http://www.cbc.ca/canada/british-columbia/story/2009/11/11/bc-home-inspection-lawsuit.html
Home inspector must pay $192,000
Ordered to pay the difference between his estimate and actual repair cost
CBC News
The B.C. Supreme Court has ordered a home inspector to pay nearly $200,000 in compensation to a North Vancouver couple for a faulty home inspection he performed.
The court found that Imre Toth of Aldergrove was negligent because he failed to inspect the entire home, and should have advised the couple to hire a structural engineer before they bought the $1.1-million house in September 2006.
Toth’s estimate of $20,000 to repair the house was less than one-tenth of the actual cost of $212,000.
The couple signed an agreement with Toth that limited the inspector’s liability to the cost of his service, which was $450.
But the judge found that Toth did not give the couple sufficient time to read the contract and did not do enough to highlight the clause limiting his liability.
The court ordered Toth to pay the $192,000 difference between his estimate and the final repair bill.
Another Vancouver-area home inspector not connected to the case said he has never heard of a judgment that big, and hopes it leads to tougher regulations for the inspection industry.
“The average inspector is only there for three hours or less,” said Sean Wiens. “I’m of the view, and I don’t represent the majority, by far, that a good inspection is a full day.”
(Additional information in the on-air news story said the judge found that the inspector spent only 30 minutes checking the roof and the entire outside of the structure.)
Dinosaur
How now, Mighty Sauron, that thou art not brought
low by this? For thine evil pales before that which
foolish men call Justice….
Replies
his mistake was offering up a price to repair instead of just pointing out the deficiencies and letting the prospective buyer do the homework on the repairs. Really... would you expect a HI to know the costs of all the repairs he finds deficienies for?
Not that I have any love for HIs but you gotta know what other peoples/businesses limitations more than they need to know them.
>>his mistake was offering up a price to repair instead of just pointing out the deficiencies and letting the prospective buyer do the homework on the repairs. Really... would you expect a HI to know the costs of all the repairs he finds deficienies for? Good point.There are some jurisdictions which require an HI to give estimates!!!!I'll give very general estimates for a few things, but generally avoid them. (E.g., new water heater.)I do give referrals to contractors I respect for obtaining estimates.Bear in mind, the HI in question may well have hedged his estimate and the 'hedging' aka provisios got lost along the way.It can be amazing to hear, after 2 or 3 stops along the way the things I have supposedly said in an inspection!
"Man's capacity for justice makes democracy possible, but man's inclination to injustice makes democracy necessary." Reinhold Neihburh: 'The Children of Light and the Children of Darkness'http://rjw-progressive.blogspot.com/
I was had something I said, as the buyer, put in the report by the inspector as if he'd caught it. CYA, I know, but I wondered why I was paying him to quote me.
>There are some jurisdictions which require an HI to give estimates!!!!<
that's bad. it's like asking the CC finishers what the cost of a roof will be. Maybe he ran a roofing company last year, maybe not. It would only be odd luck to get an accurate number.
"There are some jurisdictions which require an HI to give estimates!!!!"That is insane. HIs have no business doing estimates
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Bob,
You reading this?
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
He was way out on a limb if he offered them an estimate to repair. When I do an inspection I totally separate my inspection services from my work as a contractor. They want cost figures? I ask them to wait until I have finished the inspection and been paid, then initiate a new relationship.And any 'estimate' made as part of a 3 hr inspection is not an estimate, it is a WAG!
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
So, you did end up starting a HI business?
I remember you were just looking into it a few years back.
BTW - I too would be surprised of HIs were required to give estimates. OTOH, maybe something like "that repair would cost between $100 and $100,000". :-)
Also we haven't heard the subject HIs take on the situation. At this point, who is to say there wasn't hidden damage involved? It sounds like he maybe did identify there was a problem but didn't realize the extent of it.
