Fall forum small by Jeannie Flynn

Fall 2014

Contents

f a l l

2014 NAHI BOARD OF DIRECTORS

2014

FEATURES To Bond or Not to Bond CSST | 7 2014 NAHI National Education Conference | 12-13 Go Fly a Drone | 14

NEW! It’s Your Business | 19

Seller Lawsuits-How Far Does An Inspector’s Duty Extend

Insurance and the Home Inspector | 26

COLUMNS Commentary | 5 New Members | 17 Now I’ve Seen Everything | 24 BYOB / Build Your Own Business | 25

President | Forrest A. Lines, CRI, NIT By-Lions Home Inspections, LLC PO Box 93 | Blacklick, OH 43004 P: (614) 855-9310 | F: (614) 855-9320 bylionshi@gmail.com Vice President | Troy M. Bloxom, CRI Home Inspection Plus, LLC 17640 Lacey Drive | Eagle River, AK 99577 P: (907) 694-7587 | F: (907) 694-6649 homeinsp@mtaonline.net Secretary/Treasurer | Charles Kleindienst, CRI Open Sky Inspections 10800 Canaan Valley Ct. | Glen Allen, VA 23060 P: (804) 346-4588 | F: (804) 346-4277 openskyinspections@verizon.net Past President | Curtis S. Niles, CRI, NIT Armored Home Inspections, LLC 7101 Wayne Ave | Upper Darby, PA 19082 P: (610) 352-2212 | F: (866) 203-0656 nilesent@msn.com Director | Charles Allen, CRI National Property Inspections 713 Augusta Drive | North Aurora, IL 60542 P: (630) 879-5715 | F: (630) 406-0759 callen2777@sbcglobal.net Director | Steven Burnett, CRI Journey Property Inspections, LLC 403 Burt St. | Tecumseh, MI 49286 P: (517) 920-2888 | journeyinspection@gmail.com Director | Jeffrey Fletcher, CRI Fletcher Inspections, LLC 8991 Austin Rd. | Saline, MI 48176 P: (734) 944-8547 | F: (734) 322-4424 jeff@fletcherinspections.com Director | Sean McKenzie, CRI Burlington Home Inspection Service 137 Mansfield Ave. | Burlington, VT 05401 P: (802) 238-6558 sean@burlingtonhomeinspection.net Director | Peter Rossetti, CRI Pete’s Friendly Home Inspection, LLC 1227 N Peachtree Pkwy | Peachtree City, GA 30269 P: (678) 329-7198 pete@friendlyinspector.com

Executive Director | Claude McGavic (800) 448-3942 | claude@nahi.org NAHI® is a non-profit association dedicated to promoting and developing the home inspection industry. NAHI®’s objectives are to further the professionalism of the home inspection industry by promulgating standards of practice to provide a consistent method of performance of home inspections; to promote educational opportunities to benefit its members, the home inspection industry, and consumers of home inspection services; to inform the public of the importance of a reputable home inspection as an integral part of the residential real estate transaction; and to protect consumers from fraudulent, misleading, or deceptive practices. The NAHI® Forum is available free of charge to members of the National Association of Home Inspectors and those interested in the promotion and development of the home inspection industry. Statements of fact and opinion in this publication are the responsibility of the authors alone and do not imply an opinion on the part of the members, directors or staff of NAHI®. Material may not be reproduced without written permission.

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National Association of Home Inspectors, Inc. 4426 5th Street West | Bradenton, Florida 34207 (800) 448-3942 | Fax: (941) 896-3187 info@nahi.org www.nahi.org

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commEntary By Forrest Lines, CRI, NIT

By Claude McGavic, CRI,

From the NAHI

By-Lions Home Inspections, LLC

President’s DesK

Photo credit: depositphotos.com/jtiloligo

It has been my pleasure to serve on our national Board of Directors. The time commitment has been manageable and the rewards have been many. Meeting and coming to know other inspectors from all over is very interesting. We have board members from all over the United States. They have become friends as well as colleagues and knowing them has made me a better inspector as well as a better man. This group has come together in a very challenging time and their focus has always been what is good for NAHI... not themselves. Our strong NAHI leadership consists of experienced and busy home inspectors. These inspectors all have their own businesses at home. They still find the time to tend to NAHI’s business. There is every excuse why someone should not volunteer. “I don’t have the time” is one that we hear quite often. The fact is that we all could make that excuse and it would be true. However, being part of the solution is an honorable and rewarding thing. Our staff in Florida has made our job easier and much more efficient. The requests I make to them are met with enthusiasm and professionalism. They support the Board and embrace all requests to the best of their ability. There was a time that we did not have our own staff. The staff we had were very professional, but could not respond the way our staff does.

Photo credit: depositphotos.com/7661617

Nominations for board positions are coming due. The easy thing to do is to assume that someone else will fill those positions. The harder thing to do is to step up and take your turn. I am asking you to do it now. “I don’t have the time” is not good enough. Make the time and help lead NAHI into the next few years. You will not regret it, I promise. I look forward to seeing you all in Pittsburgh in November! Stay safe.

National Association of Home Inspectors, Inc.

Executive Director

The Great One We all understood the wisdom of the great Wayne Gretzky when he said, “You miss 100% of the shots you don’t take”. But his wisdom did not stop there. What if we, as home inspectors, could have his attitude, drive, and insight? What if we applied his years of experience to our daily activities as inspectors? What if the Gretzky had been a home inspector? His quotes might have sounded like this . . . ‘You miss 100% of the stuff you don’t look at’. ‘No matter who you are, no matter how good a home inspector you are, we’re creatures of habit. The better your habits, the better they’ll be in pressure situations’. ‘A good home inspector looks where the problem is. A great home inspector looks where the problem is going to be’. ‘I can’t beat my competitors with marketing. I don’t have all the latest gadgets. I’m not the fastest inspector. My eyes and my mind have to do most of the work’. ‘The highest compliment that you can pay to me is to say that I work hard every day, that I never dog it’. From my perspective, if Gretzky’s philosophy doesn’t light your fire, your wood’s all wet. If you do just one thing for your clients that your competitors don’t do, it makes you above average. But if you do 10 things your competition doesn’t do, and if you do them with Gretzky’s attitude . . . life will indeed be good. And you can take that trophy to the bank. Game On.

