility for those areas of the house.
You should also advise them to seek further review by the appropriate professional of any system or area for which you are disclaiming responsibility due to inaccessibility.
I am sometimes asked by home inspectors whether it is possible to have "too many disclaimers." I understand the concern. Can you have so many disclaimers in your report that they lose effectiveness? The reader’s eyes glaze over.
Have you ever purchased a step-ladder? You spend your first hour of ownership removing warning labels. I recently stayed in a hotel that had this advisory stenciled on the shower tiles: "PLACE SHOWER CURTAIN INSIDE TUB BEFORE TURNING ON THE SHOWER."
In our litigious culture, you have to warn people about everything. So the short answer is "No. You can not have too many disclaimers in your reports."
For example, a home inspection is not going to determine a property’s boundaries or whether appropriate permits for additions or improvements had been obtained. Nor will it address title or zoning issues. Or any of a myriad of other matters. Easements, covenants and the like.
Consequently you have to disclaim any responsibility for those issues. These are issues that are common to all properties.
You also have to disclaim responsibility for issues that are idiosyncratic to this property. The roof may have been covered by ice and snow. Therefore, you would have to disclaim any ability to offer an opinion on the roof.
Oftentimes, many areas of the home are inaccessible. Access to the attic or garage may be obstructed by an accumulation of stored items that inhibit visibility. Crawlspaces may have insufficient clearance.
If you are effectively prevented from inspecting any area of the property, you need to note it, corroborate your finding with photos and disclaim responsibility for those areas of the house.
You should also advise them to seek further review by the appropriate professional of any system or area for which you are disclaiming responsibility due to inaccessibility.
I am sometimes asked by home inspectors whether it is possible to have "too many disclaimers." I understand the concern. Can you have so many disclaimers in your report that they lose effectiveness? The reader’s eyes glaze over.
Have you ever purchased a step-ladder? You spend your first hour of ownership removing warning labels. I recently stayed in a hotel that had this advisory stenciled on the shower tiles: "PLACE SHOWER CURTAIN INSIDE TUB BEFORE TURNING ON THE SHOWER."
In our litigious culture, you have to warn people about everything. So the short answer is "No. You can not have too many disclaimers in your reports."
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