OTOH, I think the initial article was possibly on target when it said that the HI failed to recommend a structural engineer (or similar). Every HI inspection I've read always says stuff like "A licensed contractor should be hired to make the repair." or "A licensed plumber should be hired to fix the leaky faucet" or "a roofing contractor should be contacted to fix the nail pop on the 3:12 roof" etc, etc next to every noted repair needed. Never seen one though (and I've seen a bunch) that gave an estimate of cost to repair. Here, state law even prohibits the HI from saying exactly how an item is to be fixed.
Further, the article said something like the HI estimated the repair was to be 20k. Granted 20k buys more or less stuff/services in different geographies, but to me it is fairly major. It would seem that if the buyers were looking at a 20k fix which obviously, neither they (or the HI) knew much about they would have gotten a second opinion. An actual estimate from someone who was competent to do the repair. Sounds to me like maybe they have more money than sense.
Did not start a HI business per sae, but I do 3-4 a year.I also do consulting and maint planning advice, so that class helped me there. and when I am called for a minor repair, I find it simpler to upsell because I now have a broader outlook/eye for seeing other things that need repair once on the job.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Good for you. Not sure of you remember me saying it but I went to the classes and got a HI license some time ago but never really pursued it. I feel like it gives me broader perspective too.
Appanently, the HI missed seeing serious structural issues which were not hidden or inaccessible. This was established by another inspector or contractor finding water pissing out of a beam or joist and being able to sink his knife into it easily. My reading of the news report is that that negoigence is what got the judge on the rag.
As for him giving estimates, in 3 hours even a contractor couldn't offer more than a WAG as Piffin pointed out, so he should have been very specific that the estimate figures he offered were essentially worthless.
The issue of whether or not the 'not liable' clause is valid is interesting. In contract law, you've generally gotta give as good as you get, or the contract as written can be challenged and tossed by a court. Civil courts used to be called 'courts of equity' (as opposed to 'courts of justice'), so equity or evenhandedness is an entrenched philosophy. However, this could be viewed as a sort of limitation of warranty rather than a contract quid pro quo, and the jurisprudence on that is somewhat different.
In addition, if it could be established (apparently it was) that the HI pushed the HOs into signing his contract or brushed off their concerns with phrases like, oh, it's just a bunch of unimportant legalese, you don't need to worry about that, I can easily see the judge's point.
All that said, however, I haven't read the decision itself. We're going on just the news reports so far. I've also seen a report from Canadian Press which was similar to the CBC story, but I haven't had time to look up the decision itself. I'll try to do that tonight or tomorrow.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
The transcript should be available soon, on Canlii:
http://www.canlii.ca/en/bc/bcsc/
Could be interesting reading. I gather the gist of the issue is that the HI gave the buyers an estimate of what the cost to repair would be, while completely missing/ignoring more and more substantial rot, that should have been easily apparent to any reasonbly qualified HI. And because the homeowners relied on his supposed expertise to make their decision, he was found at fault.
If he had simply pointed out the rot, suggested that there may well be more, and told the buyers he had no idea what it would cost to repair, he likely wouldn't have been in that situation.
It's already there: http://www.canlii.ca/en/bc/bcsc/doc/2009/2009bcsc1515/2009bcsc1515.html
I'm reading it now....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
I've finished reading through it, and although there are aspects of the decision that merit further study, it appears that the HI committed two fatal errors:
1. He did a really lousy job of inspecting; so bad as to constitute negligence. This was proved by the testimony of another home inspector testifying as an expert witness on behalf of plaintiffs. The details are in the decision, and I highly recommend anyone doing this kind of work--and any contractors who might be called on for estimates in similar situations--read them and take note.
2. He did not give the clients enough time to read the contract, and worse, he did not verbally explain it, nor ensure that his clients understood it (and especially any particularly onerous terms it contained) before they signed it.
As a sort of 2a, the warranty limitition clause was not, in the judge's opinion, drafted with enough clarity, and it was too broad in its effect. That being the case, the clause limiting his liability to the fee paid could be construed against him by the doctrine of contra proferentem.
