$200,000 Judgment against BC Home Inspector
November 16, 2009
Re: JUDGMENT AGAINST BRITISH COLUMBIA HOME INSPECTOR
This paper summarizes the case and identifies things home inspectors can learn.
The entire judgment can be seen at http://www.courts.gov.bc.ca/jdb-txt/SC/09/15/2009BCSC1515.htm
¬∑¬†¬†¬†¬†¬†¬†¬†¬† House built in 1960s with 1980s addition. House is on a steep lot.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Sold in 2006 for ~ $1.1 million.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Agent recommended inspector ‚Äď Fee was $450.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Clients say he was negligent in not identifying material defects.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Inspector denies negligence and also relies on limit of liability in contract.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Repair costs:
o¬†¬† ~ $54,000 A-frame beams
o¬†¬† ~ $57,000 stabilization
o¬†¬† ~ $26,000 engineering
o¬†¬† ~ $9,000 remove deck
o¬†¬† ~ $24,000 replace deck
o¬†¬† ~ $12,000 shore up east deck
o¬†¬† ~ $9,000 GST
o¬†¬† ~ $22,000 contingency
o¬†¬† Total ~ $213,000
o¬†¬† Less¬† $20,000 estimated in report
o¬†¬† Net claim ~ $193,000 plus interest and costs
o¬†¬† Decision in favor of client/homebuyer ~ $193,000
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Clients apparently did not attend the entire inspection ‚Äď arrived at end.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Contract signed after inspection and report was written, before presentation to client.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Signed by one client but not other (different last name).
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Contract included a clause limiting liability to the fee.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Apparently client remembered being told by inspector that there were major and significant structural problems.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Client also remembered being told that there was nothing that should impede them from buying the home.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Report summary indicated structure problems ‚Äď rating halfway between below average and average.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Structure page of report indicated Settlement (Moderate and ongoing?) and Soil erosion as problems,
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Recommendation to check with professional engineering/pest control contractor or ________ for complete information (This was checked off on pre-printed form with no other markings.)
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Testimony by an expert witness (with a home inspection background) indicated the inspector should have examined more structural members after finding some that were damaged.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The expert witness also indicated that while the inspector recommended an engineer do further evaluation, he did not clearly present the significance of the problems and should have recommended a geotechnical review.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† It was alleged that the inspector verbally indicated the cost of the repairs would be in the order of $15,000.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† ¬†The expert witness said if the inspector did indicate $15,000, that amount appeared to be insufficient.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The contract says the Standards of Practice and Code of Ethics were attached, but the judge did not find evidence that they were included.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The judge says either way, meeting the Standards might still result in a negligent report.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† There was a room with access to rotted beams not identified by the inspector.
o¬†¬† The room apparently was accessible from outside the home by a door, but not from the inside.
o¬†¬† The Inspector could not open the door; he was not sure why, but assumed he would be able to get to the room from inside.
o¬†¬† It seems he did not. This limitation was apparently not addressed in the report.
o¬†¬† The judge felt it was the inspector‚Äôs responsibility to inspect the room.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The inspector found two rotted beams but was inconsistent between the Discovery discussion and Trial discussion about whether he inspected all the beams in that area, or whether he only inspected these two as a representative sample.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The inspector argued at trial that the rot at some of the beams progressed considerably since the inspection. (Trial was 2 ¬Ĺ years after inspection.) The expert witness‚Äôs photos, however, clearly showed the rot less than 3 months after the inspection.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The judge was convinced the words ‚Äúfix-up structural deficiencies‚ÄĚ was negligent in that these lulled the client into thinking these were minor issues, and that the recommendation to get an engineer was not clear enough.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The inspector did not give written costs, but gave a verbal indication. The judge was persuaded the inspector regularly gave costs by the fact that the contract had a clause saying if costs were given, they were only ballpark.
o¬†¬† Cost estimates, if provided, are ‚Äúballpark‚ÄĚ estimates only and are not intended to be relied upon by any person for accuracy. The CLIENT should obtain written bids from qualified licensed contractors in order to determine the possible cost of repairs.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The judge believed the inspector was inconsistent between Discovery and Trial about whether he gave costs for the settlement of the building due to the lot slope.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The client indicated he asked the inspector three times whether there was anything that should keep him from buying the house. The inspector apparently said, ‚ÄúNo‚ÄĚ and later said, ‚ÄúYou can go ahead, there is no problem.‚ÄĚ The inspector said he did not remember this conversation, but did not deny it. The judge found that significant.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The judge did not accept the limitation of liability clause, saying the inspector made recommendations about the advisability of buying the home, although the contract said that was not the intent of the inspection or report. If the inspector goes beyond what is required, he is bound by those statements.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The clients were rushed in signing the report, although they were intelligent, experienced, university educated people.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The judge said the inspector should have drawn the clients‚Äô attention to the onerous terms of the limitations of liability clause.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† The report and contract were separate documents, and the judge found nothing incorporating the report into the contract.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Don‚Äôt advise clients whether or not they should buy the home.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Don‚Äôt say things that are different than what you put in your report.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Don‚Äôt offer opinions on things outside the scope of work.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Get your contract into people‚Äôs hands before the inspection and give them a chance to read it and ask questions.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Include a copy of the contract with the report.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† If you have a limitation of liability clause, understand this is an onerous and unexpected clause. Draw the client‚Äôs attention to it.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† If you cannot get access to an area, document the limitation clearly.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† If you find damage during sampling, point out that there may be additional damage and recommend further evaluation as needed.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Make your client aware that where surface damage is visible there may be also be concealed damage.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Make your recommendations clear.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Do not use reassuring language to minimize issues.
¬∑¬†¬†¬†¬†¬†¬†¬†¬† Tell the client about the possible implications of defects.