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Posted on November 13th, 2013

Businesses providing home inspections for prospective buyers ignore the law at their peril. While many state and national organizations (California Real Estate Inspection Association; The National Association of Home Inspectors etc.) provide great tools, support, and standards for home inspectors, an inspector facing the unsavory task of defending a California lawsuit for failure to discover and disclose defects, will be bound by California legal standards.

The Legal Standard

Business and Professions Code (B&P Code) Sections 7195 – 7196 provide in pertinent part that a home inspection is a noninvasive physical examination of the mechanical, electrical, or plumbing systems, or the structural and essential components of a residential dwelling designed to identify material defects in those systems, structures, and components (emphasis added).

The legal standard applies to all home inspectors, even those not licensed as general contractors, architects etc. “It is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise.” B&P Code Section 7196 (emphasis added). A home inspector not licensed/registered as an engineer, however, is not permitted to perform any analysis that would constitute the practice of civil, electrical, or mechanical engineering. B&P Code Section 7196.1.

In Practice

The scope of what a home inspection covers is generally defined by the inspection contract, but both words and actions may serve to alter or broaden the scope! By investigating or examining things expressly excluded by the inspection contract—i.e. foundations, engineering issues etc.—a home inspector may expand what the contract covers and open himself/herself up to liability for issues related to the additional items inspected. A seemingly harmless remark—“You’re buying a great house!”— may be used later by a disgruntled buyer to say he was misled into buying a defective home.

Final inspection reports should make it clear that the written report constitutes the final conclusions and recommendations and that the report supersedes any comments made at the inspection. In addition, the language used in the report should clearly and specifically define identified risks and any recommendation being made to address those risks. For example, a general recommendation to contact a licensed contractor to address improper drainage issues might be insufficient where a home has a specific drainage or grading problem.

Time Limits

A home inspector’s failure to meet the applicable standard of care (that of a reasonably prudent home inspector), may result in tort liability. Generally, a homeowner has four years to file a lawsuit for a breach of duty arising from a home inspection. B&P Code 7199. Many inspection contracts, however, seek to shorten the four-year window and require that a lawsuit be filed between one and three years from the date of inspection.

In the case of Moreno v. Sanchez (2003) 106 Cal.4th 1315, the California Court of Appeal explained that the clock does not start ticking from the date of inspection, but begins when the homeowner discovers or should have discovered the issue. Moreno, however, did not expressly forbid an inspection contract from shortening the statutory limit. The court held that an agreement to shorten the four-year time limit does not violate public policy as long as the agreed-upon time limit is not so unreasonable as to show imposition or undue advantage.