Error number two contains an important lesson for those of us who ain't lawyers: Most people believe that they are bound by the terms of any contract they sign, even if they haven't read it. But according to the Supreme Court (opinion by Beverly McLaughlin, CJSC at that time):
In other words, if your contract contains any exclusionary clauses or limitation of liability language that an ordinary homeowner would not understand and expect to be there, you had better made very damned sure that they have read it and understand it clearly...perhaps even going so far as to have them initial the clause in question in addition to signing the whole contract.
There are other interesting aspects of this case. I would strongly recommend that all home inspectors read it in its entirety. It makes good reading for the rest of us, too.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Thanks for that. The comments on contracts reminds me of something I ran into a few years ago - my daughter was invited to a birthday party at the local YMCA; it involved various activities, including using the rock climbing wall. In order to be allowed to climb on the wall, each kids parent was required to sign a waiver.
One clause in the waiver struck me - it said that you couldn't sue the YMCA, even in the case of negligence on their part. I thought that part was particularly odd, essentially the YMCA was saying they didn't have to give a hoot about anything, and if they killed your kid, well, too bad.
A lawyer friend of mine confirmed what I thought - if push came to shove, there is no way it would stand up in court, and it was likely there to discourage people from suing if anything happened, people would go on the assumption that they couldn't sue, and also that it was likely a clause suggested by their insurance company.
Most injury waiver clauses aren't worth the paper they're written on once they get to court. And any third-year law student who couldn't beat one to a pulp in a coupla minutes flat oughta consider taking up another line of work.
The purpose of making people sign those things is to discourage them from ever consulting a lawyer in the event of a relatively minor injury. If there is major injury or death and the injured party or his estate feels there was negligence by the owner of the facility where the injury occurred, it's a no brainer he'll consult an attorney...and then the jig is up.
All ski centres have injury waiver lanuage on the back of every lift ticket; that doesn't prevent people from suing ski centres when they get hurt (even if, as in 99.9% of cases, it's the victim's own fault). If I, as a patroller, arrive at the scene of an accident and see or hear anything that indicates the victim might consider suing the mountain, I have to call a special code over the radio so that another team will be dispatched to document everything about the incident with photographs, terrain surveys, witness interviews, weather and snow condition reports, and a whole bunch of other stuff.
By the way, one of the criterion under that 'anything' rubric is if the victim mentions he is a lawyer or has a lawyer in the family or as a close friend. No kidding.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
A challenging case, on several levels.
FWIW, I discuss the limitation of liability clause in my contract with _every_ customer, AND offer them the alternative of an "Inspection Plus" with unlimited liability, a stated hourly billing rate, and an observation that they should expect that inspection to last 12-16 hours.
No one has ever taken the Inspection Plus option. (I carry smelling salts in case I ever have to tell an agent that we want 2 days in the house....<G>)
The market reality for home inspectors is that in every market I've heard of, the prevailing fee pays for about 3 hours of the inspector's time.
Perhaps 4 in the market of the the story.
Try to book and bill for a full day inspection and, unless you are extraordinary, you won't get much work.
So, if the market will pay for a 3 hour inspection, how much time can the exterior and roof take?
>>(Additional information in the on-air news story said the judge found that the inspector spent only 30 minutes checking the roof and the entire outside of the structure.)
Keeping in mind that one has to look at just about everything else, 3 minus 1/2 = 2 1/2 left for structure, heating, cooling, plumbing, electrical, kitchen, interior, attic, crawl/basement, windows, doors, etc etc etc.
QUOTE
Another Vancouver-area home inspector not connected to the case said he has never heard of a judgment that big, and hopes it leads to tougher regulations for the inspection industry.
"The average inspector is only there for three hours or less," said Sean Wiens. "I'm of the view, and I don't represent the majority, by far, that a good inspection is a full day."
END QUOTE:
I'm all in favor of tougher "regulation" of the industry, starting with qualifications....
