In our Questions To Ask Your Home Inspector post, one of the things we encouraged you to do is to ask for a copy of a home inspector’s contract prior to hiring them. Some will use long, legal filled contracts others will have just a few terms and others still will have no formal agreement between them and you. Make sure you understand what they use and what it says – it could turn out to be really important later if things go horribly wrong!
Remember, you don’t have to agree to anything you don’t want to or don’t feel comfortable agreeing to. That may mean that some providers will choose not to work with you and you will then have to decide how strongly you feel about the language in their contract. That decision is solely yours to make.
That being said (and again we are not lawyers, this is based on our personal experiences so check with your lawyer or advisor), some items to look for and be absolutely sure you understand BEFORE you sign are:
Liability Limits Of Releases
This could be any clause that releases them from liability – it may be a partial release or it may be a full release. It may read something like this “The Company’s liability for any Client post-inspection claims is limited to a maximum of the inspection fee paid.” Case law and state laws vary on this topic, but remember that whatever you sign, you are agreeing to. It can be extremely difficult to get past a signed document in a legal case.
Entirety Of Agreement
There should be something in the contract that says that the document is the entire agreement between you and the home inspector. That way you are both agreeing to the entire set of terms and scope of work to be performed.
This is a legal term that basically will state that is one or more pieces of the contract are found to be invalid, the rest of the contract is still valid. One piece being thrown out does not make the whole thing go away.
Notification & Time Period To Make Any Claims
This should spell out exactly how you have to notify the home inspector if you find a problem with their inspection or report (often times it will say you have to do it in writing, for example). The contract almost always states how long you have to make a claim. This is also governed by state laws, so it is possible an inspector could have something in their contract that is not what your state’s law is.
Look at that time limit and make sure it is reasonable. In our case, there was not a contract in advance of the inspection, but in the report document it said we had 7 days to file any notice of problems. That is ridiculous when you think about the home buying process. Problems will not “become know” under most circumstances until after you actually take possession of the property – you don’t have access to it prior to that time other than for scheduled inspections.
Arbitration, Mediation Or Alternative Dispute Resolution
The contract may specify that before an actual lawsuit would be filed, you’d agree to another method of trying to resolve the dispute between the parties. This could be mediation, arbitration or could be called “alternative dispute resolution”. Basically it means that the parties (you and the inspector) are agreeing to try to resolve the dispute in at least one other way before lawsuits are filed. It’s not necessarily a bad thing, as lawsuits are EXPENSIVE.