A home inspection is performed by a home inspector as a result of the sale of a home. This inspection is an assessment of the current condition of a home. Home inspectors are professionally trained to identify issues and risks with a home and may suggest recommendations based on the inspection. A pre-inspection agreement allows you to set the exact terms of your inspection and helps insulate you. EliteMGA requires that you always have a signed pre-inspection agreement before you begin an inspection.
What is a Pre-Inspection Agreement
A critical component of the home inspection process is a pre-inspection agreement. A pre-inspection agreement should be signed by clients before a home inspector performs an inspection. A pre-inspection agreement sets clear expectations and protects the home inspector against future claims and disputes. Key elements for pre-inspection agreements are included in the contract. For added security, EliteMGA provides home inspectors with errors and omissions insurance policies that protect them from lawsuits or claims that are based on omissions or mistakes made in an inspection.
What Resources are Helpful When Drafting a Pre-Inspection Agreement?
There are numerous sample pre-inspection agreements online. However, these should be used only as references. It’s important to check the state code and have the pre-inspection agreement reviewed by an attorney.
An attorney will provide suggestions on the agreement and ensure that the agreement covers the home inspector in the event of a claim or dispute. The pre-inspection agreement is the home inspector’s first line of defense if issues arise.
Sometimes, pre-inspection agreements are difficult to interpret and understand. A pre-inspection agreement must be easy to read by including proper spelling, appropriate fonts, spaces, and organized text. Although this is necessary, it’s even more imperative that the technical details of the home inspection are easy to understand. Be specific about identifying key elements for pre-inspection agreements.
Key Elements for Pre-Inspection Agreements
- Home inspection fee and due date.
- Exclusions of the inspection. The inspector does not include engineering or architectural services.
- Inclusions of the inspection. Clearly, describe the scope of services.
- Extras that can be included in the inspection for a fee.
- Limitations of liability. See a lawyer and state provisions.
- Dispute resolution process in the event of a claim.
- There is no guarantee or warranty on the inspection.
- All changes to the agreement must be in writing.
There are several types of exclusions, including items that a home inspector: never inspects, usually inspects but may exclude due to extenuating circumstances, only inspects if the client adds the service for a fee.
Importance Of A Home Inspection Agreement
A home inspection agreement are an important tool used to protect you and your business from the risk of claims resulting from issues like damages, errors and omissions.
Why you should have an Attorney Help Write your Pre-Inspection Agreement
It’s crucial to have an attorney’s assistance when creating a pre-inspection agreement since state laws vary. Limitations of liability provisions, in particular, can be location-specific. By drafting an easy-to-follow and clear pre-inspection agreement, inspectors are likely to resolve disputes before a lawsuit arises, with less impact on their home inspection insurance.
A statute of limitations provision deters clients from coming back with complaints against home inspectors long after their inspection. Additionally, a severability clause protects the contract when a court voids a portion of it.
Frequently Asked Questions About Home Inspector Pre-Inspection Agreements
Knowing the risks that insurance inspectors face is our business, and we take those risks very seriously. From identifying risks to helping home inspectors mitigate those risks on the job, we constantly research the latest trends in the industry so that we can be prepared to give advice to inspectors who are in search of answers about mitigating risk. Through our time in the errors and omissions insurance industry, we’ve found that the pre-inspection agreement is among the chief concerns for inspectors, regardless of how much experience they have in the field. Thus, we have here compiled a short list of errors and omissions insurance questions and answers regarding the pre-inspection agreement, and we hope that it will serve as a resource for inspectors and their clients:
Should all Clients Sign an Inspection Agreement? What about Clients Who are not Local?
Absolutely. The pre-inspection agreement is an essential tool in protecting not only your client but yourself as well. Because non-local clients may have not yet seen the house, it is up to you to protect yourself by securing the inspection agreement signature. In most cases, an email or fax signature will be relatively easy to obtain.
Can Someone other than the Client Sign the Agreement? The Realtor?
Under no circumstance should anyone other than the client sign the pre-inspection agreement. Because you are performing a service for the client, and not for the realtor, and because the client will call you if problems arise with the home, it is essential to have the client’s signature on the agreement. Luckily, most realtors will understand that the pre-inspection agreement is an aspect of the inspector’s risk management practices, they can often be relied on to help locate the client and to secure their signature.
Should Pre-Inspection Agreements be long or short? Is there a Specific Link?
The length of the pre-inspection agreement is less important than what you could call its “density.” In general terms, the density of the agreement refers to the number of legal concepts that it introduces, and the amount of plain language versus specialized legal vernacular (legalese) used in the document. In general, as long as the document is drawn up by an experienced attorney then the density and length of the document will be your preference.
In some cases, you may find that you are more comfortable, or that your clients are more comfortable, with a longer and more dense contract. Similarly, you and your clients may be happier with a shorter and easier-to-read or understand contract.
What Should I Make Sure is Included in My Pre-Inspection Agreement?
While this may seem like a simple question, it is extremely complex. Primarily, because it’s not easy to know what problems can arise and, thus, it’s impossible to accurately know how to protect yourself. Luckily, many example contracts exist online from which you can draw inspiration. Another resource is to inspect your state’s code for information regarding such protections as state limits of liability. When using these pre-written agreements, though, it’s important to remember that you must obtain permission before using them and that you should never use a pre-made legal document without first allowing it to be reviewed by an attorney.
Do Errors and Omissions Insurance Negate the Need for an Inspection Agreement? Vice versa?
Unfortunately, very few legal agreements are actually “iron clad.” There are always loopholes or interpretations to legal codes that will allow attorneys to get around your contract. Similarly, some states simply have legal insurance requirements and thus you must carry insurance. Still, regardless of whether or not your state requires you to carry errors and omissions insurance, it’s important to remember that the pre-inspection agreement is simply a first-level defense against litigation. The errors and omissions insurance policy is there to protect you if the agreement fails to protect you, and thus it is an essential aspect of every business, not just inspection businesses.
How to Protect Yourself Beyond a Pre-Inspection Agreement
Home inspectors should have detailed agreements specific to their state law that include key elements for pre-inspection agreements. Additionally, obtaining errors and omissions insurance protects home inspectors in the event of a claim if the agreement fails to protect them.
EliteMGA provides reviews of inspection contracts for the insured’s in the InterNACHI program and we give them new contracts where we can’t fix their existing contract.
EliteMGA has created an insurance program exclusively for the home inspection industry. Contact us at 1-800-355-1185 or via our website to learn more about our errors and omissions insurance and your pre-inspection agreement.