Based on comments in telephone calls to the Commission, many licensees view home inspectors as at least the equal of mortgage brokers and lawyers as "deal killers." Some transactions may fail because of any one (or combination of) the three. Yet, all three are essential to a successful real estate license transaction with limited liability for the licensee. A reliable inspector reduces significantly the licensee's liability for representations about the seller's property. Thus, most licensees wisely recommend that the prospective buyer retain an inspector, particularly in residential transactions.
When an inspection fails to disclose damage later found after closing, the purchaser often wants to blame the licensee. Indeed, sometimes the purchaser alleges collusion between the inspector and the licensee to hide a defect. Such collusion is rarely the case. Yet, the perception of collusion or of incompetence in inspectors has caused a variety of reactions among licensees.
First, many call for the licensing of home inspectors. In the 1990s Georgia's legislature considered creating a regulatory board for home inspectors. Before the Legislature can create a licensing board, Georgia's "Sun Rise Law" requires proof that both (1) a need for a regulatory board exists and (2) the trade or profession can reasonably pay the cost of regulation. The Legislative committee considering regulating home inspectors found that neither standard was met. Since structural engineers already must hold a professional license, inspectors must have liability insurance, and aggrieved parties can bring civil court actions, existing regulation was adequate. Because of the relatively small number of inspectors, licensing fees for a new regulatory board would be prohibitively high.
Second, some brokerage firms hire their own inspectors or contract with specific inspectors to provide home inspections for their clients and customers. These brokerage firms of course assume a greater liability for inspector errors. However, they have made a business decision that more direct control of the inspector allows them to assure reasonable competence and satisfactory performance of the inspector for their clients and customers.
Third, most brokerage firms do not choose to assume that greater liability and prefer to recommend a list of inspectors with whom prospective buyers may contract for services. In recommending inspectors, licensees should consider a variety of issues:
- Include several inspectors from which the prospective buyer may choose.
- Have the prospective buyer contact and contract with the inspector directly.
- Disclose any affiliation that you or your firm may have with an inspector. (It is preferable not to have any affiliation with any inspector only your list.)
- Do not ask for or accept referral fees from inspectors on your list.
- Have your firm's attorney draft a form letter that states that you cannot guarantee any inspector's competency or work. (Deliver that letter to the prospective buyer at the time you supply him or her your list of inspectors.)
- Evaluate the qualifications of inspectors on your list:
- Do they thoroughly examine the property (to the extent of their assignment)?
- Do they provide a written report listing their findings?
- What limits do they place on liability for their own negligence?
- Do they carry liability or errors and omissions insurance?
- What is their experience and training?
- How current are their inspection techniques and equipment?
- What do their references say about them?
- Do they encourage the client and licensee to attend an inspection?
The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at firstname.lastname@example.org . Last reviewed August, 2006.