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Limited Liability Clauses in Home-inspection contracts

Whether you're building a home from the ground up or buying one that's already there, ultimately closing the deal often hinges on an inspector's report. These home-inspection reports are meant to confirm the residential structure is in good physical condition. But, as you can probably imagine, these reports aren't always accurate. In the case of an imprecise inspector's report, who should bear the cost of any resulting injury or repair?

Rather than battling over the terms of an inspector's contract after the damage is done, you should contact a construction law attorney to make sure the terms are fair and well understood before the inspection takes place.

Home inspectors are responsible for checking the condition of certain structural components such as:

  • Exterior
  • Roofing
  • Plumbing
  • Electrical
  • Heating
  • Central air conditioning
  • Interiors
  • Insulation and ventilation Built-in kitchen appliances

Before any inspection, the inspector and the homeowner bargain for a pre-inspection contract that lays out the terms of their relationship. Among other things, this pre-inspection contract will contain terms that serve to limit the inspector's liability in the event of a faulty report.

This language in the contract commonly seeks to limit the inspector's liability to only the full amount paid by the homeowner for the inspection. For example, imagine a homeowner pays $500 for an inspector's report that fails to include information about a house's leaky roof. If that leak creates water damage, the aforementioned terms attempt to limit the inspector's liability to the $500 the homeowner paid for the inspection. Of course, the cost of water damage or similar repairs can far exceed that inspector's fee amount.

As the CCB notes in its notification to inspectors, these limited liability clauses don't often hold up in court. In most cases, such terms must be bargained for by the parties, and clearly visible in the contract. Unfortunately, while a judge may decide the terms are invalid, obtaining such a judgment could require a lengthy litigation process, which may end up costing more than the repairs themselves.

You can usually recover the cost of repairs while avoiding litigation by making sure the terms in the contract are well understood by all involved parties. A local construction law attorney can help.

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