Featuring America's Home Inspector: Nationally Syndicated Columnist, Barry Stone

Home Inspector Makes Suspicious Mold Disclosure

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  Our home recently fell out of escrow, and the circumstances were very suspicious. The buyers hired a home inspector who reported that we have mold. We were unable to see any mold, but the inspector said it was only visible with a special flashlight. We agreed to remove the mold ourselves, but the buyers said they wanted it done by a professional. Lo and behold, the home inspector was also in that line of work – for a fee of $1500. While we were negotiating this, the buyers cancelled the sale. What do you think of this situation?  Valerie

Dear Valerie:  The fact that the home inspector was ready to remove mold that no one else could see is highly suspect. Furthermore, it is a conflict of interest for a home inspector to perform repair work on a home that he has inspected. To do so violates the codes of ethics of every home inspector association.

The main issue for now is to determine whether you actually have mold in your home and what to disclose to future buyers. To answer the mold question, you should hire a professional mold inspector for an evaluation. If mold is found, you can have a qualified contractor do the remediation. And make sure that the one who does the removal is not the one who did the inspection.

If it turns out that you do not have mold, you can use the mold report for disclosure to future buyers. You can also use the report as evidence if you file an ethics complaint against the home inspector.

 

Seller Suspects Home Inspector Collusion

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:The people who are buying our home just had a home inspection. After the inspection, I heard the inspector tell the buyer’s agent that he would change the report to what the buyer wanted.  Since the report will be used to negotiate the terms of the sale, we are very concerned about what appears to be some sort of collusion. The inspector seems to be “playing ball” with the agent and the buyer, rather than simply reporting what he sees. Isn’t he supposed to be impartial in his findings?  Dori  

Dear Dori: The conversation you overheard between the inspector and the buyer’s agent has a suspicious ring, but it may or may not be as bad as it seems, depending on the details. For example, if the buyer wanted the inspector to inflate the severity of defects in his report, or if the inspector was being persuaded to report nonexistent defects, that would definitely involve unethical and fraudulent practices, calling for some form of legal recourse. On the other hand, buyers sometimes notice defects that are missed by their inspector, such as water stains in a closet or a cracked window. In such cases, it would be reasonable for a buyer to want those defects added to the inspector’s report.

Another example might be a safety violation where the inspector noted the defect but did not specify that safety was involved. In those cases, a buyer might request that the inspector use the word “safety” in the inspection report. Then it would be reasonable to “change the report to what the buyer wanted.”

Home inspectors should definitely be impartial in their findings. They should disclose what is true and observable. In your case, it would be reasonable to express your concerns to the agents and brokers in the transaction, as well as to the inspector, and to insist on an explanation of the conversation that you overheard.

Who Is Liable For Nondisclosure?

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: When we bought our house, our home inspector said that everything was in good condition. Since then, our basement has leaked, some of our circuit breakers became so hot they had to be replaced, and a chimney sweep told us that the fireplace is not usable. All of these issues should have been disclosed to us, and now we are saddled with one expense after the other. Who do we blame for these problems, the home inspector, the Realtor who recommended the inspector, or the previous owner?  Rena

Dear Rena: All three share some blame for the unfortunate lack of disclosure. The home inspector apparently did not do a thorough job. When a basement is prone to leaking, there are usually some signs of past leakage. If breakers are prone to overheating, there are usually some observable symptoms or evidence of faulty installation. When a fireplace is not usable, it is either because of substandard construction or material deterioration. Such conditions are typically identified qualified home inspectors.

If the Realtor recommended your home inspector, there could be some liability on the basis of “negligent referral.” Agents usually know which home inspectors are more or less qualified and thorough. Unfortunately, some agents are not inclined to recommend the best home inspectors. In some real estate offices, the best inspectors are labeled as “deal killers” or “deal breakers” and summarily dismissed from referral lists.

The sellers may or may not have known about the problems with the electrical panel and fireplace. Evidence of such conditions is not always apparent to homeowners. However, they probably knew about the leaking basement and should have disclosed that condition.

To hold a home inspector liable, you should give notice of the problems before they are repaired. Once the defects are altered from the way they were at the time of the inspection, it is difficult to raise issues of liability. Some home inspection contracts specifically require that you notify the inspector before making repairs.