Claude McGavic Executive Director

Forrest

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To Bond or Not to Bond CSST? Energized arc-resistant conductive jacket.

ccording to the NFIRS (National Fire Investigation Reporting System), there are (on average) between 150 and 180 residential fires every year resulting from a lightning strike where fuel gas was ignited. These fires result from damage to some part of the gas delivery system or equipment, including the piping and flexible connectors. In an effort to understand and to minimize damage from lightning induced arcing, the corrugated stainless steel tubing (CSST) industry has investigated and analyzed the causes and effects of both direct and indirect lightning strikes on the various components within any gas piping system. The outcome from these studies includes institutional changes to the way CSST gas piping systems are electrically protected (i.e. bonded) as reflected in the many revisions to model code coverage regarding the bonding and grounding of gas piping systems. Code History Requirements for bonding of gas piping systems have always been included in both the National Electrical Code (NEC) and the National Fuel Gas Code (NFGC). Going back to 1988 when CSST was first included in the NFGC, bonding of all gas piping to any of the grounding electrodes was a requirement (Section 3.14). Up to the 2002 edition, the NEC and NFGC codes both had similar bonding requirements for gas piping systems: either bonded directly to the grounding electrode system (NEC-1999) or directly to the grounding electrode (NFGC-1999). This was commonly interpreted to mean an electrical connection using a 6 AWG copper wire in a fashion similar to bonding of the copper water service. However, in the 2002 editions of these two codes, the requirements were harmonized and modified to limit the need for electrical protection for ground fault conditions only. A new term was invoked (“likely to become energized”) that limited the need for bonding to malfunctions within the elec-

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trical power distribution system. This required bonding only when there was a branch circuit serving the gas appliance, and the size of the bonding conductor was based on the size of the branch circuit in accordance with Table 250.122. Recognizing the importance of bonding, Omega Flex included bonding instructions in its Design Guide and Installation Instructions starting in 1999. The shift in electrical protection requirements in the 2002 NEC created confusion on how and by whom the bonding should be implemented. Inclusion of direct-bonding requirements for CSST systems in the Installation Instructions was intended to ensure that this important safety function was not ignored. Bonding requirements have been included in the Omega Flex Installation Instructions ever since, and they reflect the most current requirements for electrical protection against arcing. The unintended consequence of the code changes made in 2002 has resulted in some gas systems having no bonding connection to ground at all or an electrical connection with relatively high impedance. During the period of 2002 to 2012, damage to gas piping systems from electrical arcing associated with lightning was being recognized more often by fire investigators, manufacturers, and building officials. The gas industry engaged in research and investigations to determine the root cause and effect between the gas piping, including CSST, and the electrical arcing induced from both direct lightning strikes (lightning attaches or “strikes” a point on the building) and indirect lightning strikes (lightning attaches or “strikes” a point beyond the building, but the electrical energy migrates into the building through several different routes). One reported research effort (authored by Brian Kraft and this author) documented testing results from physical examination of different bonding scenarios. The Kraft/Torbin Report published in August 2007 helped to define the minimum effective requirements for bonding CSST

Reprinted from Butane-Propane News May 2014

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Bonding at the service entrance.

to protect it against the effects of indirect lightning strikes. The report essentially confirmed that previous conventional bonding practices would be effective in mitigating the damage caused by arcing from lightning energy injected into the various metallic systems within any residential building. Extra bonding, in addition to any bonding required for ground fault protection, would require at least a 6 AWG copper wire from the gas piping back to the ground electrode system regardless of the presence of any connected, electrically-operated gas appliances. Consequently, modifications were made to the 2009 NFGC resulting in new requirements for the mandatory bonding of all CSST gas piping systems. The 2009 edition dictated that the CSST be bonded directly to the grounding electrode system using at least a 6 AWG copper wire (or equivalent) with the point of attachment located at the service entrance to the building being served (photo above left). The connections to the grounding electrode system were the same used for conventional, ground fault protection and are shown in the drawing on page 11. The additional bonding requirements were not included in the 2008 NEC, but it was generally agreed that the new bonding requirements did not violate the NEC requirements for bonding of gas piping systems. Furthermore, the additional bonding requirements for CSST were consistent with bonding requirements for gas piping systems included in National Fire Protection Association (NFPA) 780 Standard for Installation of Lightning Protection Systems. The bonding requirements were updated in the 2012 NFGC, permitting the bonding clamp to be located between the point of delivery and the first downstream length of CSST as shown in the photo at top right. In addition, any existing gas piping system where CSST is used to add new appliances would have to be bonded in accordance with the new requirements. As part of the NFPA efforts to maintain correlation between model codes, an Informational Note was added to the 2011 edition of the NEC to alert electrical contractors and inspectors that there were additional bonding requirements for gas piping found in the NFGC. However, the NEC did not include the specific requirements for bonding CSST systems within the body of the NEC and Section 250.104(B). At this point, the NFPA Standards Council was asked to intercede and resolve the conflict between the National Fuel Gas Code and the National Electrical Code.

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Bonding upstream of first CSST drop.

NFPA Standards Council Actions The NFPA Standards Council set up a CSST Task Force to review the circumstances surrounding the need for bonding of CSST and to examine the efficacy of the bonding method described in the NFGC 2009 edition. Upon completion of their review, the Standards Council issued a decision (D#10-2 dated March 3, 2010) requesting the CSST industry to demonstrate that the bonding methods being used would be effective by reducing or eliminating the effects of transient electrical arcing on CSST. This directive resulted in the initiation of a research project funded by CSST manufacturers and other industry interests, managed by the Fire Protection Research Foundation and performed by SEFTIM of Paris, France. The SEFTIM Phase I Report is available online at the FPRF website: (http://www.nfpa.org/~/media/

Files/Research/Research%20Foundation/Research%20Foundation%20reports/csst%20gas%20piping%20ph1%20final%20 report.pdf). This report stated that the bonding being used for

CSST was indeed common practice for arc mitigation, and made recommendations to perform physical testing and computer simulations to verify/validate the effectiveness of bonding on CSST products. The second phase of the research was performed by a team including the Gas Technology Institute (GTI), PowerCETCorp., and Lightning Technologies Inc. Their final report is also available online from the NFPA website: (http://www.nfpa.org/As-

sets/files/AboutTheCodes/54/GTI%20CSST%20Final%20 Report%20Amended%209-5-13.pdf). This research involved a

number of physical tests on CSST products to determine electrical performance characteristics, and the development of a computer model of a typical CSST piping system configured to simulate lightning strikes at various locations within the house. Finally, a full-size mock-up was constructed and tested to validate the model results and to confirm the various outcomes from the computer simulations. The report con-firmed that the recommended bonding methods described in the NFGC 2009 and 2012 editions would provide for effective mitigation of lightning damage to CSST systems. The NFGC Technical Committee was briefed by GTI regarding the results from the Phase II research, and the Technical Committee added modifications to the bonding requirements that will be included in the pending 2015 edition of the NFGC.

