Did you buy the home of your dreams, only to find yourself living a nightmare after moving in? Major damages that pop up after closing can feel like your perfect house is more like a house of horrors.
For homebuyers who hired a home inspector, those issues can feel even more unfair. An inspector is supposed to find and report problems before you buy the house. So when you have multiple issues soon after you move in, it’s normal to start to wonder if the inspector really did their job.
If that’s you, an undercover study conducted by Consumer Checkbook indicates that your skepticism could be well-founded. This consumer research company conducted an unofficial test of a dozen home inspectors, in which each was paid to report on the same property … with known defects.
Of the twelve, five missed a major plumbing leak, eight did not report evidence of a rodent infestation, and four failed to record visible water damage from a faulty roof, among other concerns. Obviously, inspectors have the potential to miss some pretty serious problems.
So if major issues arise soon after closing, can homebuyers sue their home inspector? Maybe. But there are things you should know first. With the help of real estate attorney James Brown, who practices law in West Palm Beach, Florida, we’ll walk through the realities.
What should you consider before suing your home inspector?
For new construction, the builder may be at fault
If you’ve purchased a new-construction home, good on you for getting an inspection –– not all buyers do! However, if you’re now having issues with your newly built home, the responsibility may lie with the builder and not the inspector.
New building materials often respond to seasonal changes in unpredictable ways. For example, new lumber can have up to a 19% moisture content, according to federal standards. But during the course of one summer, the moisture content may fall to 9%. That kind of shrinkage can cause settling or drywall buckling that your inspector wouldn’t have been able to detect when you purchased the home.
In fact, there are many possible problems that could occur over time with a new build. That’s why builders usually include a home warranty for new owners –– because it’s quite possible that problems will pop up as the seasons change.
Talk with your real estate agent; an agent who is familiar with new construction will be able to help guide you in the next steps. They may refer you to your warranty documents for coverage terms and limitations. And they may also help you reconfirm that code inspections were done (and passed) at the proper times.
For an existing home, the seller may be at fault
In most states, sellers are required to disclose any known material defects to the buyer prior to purchase.
Seller’s disclosures are legally binding documents. That means if the seller didn’t tell you about a known issue, and you can prove that they knew about it, you may be able to sue them for it.
Brown says, “We get a lot of cases where going after the inspector is fruitless, but you can go after the seller under a body of law called Johnson v. Davis.”
This Florida court case basically looks at whether the issue was known by the seller, whether it materially affects the value of the home, and whether it was readily observable.
However, the word “known” is a huge caveat. A seller can’t disclose issues that they don’t know about, nor are they required to.
Will you be able to prove that the seller actually did know about the problem you’re experiencing? If so, you may have a case; if not, you probably won’t. Talk to a real estate attorney for more guidance.
When do you have a legal claim against the inspector?
If you’ve ruled out the builder and the seller as possibly responsible for these issues, then the inspector must be to blame for your problem, right? Well, maybe … and maybe not. You could have a legal claim to hold the inspector responsible under the following precedents.
If the inspector breached the contract
A signed contract forms the basis of a legal claim. As a homebuyer now in distress, you should first refer to the contract that you signed with the inspector.
Look specifically at what the contract says that the inspector will do for you. Does the contract say that they would perform certain inspections, and do you know for a fact that they didn’t? If that’s the case, the inspector may be liable under breach of contract.
Your contract with the inspector should also outline the inspector’s reporting duties. Do you suspect that they hid, changed, or misrepresented something in the report? If so, that may also fall under a breach-of-contract liability.
If the inspector was negligent
Negligence refers to a lack of reasonable professional care within the contract. Maybe the inspector performed all the duties of the contract, but did they perform them to a reasonable standard? Meaning, did they do and see what any other qualified inspector in their situation would do and see? If not, you may have a claim of negligence on your hands.
Brown relates a case where an inspector failed to disclose visible water stains on the ceiling. The roof was obviously leaking, but the out-of-state buyer did not know about the condition prior to purchase because the inspector didn’t include the ceiling stains in the report. In this case, the inspector was clearly at fault.
“There’s an implied duty of merchantability,” Brown explains. When you buy a car, it’s implied that it will come with four wheels. In the same way, when you purchase a home inspection, it’s implied that obvious defects will be recorded.
If you think the inspector was negligent in their duties, the best way to prove it is to document the extent of the damage to your home. Take lots of photos before cleaning up or fixing anything!
Then, ask another inspector (or several others) to take a look and give you their professional opinion about the situation. If other inspectors agree that the original inspector should have caught the problem, you’ll have a better chance of proving negligence.
But remember, home inspectors are limited in their scope based on what’s immediately visible. A negligence claim might not work if the defects were hidden from view, such as behind wall paneling or underneath basement flooring.
A home inspector would also not be considered negligent if the damage results from an area that would require specialized inspection, such a plumbing, septic, or foundation inspection.
If the inspector was fraudulent
Fraud refers to fabricated details in the inspection report. In another word: lies.
Outright lies on an inspection report would be different than negligence. Rather than an absence of accurate, complete information, fraud would include falsified information. For example, an inspector claims that repairs are required, when in reality they are optional.
As a buyer, you may not be as affected by fraud because oftentimes, inspection repairs are paid for by the seller. But if you did have to pay for repairs based on made-up information (like in the case of an as-is home purchase), then you may have a claim for fraud.
To prove a fraud claim, you’ll want to keep all receipts for repair work done. You may also need to contact a few professional contractors to see if the inspector’s stated need for repairs was fact or fiction. A real estate attorney can help guide you.
If there was no exculpatory clause in your contract
An exculpatory clause is a paragraph stating that the inspector’s liability is limited to the amount of money you paid for the inspection, and no more.
If you find this clause in your inspection contract, it’ll be very difficult to recover any money for damages in a court of law. In fact, the cost of litigation may end up being greater than the amount you get back in a settlement.
What should you do?
If you think you do have a legitimate claim against your home inspector, your first step should always be talking to your real estate agent. Their experience in the industry can help give you some outside perspective that can clarify your options.
Your real estate agent will also be able to refer you to a reputable real estate attorney. When you meet with the attorney, be sure to bring your inspection contract, your purchase contract (and seller’s disclosures), any home warranties, your homeowners insurance policy, and all documentation of the damages in question. This information will help the attorney get a comprehensive picture of your case.
When it comes down to it, Brown says, “Building inspectors know how to dodge liability. We very rarely sue building inspectors.”
After consultation, the attorney will be able to advise you more specifically on your next steps. Together, you may find that negotiation and mediation are the best route. Even with an exculpatory clause, the inspector may agree to settlement if it keeps them out of a lengthy (and publicly recorded) court process.
If your attorney advises you toward litigation in court, remember there are state limits to the amount of money you can recover in small claims courts.
Damages to a new home purchase can be disheartening, to say the least. With the right team of professionals by your side –– including your real estate agent and attorney –– you can approach the next steps with confidence, whether that includes suing your inspector or choosing a different solution to your problem.
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