But, what is a "good inspection?" Hmmmm.
In most cases I know (or can know) within about 1/2 hour, maybe 45 minutes, if there are any "major" concerns ($1,000 + to repair or replace or a significant safety hazard, using the 'standard' risk analysis formula.)
The rest of my time is spent more or less on 'little stuff' and looking for 'hidden' big stuff in crawls and attics and inside the panel(s)
"Man's capacity for justice makes democracy possible, but man's inclination to injustice makes democracy necessary."
Reinhold Neihburh: 'The Children of Light and the Children of Darkness'
http://rjw-progressive.blogspot.com/
Here many HIs carry Errors and Omissions insurance for such things. All thier contracts limit their liability, but as we see here, what is on paper and what a court may decide may be different.
But, what is a "good inspection?" Hmmmm.
Not sure what a "good inspection" might be, that is open to much speculation. Makes me wonder, though, what a "good inspector" is; and is this mythical being kept in the same place as the seldom-seen "good architect" and the even more elusive "good lawyer"? Which I hope Mr Toth is able to find. Bottom line here is do the diligence , don't be greedy and CYA in the contract.
Introducing some responsibility to the Home Inspection business is a fantastic idea. I was
recently involved with a renovation on a house that was inspected. The inspector was there
for two hours walking around with a flash light, and at the end of it gave the HO a list of
problems. My company completed the work and his list was completely off and his
solutions were mostly solved with caulk. The whole business is a rip-off. I applaud this
decision. I hope it spurs the business into officially certifying and licensing all those
involved.
HI is a joke.
Get a relationship with a qualified contractor. Have him give you the same info and a real proposal to address the issues.
If you were inclined to buy a used car, and have someone check it out before you finalized the deal - would you take it to your mechanic - or a meter maid...
Remodeling Contractor just on the other side of the Glass City
But the judge found that Toth did not give the couple sufficient time to read the contract and did not do enough to highlight the clause limiting his liability.
That's just preposterous! How much time is sufficient? You would think that the people signing the contract would decide.
And what's this about a highlighter? Pink, Blue... nope, has to be yellow.
If the story is true as written, I hope it's reversed on appeal. The judge sounds like he's on a mission.
Most odd judgements do seem to be overturned on appeal. We had one here a couple of years ago where a tenant sues for falling through a crawlspace trap door she had left open. The landlord was found liable because it didn't meet the latest code. Silly decision, overturned by higher court.
Don, in re the points you raised about the contract, see my previous post and read that part of the decision. The judge wasn't inventing anything new--this is established by the jurisprudence--and we all need to pay attention to that lesson if we don't want our own contracts to come back and bite us on the butts.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
One thing to keep in mind when you read about a court case is that the report never has the full story. Even if you get a trial transcript, it's very likely that there are other factors that are not reflected. This can make it a challenge to make any generalisations.
As far as home inspections are concerned, my biggest regret is that they are necessary. Uneducated buyers and motivated sellers make a recipe for unhappiness.
Anyone involved in construction knows that a nice paint and plaster job can hide a multitude of sins. We also know that customers can be quite delusional in their expectations. An awful lot of the business relys upon simply getting the job signed off, getting paid, and what the customer doesn't know 'won't hurt us.'
Naturally, when something turns up a few years later, it becomes 'but the inspector should have caught it.' We'll overlook the severe limitations of most home inspectors - we all have stories to tell - as well as their 'I'm not responsible for anything beyond cashing your check' contracts; the fact is, great efforts are frequently made to hide things from the inspector, and we often expect super-human abilities on their part.
A recent basement flood has really brought home the way a customer can radically change their expectations. One set of exacting expectations when the insurance was thought to be paying, and a far more lenient standard when the customer was paying.
We see a similar problem regarding home inspections. Prior to the sale, why, what a lot of things that simply must be fixed. After the sale though, there is never any need to actually have those repairs made. It's all a game- with the HI as a 'wild card' for hire.