Reprinted from Butane-Propane News May 2014

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2015 NFGC Based upon the GTI study and other technical research associated with the bonding of piping systems and the protection of structures from arcing damage caused by lightning strikes, the NFGC Technical Committee considered the effectiveness of bonding, and proposed several refinements to the current code requirements. The primary result from the research was that the length of the bonding conductor could be quite effective up to 200 feet, but that the shortest practical bonding conductor would assure the greatest effectiveness. Given that the entry point of lightning energy into the house cannot be predicted or controlled, the location of the bonding clamp should be allowed to be placed anywhere on the piping system that resulted in the shortest practical bonding conductor. The NFGC Technical Committee imposed a maximum permissible length for the bonding conductor of 75 feet. The bonding conductor must be at least 6 AWG copper wire (or equivalent), must be attached to a rigid piping system component, and electrically connected to an appropriate location within the grounding electrode system. If the house has a lightning protection system (LPS) installed, the bonding conductor may be connected to the grounding electrode system of the LPS. The 2015 NFGC is expected to be approved by the NFPA membership at its annual meeting in June 2014. The ANSI version of the NFGC should also be approved by that time.

Alternative Method

Bonding connections to grounding electrode system.

The CSST industry has been promoting an alternative to direct CSST bonding. New CSST products using a conductive jacket have been produced since 2004. At a minimum, the conductivejacket products provide the equivalent level of protection from electrical arcing damage to CSST as afforded by bonding to the grounding electrode. These conductive jackets have been tested and listed to a bench standard developed by ICC Evaluation Service. Energy from a lightning arc is absorbed and dispersed within the jacket, and the energy level is significantly reduced through this process. Based on this work, the nationally recognized ANSI LC-1 CSST Standard has been revised to now include new testing requirements that establish the level of performance for the conductive jackets. The new tests include electrical arc resistance, jacket survival at extreme low temperatures, jacket resistance to wear and tearing, and additional corrosion testing for certain multi-layered designs. Conductivejacket CSST is expected to be tested and listed by CSA during the second half of 2014. State and/or local approval by the authority having jurisdiction will be required before these new CSST products can be installed without the additional bonding needed by the model codes. However, 15 states have already approved the use of conductive-jacket CSST without the need for the additional bonding.

in other industrialized countries such as Canada, United Kingdom, and South Africa. The CSST manufacturerâ&#x20AC;&#x2122;s design and installation guidelines all require this additional bonding and provide instructions on where and how it should be performed. Although these installation manuals correlate with the most recent edition of the NFGC, they do accommodate any and all of the bonding requirements from either the 2009 or the 2012 editions of the NFGC, and soon the 2015 edition. However, local enforcement of CSST bonding depends on the fuel gas code being followed within the jurisdiction, any local code amendments allowing alternative methods and materials, and the level of cooperation between the electrical and plumbing inspection departments. Sometimes the electrical inspectors are less likely to enforce bonding because of the lack of coverage in the NEC. However, the installation of conductivejacket CSST avoids any gaps in coverage and enforcement as these black-jacketed CSST products will provide electrical arcing protection whether bonded or not. Bob Torbin is director of codes and standards for Omega Flex, Inc. Reprinted with permission.

TRENDSPOTTER

Conclusions The bonding of CSST gas piping directly to the grounding electrode system using a 6 AWG copper wire (or larger) has been shown to be effective in mitigating the effects of arcing induced by a lightning strike. This conclusion is drawn from an extensive series of engineering analyses, laboratory testing and computer simulation from a number of independent third party entities. The bonding method recommended for CSST is consistent with similar bonding requirements for lightning found in other NFPA and UL standards as well as electrical codes used The NAHIÂŽ Forum

Source: Pew Internet & American Life Project report, January 2014

Reprinted from Butane-Propane News May 2014

GOING MOBILE

% OF AMERICAN ADULTS AGED 18 AND OLDER WHO OWN A TABLET 2010 (May): 3% 2011 (May): 8% 2012 (Dec.): 10% 2013 (Sept.): 34% 2014 (January): 42%

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NATIONAL EDUCATION CONFERENCE & TRADE SHOW

THE

THE ASSOCIATION OF EXPERTS!

LET’S MEET!

Join us as we gather professional home inspectors from across the nation in a three-day, must-attend, networking and education extravaganza. Change the tune of your future with comprehensive technical sessions and a packed Trade Show that will bring you new and innovative ideas to move your home inspection company forward.

SPEAKERS

WEDNESDAY nOVEMBER 5TH 8:00 AM - 5:00 PM mARKETING SECRETS m. cROW

tHURSDAY NOVEMBER 6TH 7:30 AM - 9:30 AM iNSPECTING STRUCTURES t. FEIZA 10:00 AM - 12:00 PM wall systems d. goldstein

Mike Crow, Millionaire Inspection Community

Tom Feiza, How To Operate Your Home

David Goldstein, Inspector Education Institute

1:00 pm - 3:00 pm Housetalk R. Passaro 3:30 pm - 5:30 pm Structures D. Stercho

Friday NOVEMBER 7TH Ron Passaro, RES-I-TEC, Inc.

Doug Stercho, Simpson Strongtie

Joseph Denneler, Esquire

7:30 AM - 9:30 AM inspection contracts j. denneler 10:00 am - 12:00 pm inspecting appliances c. mcgavic 1:00 pm - 3:00 pm inspecting attics p. scelsi

Claude McGavic, NAHI

Paul Scelsi, Air Vent, Inc.

