The inspection agreement contract is something that generates a lot of questions from clients. The main purpose of the inspection agreement is to define the scope of the service being offered. For instance, the term home inspection is not very specific because it has a different meaning, to different people. A home inspection including roof and termite is more specific, but still does not explain what other systems the inspector includes in the report. States with licensing for inspectors will have Standards of Practice the inspector will have to meet. In states where there is no licensing, the inspector can put in, or leave out pretty much anything they want to. Someone who has purchased a home in Texas, a state with a strict, Standard of Practice, will likely be disappointed in an inspection done by someone in a state with no licensing or a more relaxed Standard of Practice. Obviously, the inspector’s experience will make a huge difference in how in depth the report is too.
In Florida, it is part of the statute that inspections are contracted.
468.8321 Disclosures.—Prior to contracting for or commencing a home inspection, a home inspector shall provide to the consumer a copy of his or her license to practice home inspection services in this state and a written disclosure that contains the scope and any exclusions of the home inspection.
History.—s. 2, ch. 2007-235.
This is about as specific as you can get! It clearly states that the inspection can not be contracted or started until the the client is provided with a copy of the inspector’s license and the scope of the inspection, and any exclusions. There will likely be a clause stating there are no promises other than those set forth in the agreement, and that all prior discussions are merged into the inspection agreement. In addition, it should state that any modification of the agreement must be in writing. This is for that client who wants “everything” inspected but doesn’t want to pay for additional services. It is also an opportunity to suggest additional services the client might be interested in such as mold or other environmental testing for those who offer those services.
In the old days before licensing, some inspectors would email the inspection report with a clever little twist that the client had to agree to the terms or the report wouldn’t open. That is not fair as the client would already have paid for a service without actually agreeing to the terms of the service.
Our company has always emailed the inspection agreement immediately after the client first calls to request the service, so they have the time to read it carefully, and ask questions if any. If the terms do not suit them, they can choose a different inspection company. The time to find out you don’t have a meeting of the minds, should NOT be in the driveway of the home on the last day of the client’s inspection period. It should also NOT be be months later when an angry client finds an expensive defect he thinks was missed, when in reality it was never part of the contracted service. This is not fair to either party!
On average, 3 or 4 times a year, we have clients who cancel because they do not agree to the terms. We wish them well in finding what they need. Hopefully they do not end up with the inspector who hands them a 4 page legal document to read and sign right before the inspection starts. Courts refer to this as signing under duress and the inspection agreement can be declared not valid.
Toward the top of the agreement is where you should see the price, and when payment is due, usually on the day of service. You may see a personal guaranty clause if the client is buying through a corporation. Also, very important, it should state who owns the report. Generally it belongs to the inspection company and is licensed for the sole use of the client. Sometimes the report is shared with a different client by a 3rd party after a deal falls through. This clause protects the inspector from claims by someone other than the client. The home may have changed for the worse in that time period and the new buyer is making a decision without up to date information. Again, this is not fair to the 2nd buyer or the home inspector.
Other items included in the inspection agreement should be a disclaimer of warranties. Some people are under the incorrect assumption that they are purchasing a home warranty. An inspection is a snap shot of the visually observed conditions the inspector finds on the day of the inspection and deems important. This should be made very clear otherwise the inspection company may receive calls for service down the road.
It is very important that a limitation of liability and damages is included. This protects both the buyer and the inspector. There is a lot of risk when doing a home inspection and it is the industry standard to limit damages to the cost of the inspection. If home inspectors had to pay actual damages, that would have to be reflected in the fee, and the average consumer could not afford an inspection. Home Inspectors are generalists who know a little bit about the many systems of the home. It is not affordable for clients to hire an Electrician, Plumber, HVAC Tech, Roofing contractor and Engineer, all specialists, when buying a home.
Keep in mind, the inspector is in someone else’s home and can only visually assess what they can see. Furnishings can cover problems that can be expensive and some problems are just not visible until a later stage. Also, keep in mind, experience is important. Ask how long the inspector has been in business.
There should be a section that explains the procedure for the client to make a claim. Claims are usually limited to a specific time fram, such as within a year of the service. The inspector has the right to go back (usually within 2 weeks) and verify any issues. This must be before the alleged issue has been repaired. There should be a description of the dispute process which is usually arbitration and waiver of litigation.
This is a general idea of what a client can expect to find in a standard inspection agreement. It is very important to read and understand the document before signing. Your home inspector wants to do the best job possible for all their clients. The inspection agreement outlines what will be done, and won’t be done so all parties are on the same page.