Owning a home can be an immensely rewarding experience, the keystone of the American Dream. Buying a home, however, can be an immensely complicated experience fraught with risks. Before taking the plunge into homeownership, it is important for a prospective home owner to engage a qualified home inspector. When done right, a home inspection can arm the home buyer with important information including knowledge of construction defects that may mean the difference between buying a perfect home and buying a house of construction horrors. Of course, home inspections can be done the wrong way. Thus, it is important that home buyers, and home inspectors alike, understand the extent of a home inspector’s liability for defective work and what requirements the law imposes regarding the home inspection process.
Law Governing Home Inspections in Pennsylvania
The Pennsylvania Home Inspection Law, passed in 2001, imposes certain requirements on individuals performing home inspections. Chief among the requirements is that any home inspection be performed by a home inspector who is a “full member in good standing of a national home inspection association in accordance with the ethical standards and code of conduct or practice of that association.” Additionally, the Law requires home inspection reports to include and exclude certain information. For instance, inspection reports must include a description of the scope of the inspection and a description of any material defects discovered during the course of the inspection. Inspection reports must exclude any repair estimates. Any provision in a home inspection contract that disclaims liability for gross negligence or willful misconduct, is void. Home inspectors must also maintain insurance policies for errors and omissions and general liability (failure to do so can subject inspectors to criminal and civil penalties).
Home Buyers Should Inspect Their Inspectors
Before hiring a home inspector, a buyer should determine whether the inspector is compliant with the national home inspection association membership requirements set forth in the Home Inspection Law. To aid buyers in this respect, the Pennsylvania Association of Realtors, among others, has developed a compliance form that homebuyers can ask home inspectors to fill out and demonstrate his or her compliance with this requirement of the Home Inspection Law.
Prior to signing any home inspection contract, home buyers should also review the contract to determine whether it includes any provision limiting the home inspector’s liability for ordinary negligence. While the home inspection law voids any provision purporting to limit the inspector’s liability for gross negligence or willful misconduct, it does not void provisions limiting ordinary negligence. Disclaimers of ordinary negligence are enforceable against buyers and can restrict them from recovering from a negligent inspector.
What Home Inspectors Should Look For When Drafting Their Contracts
As discussed, violation of the Home Inspection Law may give rise to both criminal and civil liability. Given that risk, home inspectors, like home buyers, should carefully ensure compliance with the Law. As a general matter, home inspectors should be sure to maintain membership and good standing in a national home inspection association and maintain the required E&O liability insurance and general liability insurance. Additionally, home inspectors may wish to insert permissible language limiting liability in their contracts with home buyers. At a minimum, inspectors should be familiar with the law and its consequences.
In sum, while buying a home can be risky, an understanding of the Home Inspection Law and its requirements can reduce these risks for both the home buyer and the home inspector.
Please feel free to contact us for additional information on the Home Inspection Law and home inspector liability.
Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.
Matthew G. Tom is an Associate at Cohen Seglias and a member of the Construction Group.