Ed Meyer, Nash Distribution, LLC

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3:30 pm - 5:30 pm inspecting crawl spaces E. Meyer

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THREE GREAT REASONS TO ATTEND 1. You won’t find a better place this year to network with some of the country’s best home inspectors. 2. You won’t find a better place to soak up technical information. Factory reps, suppliers, installers, and contractors...the ones who actually make the stuff or put it together in the field will lead the technical sessions. 3. Sales reps for equipment, software, insurance, testing labs, and inspection-related services will be there to compete for you business. Be there in person and make them earn it.

REGISTRATION

HOTEL INFORMATION

Get it all in three (3) days. Technical Special group rate: $102 till october 14th Sheraton Pittsburgh Airport Hotel sessions, expert advice, trade show, 1160 Thorn Run Road free gifts, prizes/giveaways, 16 NAHI CEs, Coraopolis, PA 15108 breakfast, lunches, plus reception. (412) 262-2400

Only $400 per person.

sheratonpittsburghairport.com reserve your room at nahi.org. Click on education.

Alternative payment method: Complete form on page 23 and mail check/credit card info to:

Questions? (800) 448-3942

NAHI Attn: Conference Dept. 4426 5th St West Bradenton, FL 34207

Refund Policy: If received in writing to NAHI before October 22nd, NAHI will refund meeting registration, less a $50 admin fee. No refunds will be granted after October 23rd or for NO-SHOWS. NAHI is not responsible for cancellation of registrant’s hotel and/or travel reservation.

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Go Fly a Drone!

but the FAA asks...Is It for Work or Play?

Photo: Courtesy of Brady Quick

Home Inspectors take note. The Federal Aviation Administration is warning real estate agents who fly their own drones to take pictures or videos of listings that they are not engaged in a “hobby or recreation.” That means that the FAA could attempt to take enforcement actions against them if they and their aircraft have not been certified as experimental or commercial operators. According to the FAA Modernization and Reform Act of 2012 as (1) the aircraft is flown strictly for hobby or recreational use; (2) the aircraft is operated in accordance with a community-based set of safety guidelines and within the programming of a nationwide community-based organization; (3) the aircraft is limited to not more than 55 pounds unless otherwise certified through a design, construction, inspection, flight test, and operational safety program administered by a community-based organization; (4) the aircraft is operated in a manner that does not interfere with and gives way to any manned aircraft; (5) when flown within 5 miles of an airport, the operator of the aircraft provides the airport operator and the airport air traffic control tower…with prior notice of the operation; and (6) the aircraft is flown within visual line sight of the operator.

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In passing the law, Congress barred the FAA from adopting additional rules or regulations for aircraft meeting the criteria spelled out in the “special rule,” which also require that model aircraft operators notify airports before flying within 5 miles of a runway. Some real estate agents have claimed that as long they are not charging money for the service, they qualify as hobbyists. Companies that provide drone photography or video for real estate brokers and agents will sometimes say they are charging for photo or video editing, not drone flights. In a notice interpreting the special rule governing model aircraft, the FAA explicitly stated that “a REALTOR® using a model aircraft to photograph a property that he is trying to sell and using the photos in the property’s real estate listing” is not engaged in a hobby or recreation. Nor is “a person photographing a property or event and selling the photos to someone else.” REALTORS® and other commercial drone operators “are subject to all existing FAA regulations,

as well as future rule-making action,” the FAA said. The FAA is soliciting public comment, saying it “may modify this interpretation based on comments received.” The June 23rd notice restated the FAA’s existing position that even hobbyists are subject to enforcement actions if they fly model aircraft in a way that interferes with other aircraft, or poses a risk to people and property on the ground. In conjunction with the new interpretation of the “special rule,” the FAA issued guidance to hobbyists on the “do’s and don’ts” of flying small unmanned aircraft, citing “recent incidents involving the reckless use of unmanned model aircraft near airports and involving large crowds of people.” Some drone pilots have been operating under the mistaken assumption that the FAA had lost its authority to regulate commercial drone flights. The extent of that authority remains in dispute.

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Examples of types of flights that are not considered hobby or recreation by the FAA. HOBBY OR RECREATION

NOT HOBBY OR RECREATION

Flying a model aircraft at the local model aircraft club.

Receiving money for demonstrating aerobatics with a model aircraft.

Taking photograghs with a model aircraft for personal use.

A REALTOR® using a model aircraft to photograph a property that he is trying to sell and using the photos in the property’s real estate listing. A person photographing a property or event and selling the photos to someone else.

Using a model aircraft to move a box from point to point without any kind of compensation.

Delivering packages to people for a fee.*

Viewing a field to determined whether crops need water when they are grown for personal enjoyment.

Determining whether crops need to be watered that are grown as part of commercial farming operation.

* If an individual offers free shipping in association with a purchase or other offer, FAA would construe the shipping to be in furtherance of a business purpose, and thus, the operation would not fall within the statutory requirement of recreation or hobby purpose.

The FAA has issued a bulletin warning that it is a “myth” that unmanned aircraft can be flown for commercial or business purposes as long as the aircraft is small and flown below 400 feet over private property.

regulations providing for the commercial use of unmanned aircraft.”

All unmanned aircraft used for commercial or business purposes “are subject to FAA regulation. At a minimum, any such flights require a certified aircraft and a certificated pilot,” the bulletin said, and flights conducted for commercial and business purposes are not exempt under the special rule for model aircraft.

Article excerpts from Inman News, Teke Wiggin Staff Writer, June 29th. Table Source: FAA “Interpretation of the Special Rule for Model Aircraft.”

Obviously, this topic will continue to be a source of discussion with REALTORS® and Home Inspectors. NAHI will provide updates as they become available.