At this point, you should give notice to the inspector, the agent, and the seller that these problems have been discovered. If no one is willing to address the matter, you can seek legal advice regarding disclosure liability.

Home Inspector Accused of Collusion

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: Before we bought our home, we hired a home inspector, but he didn’t report any of the major problems in the house. Now we have to repair the plumbing, the electrical wiring, and the roof. When he did the inspection, he said everything was OK, but he was just lying, and we think he may have gotten a big tip from the seller or the agent. He was supposed to be working for us. Why would a home inspector do business this way?  Beatriz

Dear Beatriz: To assume that a home inspector took a bribe is a big jump. When home inspectors fail to report defects, the problem is usually negligence or professional incompetence, not willful collusion with sellers or agents. Unfortunately, there are more than a few home inspectors who are just plain inexperienced or not adequately skilled as inspectors. Because of this, many homebuyers do not receive adequate disclosure. To make matters worse, there are many agents who recommend such inspectors to their clients.

The first thing you should do is have your home reinspected, but this time you should find an inspector with many years of experience and a reputation for thoroughness. To gather some leads, call a few real estate offices and ask for the most “nit-picky” home inspector in town. Tell them you want a home inspector who is known as a “deal breaker.” That’s the misnomer that some agents apply to the best inspectors.

A second report from a truly qualified home inspector will reveal the actual condition of your home and will provide a more complete list of the issues that were missed by the first inspector. Then you can notify the first inspector of your concerns and ask if he has errors and omissions insurance. Hopefully, he will be willing to address your concerns.

Teaching Disclosure Ethics to Realtors

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: As a real estate instructor, I teach many programs on ethics and disclosure to agents and people preparing to become agents. These same subjects are often addressed in your column. From your perspective, what can we Realtors do to enhance our ethical approach to real estate disclosure?  Janice

Dear Janice: Realtors are often advised, in seminars and trade journals, to disclose defects and recommend home inspections to clients. The reason given for this advice is to reduce liability and avoid lawsuits. That recommendation has merit, but it offers a narrow view of the issue. Reduced liability is a fringe benefit of disclosure. It is not the primary motive to disclose.

The best reason to disclose property defects is simple: It is the right thing to do. It is the way each of us wants to be treated in business. The focus, instead of liability, should be promoting the best interests of clients. Agents who pursue that approach, rather than a legalistic one, enjoy three primary rewards: They build a lifetime reputation for honest, ethical business practice; they receive the repeat business and referrals engendered by a solid gold reputation; and they reduce the likelihood of claims and lawsuits for undisclosed defects. From that perspective, here are some simple ways to put this into practice.

Agents should determine which home inspectors are the most experienced and most thorough, and they should provide a list of those inspectors to all of their clients. Articles and seminars often advise agents to provide inspector lists as a way to avoid liability, but the competence of the inspectors who appear on such lists is rarely mentioned. The problem here is obvious. If the list contains mediocre inspectors, then it fails on the ethics scale, while increasing the agent’s liability. If the client chooses an inexperienced home inspector from the agent’s list, disclosure will be incomplete, and disputes may occur after the sale.

Real estate brokers should be proactive about disclosure, even when they are not directly involved in transactions. Many brokers are laissez faire in their approach, uninvolved in the home inspector choices made by agents. This lack of oversight increases a broker’s liability. When a lawsuit for a faulty home inspection is filed against an agent, the broker is usually named in the suit. To avoid this liability, brokers should influence the inspector referrals made by their agents. The message should be, “This brokerage cannot afford disclosure related lawsuits. If you work for this company, you must recommend only the most thorough home inspectors available. Here is the list of inspectors we have found to be the most qualified.”

Brokers who wish to maximize this approach can test local inspectors to see who qualifies for the referral list. Inspectors can be hired to inspect a representative home, and the findings can be compared to see which inspectors provide the most complete disclosure.

Real estate professionals are in a service business. Success in any service business comes from treating customers the way you want to be treated. Homebuyers want to know what they are buying before they buy it, not after the sale is closed. Agents and brokers who approach their profession from this perspective will build reservoirs of repeat business for years to come and will simultaneously reduce their liability.