Recently we were alerted to a post on Facebook by one of our members. This is how the post appears. Click on the image to go directly to the original post so you have a better understanding of the comments here.
With due respect to Brian Madigan’s legal background and the fact that he is also a Realtor, it appears that the post appears to be trying to switch the blame associated with the RECO disciplinary ruling to the Home Inspector.
Let’s look at the concerns behind the blog.
Brian in his post, is suggesting that the Home Inspector gave legal advice. What I see from the blog is that the home inspector gave two recommendations.
Brian suggests that we all “appreciate that neither the permits nor the receipts have anything to do with the physical home inspection which was conducted for the purposes of determining the physical condition of the building”.
I personally disagree. Both the Permits AND Receipts for work done on a roof may have material effect on the condition of the property. Permits ensure that work carried out, that was either visible or suspected by the visual inspection were done according to local jurisdictional codes.
The case against the Realtor proved this not to be the case. Receipts for work done, are a good way to indicate that the work was performed by a qualified contractor. A roof installed by a home-owner, while visibly “typical” can have much left beneath the surface that can cause problems. Having a warranty for a new roof reduces the buyers liability for costs of replacement or repair if something goes wrong and a warranty exists and is still in place.
It is a fact that the contract (of sale and purchase) and the relationship between the Sellers and the Buyers is outside of the expertise of the home inspector.
The contract for the Home Inspection, its scope and the fiduciary responsibility of the home Inspector to their client very much is within the expertise of a Home Inspector. A recommendation may be construed as legal advice, but it is done within the scope of the inspection. This is no different from om any other recommendation made in a Home Inspection or the report.
In his blog Brian states “Depending upon the transaction both matters could have already been well covered off in the agreement of purchase and sale. Obtaining possession of these two documents could compromise the buyer’s legal rights under the contract.”
The Inspection contract and the relationship between the Client and the Inspector is not within the expertise of the Realtor. If it was then, in my opinion, the Realtor should perform the inspection. Until then as indicated in RECO code of Ethics, the Realtor should defer to the Home Inspector.
Where the home Inspector makes recommendations that the Realtor should have given, and failed to do so, it behooves the Realtor to follow-up on those recommendations on behalf of their client. If nothing more than to ensure obtaining documents that, in any other example, could protect them in the future rather than for some bizarre reasoning, in Brian’s hypothetical sale-and-purchase contract, diminish their rights.
That way maybe this case wouldn’t have happened, and we would be having this age old discussion of Realtor vs. Home Inspector.
“O. Reg. 580/05, s. 8 (1). A registrant shall advise a client or customer to obtain services from another person if the registrant is not able to provide the services with reasonable knowledge, skill, judgment and competence or is not authorized by law to provide the services.”
“O. Reg. 580/05, s. 8 (2). A registrant shall not discourage a client or customer from seeking a particular kind of service if the registrant is not able to provide the service with reasonable knowledge, skill, judgment and competence or is not authorized by law to provide the service.”
Going back to the case in Brian’s blog. The first recommendation was that the Inspector’s client ask for any permits regarding addition(s)/renovations(s). This is not legal advice but professional advice. It’s a no nonsense common-sense recommendation from a Professional Home Inspector to ensure their client is fully aware of the liabilities they may be taking on when proceeding with a purchase.
Based upon the inspectors experience, (and reading into the case as an inspector), it is likely they suspected that modifications had been made to the property. However without direct visual evidence, the inspector cannot report on a material defect. Not can the inspector suggest any wrong doing on behalf of the seller, which during a visual inspection, this cannot be confirmed. Unlike Mike Holmes, of TV fame, a Professional Home Inspector cannot go around opening walls to see what has gone on behind the scenes.
What the inspector can do is to ensure their client protects themselves as best possible by getting them to check to see if permits had been issued/signed-off. If they do, and no permits have been issued, but later intrusive inspections identify un-permitted changes, then at least the client can obtain some form of recovery from the seller.
By making these recommendations, the Home Inspector is neither going beyond their standard of practice nor crossing any boundary with respect to what the Realtor should be telling their client.
The second recommendation from the inspector was that their client obtain a receipt for recent work for warranty purposes. Again, any professional Home Inspector would make this suggestion, not assuming that their Clients representative would have done so. The fact that maybe the Realtor should doesn’t guarantee they had. Recommending to someone twice that they do something is way better than them not being recommended anything at all.
WHERE THE FAULT REALLY LIES
The fact that in his blog Brian mentions that the buyer “waived” conditions, indicates that their representative, with respect to the home purchase, was not doing their job right. Having had a home inspection, they should not have “waived” the condition, but signed a notice of fulfillment.
When it comes down to the disciplinary action mentioned in the blog, it is clear that the Buyer asked for more than the permits, and unfortunately for them and the Realtor got what they asked for. It appears that the property have a list of legal issues that may not have been corrected, and had the Inspector not made the recommendation they did the buyers may never have known. The fact that the Realtor got caught for it, and yet the blame seems to be aimed at the Home Inspectors is somewhat perplexing, but not something we as a Profession are unused to.
The fact that the report re-stated that RECO decision, and concluded that the fault indeed lay with the Realtor, I find it dismaying that the title of the blog directs the fault at the Home Inspector.
Brian also states “Insurance is available to home inspectors, but would not extend coverage outside of their actual business. So, once they decide to leave their role and start providing “legal advice” or “real estate advice”, they may be facing a denial of coverage.”
Having checked with my E&O provider, I find that this conclusion of the coverage is erroneous. Indeed the feeling of the Insurance company is that by making a recommendation, based upon visual findings and knowledge gained through training and experience, ensured the home Inspector was less likely to suffer a frivolous lawsuit, and in this case especially protected the Home Inspectors Client.
The latter case is something often missed by the Realtor. The Home Inspector has a client of their own in the person who is requesting the Home Inspection. It is not up to us as Professional Home Inspectors to protect the Realtor or their commission. We find we frequently do the former, we never intentionally do the latter.
It is up to Professional Home Inspectors to protect our client by offering honest, unbiased and informed reporting on the subject property. We should not say anything that will unnecessarily “kill the deal”. Is is, however, totally within our remit to leave our clients empowered with the knowledge to assist them in making a decision that protects them from Caveat Emptor (buyer beware).
As a side note, all the Professional Realtors I work with are more than happy I make recommendations such as this where I think the need exists. It ensures they don’t miss anything for their clients, and keeps them out of court. I have the luxury of working in areas that are not bullish, and the Realtors I know and trust actually see their clients as a long-term mutually beneficial, relationship, rather than the subject of short-term profit.