The new interpretation of the special rule for model aircraft makes clear the FAA’s position that many uses of drones in real estate do not qualify as hobby or recreational use, and are subject to current and future rules. Since Home Inspectors are part of the real estate transaction, this may also apply to ones using drones in conducting inspections. “Model aircraft that do not meet these statutory requirements [spelled out in “special rule for model aircraft”] are nonetheless unmanned aircraft, and as such, are subject to all existing FAA regulations, as well as future rule-making action, and the FAA intends to apply its regulations to such unmanned aircraft,” the FAA said in its latest interpretation of the special rule. The FAA has sent out a number of cease-and-desist letters to people and companies it believes are operating drones commercially, which have been posted on dronelawjournal. com. In some cases, the FAA has advised that non-hobbyists must obtain an experimental aircraft certificate or, in the case of public entities, a certificate of authorization. Recently, the FAA authorized the first commercial drone flights over land, granting approval for an AeroVironment Puma AE to fly pipeline surveys for BP in Alaska. In April, the National Association of REALTORS® (NAR) and nearly three dozen other groups sent a a letter to the FAA urging the agency to speed up its process for issuing rules that will govern the commercial use of drones. NAR President Steve Brown said that while NAR “does not have an official policy on the use of drones at this time, the association recommends against members’ use of drones for real estate marketing purposes and against hiring companies to do the same until such time as the FAA issues

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New members J U N E 15, 2014 - S E P T E M B E R 15, 2014

ALABAMA

Chad Ezell, Tuscaloosa Robert Haines, Huntsville William McGhee, Mobile Steven Swindle, Helena Ross Vandenberg, Mobile Gregory Walker, Fairfield

IOWA

Amy Dilocker, Red Oak Frank Kohlmeyer, Sumner Tim Meyer, Winterset Terry Montag, Epworth Clint Papesh, Ogden Alan Swack, Coralville Todd Winters, Ankeny

ARIZONA

Troy Bashford, Tempe Jason Jones, Scottsdale Daryn Strait, San Tan Valley

CALIFORNIA

John Adzhyan, N. Hollywood Jarasion Bowser, San Diego James Clay, Lakewood Alvin Dizon, San Mateo Michael Griffith, Laguna Hills Dean Fraulino, Irvine Darren Harden, Menifee Mike Sands, Anaheim Owald Sosa, N. Hollywood Robert Stanovich, Seal Beach Aaron Tibbs, Canoga Park

COLORADO

IDAHO

MONTANA

Justin Kirkbride, Hamilton Cooper Raasch, Bozeman

NEBRASKA Douglas Carman, Imperial

NEW JERSEY

Michael Morales, Montague

Timber Turner, Hayden

ILLINOIS

Stoimen Gaydarov, Buffalo Gr. Edward Kelly, Wheaton Jose Maldonado, Gurnee Daniel Przewoznik, Burr Ridge Lucas Schrum, Washington

INDIANA Mark Kincheloe, Chesterton

KANSAS

Brent Boyle, Lawrence Joel Morris, Andover

NEW MEXICO

Per Atterbom, Albuquerque Kevin Jackson, Albuquerque Scott Till, Albuquerque

OHIO

James Carr, Baltimore John Clark, Bowling Green Nicholas Droughton, Columbus Austin Ewing, New Bremen Mitchell Kerchner, Grove City Gary Mader, Centerburg Robert Saxon, Norton Brett Smith,Liverpool Michael Spurr, Canal Fulton Chuck Stone, Bucyrus Tim Wallace, Powell

Corey Coffin, Longmont Gregory Dean, Denver Peter Fresmire, Bailey Ryan Gates, Colorado Sprgs. Addison Halverson, Lakewood Daniel Kline, Whitewater

LOUISIANA

David Borden II, Huntington

Nathaniel Cordes, Lawton Robert Crain, Hydro

Matthew Wessel, Colorado Spgs.

MARYLAND

OREGON

CONNECTICUT

Arthur Annecharico, E. Hartford Frances Rubenstein, E.Hartford

Edward Joseph III, New Orleans

MASSACHUSETTS

Alex Holder, Odenton

MICHIGAN

Herb Sutcliffe, Washington

Hal Buttermore, Ann Arbor Bryan Carley, Hickory Corners Nick Fornetti, Kingsford Michael Kirchner, Ann Arbor

FLORIDA

MINNESOTA

DISTRICT OF COLUMBIA

Michael Ables, Tallahassee Ari Aposhian, New Port Richey RJ Brunton, Apopka Dave Green, Venice Abby Kinkle, Stuart Keith Jones, Jacksonville Shawn McNeil, Orlando Samuel Musora, Sunrise Christopher Myrold, Orlando John Phillips, Fermandina Beach

GEORGIA

William Barnes, Acworth Thomas Burgener, Powder Spgs Steven Chastain, Canton Jon McCreath, Acworth Ray Sample, Lawrenceville Joshua Scoggins, Griffin

HAWAII Richard Halfhill, Makawao

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Patrick Frank, Ostrander William Yates, Roseau

MISSISSIPPI

Gary Harrard, Pearl Barry Lutz, Ocean Springs Marvin Sheffield, Senatobia

MISSOURI

Steven Anzelc, Grandview Christopher Arndt, Kansas City John Benedict, Lake Ozark Terrance Carr, Kansas City Derek Cooper, Eldon John Currie, Gladstone Keith Norwood, Arnold Brett Roof, Odessa Jesse Stokes, Waynesville Mark Willbanks, Mountain View

OKLAHOMA

Kevin Halligan, Bend Robert Wilder, Portland

PENNSYLVANIA

John Albarano, Williamsport Charles Bard, Liverpool Cainen Bedsaul, West Chester Joseph Frosch, Gilbertsville Joanna Furuglyas, Carlisle Doug Gracey, Willow Hill Kevin Hauff, Bradford Paul Lorrah, Phoenixville Enrique Mejia, Philadelphia Todd Syvertson, Dillsburg Bradley Watson, New Cumberland Chad Willow, Harrisburg

Stephen Conwill, Dripping Sprgs Josh Darnell, Mansfield Larry Keils, Fort Worth Rudy Luarel III, Laredo John Pumphrey, Dripping Sprgs. Dennis Rodda, Murphy Mike Scott, Amarillo Edward Valence, San Antonio

UTAH

John Cornell, Pleasant Grove Miles Fox, Taylorsville James Stowers, Harrisville Dustin Wilson, Cedar City John Wooldridge, Elsinore

VIRGINIA

Thomas Ball, Arlington Mel Cochran, Fredericksburg Erica Guzman, Suffolk Howard Hinegardner, Fredericksburg Jon Julian, Heathsville John McLaine, Sterling Joseph Newcomer, Leesburg Robert Perry, Ruckersville Robert Sears, Norfolk Robert Silk, Suffolk

VERMONT

Randy Boardman, Milton Mark Pouliot, Bristol

WISCONSIN

Bryan Dohms, Eau Claire Dan Goodine, Sheboygan Jon Gooding, Baldwin Robert Govett, Plover Jeremy Hannert, Port Washington Mark Hyde, Racine William Luznicky, Greenfield NEW AFFILIATES Marshall Peters Certified Chimney Professionals (814) 689-1576 Joseph Denneler Salmon.Ricchezza.Singer. & Turchi LLP

(856) 842-0731

SOUTH CAROLINA

Bill Janis Empowered Point of Sale, Inc. (847)-263-1292

TENNESSEE

Andrew Davis Inspection Certification Assoc. (ICA) (888) 374-4096

Mat Bishop, Taylors Dennis Guerriero, Lexington

Tim Frady, Harriman Art Frensley, Nashville James Fuson, Old Hickory Robert Light, Murfreesboro

TEXAS

Jeffrey Bennett, Fort Worth Kenneth Bramblett, Lago Vista

Christy Domanski LiftMaster (630) 516-5434 Faith Greenwell U.S. Inspect (703) 293-1409

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Need to attract new customers? It’s time to look beyond the Yellow Pages and turn to the internet as a way to find new business. Online directories are popping up everyday. Adding your home inspection company as a listing is easy, but be sure to utilize as many online searches as possible. If you don’t you’re missing a super huge opportunity. We’ve included 50, yes, 50 places that you can get your business turning up more often.

41. Yellow Assistance 42. Get Fave 42. My Huckleberry 43. GenieKnows 44. MojoPages 45. Brownbook 46. Magic Yellow 47. CitySquares 48. TeleAtlas 49. Navteq GPS 50. Judy’s Book

Make your home inspection presence everywhere. Add your local business to these directories today.

1. Google 2. Bing 3. Yahoo! 4. Yelp 5. Merchant Circle 6. LinkedIn 7. YellowPages.com 9. Whitepages 10. Supermedia 11. Yellowbook 12. CitySearch 13. Mapquest

14. Biznik 15. Local.com 16. Foursquare 17. ThinkLocal 18. CitySlick 19. USYellowPages 20. SuperPages 21. Outside.in 22. Dex 23. BizJournals.com 24. TeleAtlas 25. JustClickLocal 26. Discover our Town 27. Metrobot 28. EZ Local 29. Twibs 30. LocalEze 31. Kudzu 32. CityVoter 33. Manta 34. Zipweb 35. MatchPoint 36. UsCity.net 37. Local Site Submit 38. InfoUSA 39. Axciom 40. Infignos

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Photo credit: depositphotos.com/12412352

Stop Isolating Yourself!

r u o Y s It’

Photo credit: depositphotos.com/@ ikopylove

Business

Seller Lawsuits - How Far Does An Inspector’s Duty Extend?

L A G LE

By: Joseph W. Denneler, Esquire Since a large part of my law practice involves defending home inspectors in litigation I see many kinds of claims. I’ve defended claims where the plaintiffs’ lawyers were trying to establish a class action suit over the use of limitation of liability clauses in pre-inspection agreements. I’ve defended claims involving deaths and catastrophic bodily injuries. I’ve even defended a home inspector in Pennsylvania against an alleged failure to advise a client that a home was used as a meth lab. And now, I can add defending claims against inspectors by sellers to my list. So far, 2014 has brought me four claims involving sellers alleging a home inspector retained by a potential buyer caused damages to the seller in some fashion. The “usual” seller claim involves some allegation that an inspector retained by a buyer caused some physical damage to the property during the inspection process. This year I’ve responded to a claim that an inspector left water running in a vacant property causing thousands of dollars of damages. Thankfully the inspector’s clients attended that inspection and gave statements that they saw the inspector shut off any faucets that were tested. A relatively simple and easy defense. Another seller claim involved an inspector who, perhaps over zealously representing his buyer clients, removed a piece of tile, suspecting asbestos. Certainly any inspector who causes some damage to property, whether intentional or not, during an inspection is liable to the owners of the property. All of us have a duty under the law to behave reasonably and to make someone we injure whole. This is the basic principle of tort law in America, derived from English law. These claims are not based on some failure to properly perform the inspection. Usually when we envision a claim involving a failure to properly inspect a property we think of an inspector’s client making the claim. In most instances the inspector has a contract to perform the inspection. The contract, if properly written, sets out the scope of the agreement between the parties and creates a legal relationship. In some states the inspector can also be sued by a client for negligence. Negligence involves a duty from one party to another, an alleged breach of that duty and resulting damages. For example, an inspector’s client alleges that the inspector had a duty to report on defects found during the inspection, the inspector breaches that duty by failing to report a roof leak, and as a result the client buys a house with a leaky roof that requires repair or replacement.

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Recently, however, I have seen two claims by sellers alleging the inspector was negligent in performing the inspection or somehow negligently misrepresented the conditions resulting in a cancellation of a transaction. One of them actually became a lawsuit. There, the inspector was retained by the buyers for a typical home inspection. The inspector reported several areas of possible defects involving the foundation, some of which the inspector believed required further analysis by a structural engineer. The inspection report was well written and contained several photos of the conditions the inspector believed were either obviously defective or that required further examination. After reviewing the report, the buyers backed out of the sale, leading to a lawsuit by the seller against the buyers and the inspector. The seller contented that the inspector’s assessment of the foundation was in error, or at the least overkill, and that the inspector, being a generalist, lacked the ability to comment on the condition of the foundation. The seller alleged his damages were the loss of that sale, requiring him to carry the property for several more months, ultimately selling the property for about $20,000 less that the contract price from the failed transaction. We can all certainly recall a time, not too long ago, when it was a seller’s market. Buyers were lining up and were negotiating to secure properties by increasing offers above the list price. Money was easy to obtain from banks more than willing to lend, and appraisals were high. Now, however, buyers are harder to come by, due in large part to the tightening of lending guidelines and the virtual end of “no money down” transactions. I believe the change in the market makes it more likely for a seller to try to retain any buyer willing to pay the contract price; for fear that another will be hard to find. That is exactly what happened in my example above. The seller, instead of obtaining an estimate to make the needed repairs to the foundation, contended that the conditions were exaggerated by the inspector and that the inspector failed to adhere to the standards of practice for home inspectors by commenting on the condition of the foundation which was outside of the inspector’s expertise. The legal question was relatively straightforward: does a home inspector have a legal duty to a non-client seller relative to an alleged error or omission in performing the home inspection? As with most legal issues involving inspectors, there was no case law available where a court had previously addressed this issue and

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Seller Lawsuits....(continued) created precedent. My job was to use existing law to show that under these circumstances there was no legal duty to the seller. Here, the inspector had a contract that specified that the clients were the buyers and that the inspection was being performed solely for their benefit. The state having jurisdiction over the lawsuit is a regulated state, and defines a home inspection as being for the benefit of the client. The state’s standards of practice also made it incumbent upon the inspector to perform the inspection to those standards so that the client could obtain sufficient information about the condition of the property prior to a sale. These were all factors to be considered, but the real hammer used to build the argument that there was no legal duty came from a prior case involving a real estate appraisal. In a prior ruling, that state’s appellate court held that a real estate appraiser had no legal duty to a buyer of property because the contract for the appraisal was between the lender and the appraiser, and the appraisal was done for the benefit of the bank, not the buyer. The buyer did not rely on the appraisal in deciding to purchase the property, and therefore had no legal recourse against the appraiser for an allegedly negligent appraisal. Using these arguments, I moved to dismiss the case against my client inspector for the same reasons. The buyers, not the seller, commissioned the inspection. The inspection was for the sole benefit of the buyers, not the seller. The seller did not rely on the inspection report in any fashion, and in discovery admitted he may not have even seen the report. Finally, despite his contention, the seller was not an intended beneficiary of the pre-inspection agreement and in fact was, by nature of the inspection process, in an adversarial position to the inspector as the inspector was essentially there to give the buyers an impetus to demand credits or that repairs be made prior to closing. The seller’s argument in opposition to our motion to dismiss was artful, if ineffective. He argued that because the agreement of sale for the transaction contained an inspection contingency clause, the inspection was therefore also for his benefit to apprise him of conditions he would be required to remediate to facilitate the sale. Thankfully the judge assigned to decide the motion had read and understood the arguments. The judge discounted that argument because the inspection contingency clause did not give the seller the power to

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dispute the findings of the home inspector there was no legal relation between the home inspector and the seller created by that clause and, given the prior cases involving the appraiser, there was not any legal duty owed by inspector to the seller. The judge dismissed the case, thereby paving the way for dismissal of these claims in the future. Despite this promising result, I do not anticipate that this decision will chill other sellers from making similar claims. Given the current state of the real estate market cancelled transactions can have substantial financial impact, and suits against buyers who cancel deals similar to the one in my example are not as appealing to a disgruntled seller when they realize that buyers generally do not have insurance or assets that can satisfy a judgment that a deal was wrongfully terminated. In most states home inspectors must carry insurance, thereby making them a target. Unless and until the law begins to provide defendants with a means of recovering losses caused by questionable lawsuits that are ultimately found to be without merit, they will not stop.

Buyers Facing Less Competition From Cash Buyers The percentage of cash sales fell to 33 percent of total home sales in June, marking the lowest share since September 2008, CoreLogic reports. A year ago, cash sales stood at 36.3 percent of the market; they have been falling steadily since January 2013. The following states had the largest share of cash sales in June, according to CoreLogic: • Florida: 50.9% • Alabama: 48.1% • New York: 44.6% • Kentucky: 40.1% • Nevada: 40%

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The NAHI速 Forum

6 points to remember when inspecting

garage door openers Garage doors and openers are often the most complicated moving parts in a home and can be a safety hazard if not properly maintained. With June serving as National Garage Safety Month, here are six points to remember when inspecting garage doors and openers. 1. The garage door opener may be out-of-date. If a garage door opener was manufactured before 1993, it likely is not equipped with photo eyes or other standard safety features. This means the garage door opener will most likely only reverse AFTER making contact with the obstruction, person, child or pet standing in the way. Due to the long lifespan of garage door openers, one of these older units may be installed in a homeowners’ garage without his/her knowledge. If a garage door opener lacks photo eyes, always include in your report a recommendation to replace the garage door opener. 2. Heavy, moving objects can be a safety hazard. Don’t chance it. Check it. The garage door is the heaviest and largest moving object in a home, and when not functioning properly, can be a serious hazard. To ensure it never drops on anyone or anything, you should always examine the garage door and opener thoroughly as part of the inspection process. 3. Homeowners enter and exit their homes through the garage everyday. For more than 70 percent of homeowners, the garage door is the main access point to the home. A safe garage serves as a major hub of activity in the modern household and often serves as a family’s storage center for everything from footballs to lawn mowers. 4. Opening and closing isn’t enough. A garage door may be malfunctioning and homeowners would have no idea, unless you test it.

not be operating properly, or safely. In fact, 1-in-15 garage doors lack the latest safety features or may not be operating safely. Improperly maintained garage doors can be a potential safety hazard. In the home inspection, include a safety check for the garage door opener and if it doesn’t pass the test, include in your report and recommend the homeowner replace the opener. 5. Checking the garage door is easy with LiftMaster’s 3-Step Safety Check. The safety check works on ANY garage door! • Step 1 - Check the sides of the garage door for properly installed photo eyes (black sensors) mounted no higher than 6 inches off the floor. • Step 2 - Block the photo eye with an object over 6 inches tall and press the garage door openers’ close button. The door should not close. • Step 3 - Lay a 1.5 inch-high object on the ground in the door’s path and press the close button. The door should reverse off this object. 6. Check the Door from Ceiling to Floor To keep the garage door properly maintained and functioning safely, all of the moving parts of the door should be clean and lubricated, including the steel rollers. The door should be properly balanced – to check, start with the door closed and pull the opener release mechanism so you can maneuver the door by hand. If the door is balanced, you should be able to lift it smoothly without much effort and it should stay open about three or four feet above the floor. If the door is heavy or unable to stay open, make note of this in your report and recommend to the homeowner that a LiftMaster Dealer come and adjust the door. To learn more about the 3-Step Safety Check and safe garage inspection, visit LiftMaster.com/GarageSafety

A homeowner may not be able to see or hear it, but their garage door may

Cut here

2014

PittsburghCut here

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2014 NAHI Conference Registration Name: (please print) _______________________________________________________________

Form am

Fax registration to 941-896-3187

am not a member:

Phone: _______________________________ Email: _______________________________________________________________________

$400 One registration $75.00 Spouse Registration (name: __________________) I will attend: Wednesday, 11/5 Thursday, 11/6 Friday, 11/7 By check: A check is enclosed made payable to National Association of Home Inspectors, Inc (Indicate 2014 Conference in check comment) Mail to: NAHI - 4426 5th Street West, Bradenton, FL 34207 By credit card: I authorize NAHI to charge $_____________ to the credit card below: Discover

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Fall 2014 | 23

D Quite a maneuver. Shower valve on outside of the enclosure!

Insects inside a thermo-pane window?

E B

“Big Bird” has been found!

How to time your electrocution!

Sliding glass doors with an express lane! G

F A very secure strike on a door!

I Now, that’s a hot circuit! Photo credits: (A, C, D, F, H, I,) Troy Bloxom, AK (B) Ken Logan, VA (E) Mike Morales, NJ (G) Bill Nicholson, IL

H A horizontal “S” trap?

Now I’ve Seen Everything... 24 | Fall 2014

Cooked on the wrong side of the stove! The NAHI® Forum

Call for Experts NAHI has a wealth of untapped resources in its members and it is untapped because we don’t know where it is hidden. Some of you are master electricians, plumbers, or carpenters. Some are AC and furnace technicians, and some are engineers, site contractors, or home builders. And while each of us is an ‘expert’ on one or two things, none of us know it all or even where to go to look. To remedy that, NAHI plans to establish a number of Panels of Experts. These will be ‘Go To’ contacts for NAHI members who need technical information. These panels could also be used to review proposed revisions to the Standards of Practice and could even be used to advise states or other regulators on certain subject matter. The panels would include: Electrical Plumbing Roofing Carpentry Site Development Structure Radon Termites Pools Appliances Docks Energy Efficiency

HVAC Masonry Mold Decks EIFS Green Building

If you are interested in serving on a Technical Panel, please send us the following information: • • • • •

Your name The Panel you would like to be assigned to Description of past experience Certifications or licenses you hold How you would like to be contacted (phone, text, email, etc.) when a NAHI member is stumped

These panels are not about your home inspection expertise, they are about your trades or specialty expertise. Please do not sign up for a panel if you do not know the subject material. But if you believe you have something to contribute to fellow NAHI members we want to promote your expertise. Email to: INFO@NAHI.ORG.

Build Your Own Business (BYOB) Q&A Session with Tom Capuano, Pillar to Post

1) What business were you in before you became a Pillar To Post home inspector? I owned a small heating and air-conditioning business. 2) How has your business changed since you went into home inspection? With my previous business, I was struggling. I had the skills and experience to work with heating and air-conditioning, but the way things were going at the time, I was facing bankruptcy. When I used the last of my available credit to purchase a Pillar To Post Home Inspection franchise, things began to change for the better. In the first year, I performed 442 home inspections and, in doing so, prevented my home from going into foreclosure or from missing a single IRS payment. 3) You are the Number One franchisee in the system. What are the keys to your success? By the middle of my second year, I had become successful enough to hire my first employee inspector. From day one I’ve made sure to hire home inspectors who my agents would like and respect, growing the business by stressing the importance of helping clients buy homes and helping real estate agents get inspections done with without a hassle. In 2007, Pillar To Post founded a group for franchisees interested in growing a larger business called The Navigator Group. Between our monthly phone meetings and our face-to-face meetings a few times a year, I was really able to come into my own as a leader in my business and tremendously accelerate its growth. As a consequence, in 2005 I was recognized as Pillar To Post franchisee of the year and in 2013 my team had performed its 25,000th home inspection.

4) Your family is active in the business with you. A benefit? How does that work? In my first year with Pillar To Post my two young daughters helped stuff envelopes for marketing mailers, assembled the inspection binders, and just as importantly, keeping quiet whenever I was on a business call. It was with their help that I was able to make my business as successful as it is today. 5) What do you think is the future of your home inspection business? From day one I knew that I wanted to be the owner of a home inspection business and not a home inspector myself. I haven’t performed a home inspection since 2011. Today, my team is made up of six full time inspectors, a marketing rep, a customer service rep and an accounting clerk. I hope to continue accelerating my business. 6) Do you have any tips for converting your business to a franchise? Network. The Navigator Group Pillar To Post provided allowed me to connect with other, growth-minded franchisees which really helped me succeed.

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Fall 2014 | 25

Insurance and the Home Inspector FAQ’s or Things You Need To Know By Bob Pearson Allen Insurance Group

What is the difference between a Claims Made Policy and an Occurrence Policy?

Claims Made Policies

Traditionally, Errors and Omissions insurance policies have been written on a Claims Made basis for professionals (yes, you are a professional). I will spend more time on this, as it is the standard. Coverage under Claims Made policy is often referred to as Claims Made and Reported and coverage ends when the policy ends - usually there is no grace period after the expiration of the policy (a common belief). Unique to a Claims Made policy is when you close your inspection business. You will need to purchase Extended Reporting (sometimes referred to as Tail Coverage) to cover yourself for 1,2, or 3 years after the expiration of the policy. The policy has what is called a “Retroactive Date”. This is the date that you first bought a claims made policy. Every year, you buy another policy. This date is maintained for coverage purposes. It is extremely important that if you change your insurance company, that they maintain the Retroactive Date. It should be clearly noted on the Insurance Quote and on the Declarations Page of your policy.

It is also very important that when you renew a Claims Made policy, that you report any potential claim (especially any written demand sent to you) on your renewal application. If you do not, it is quite possible a claim arising, for an issue you knew about prior to renewal, might be denied! Lets see how claims are handled in a claims made policy. The policy in force when a claim is made is the policy that will respond. The current policy will respond to all claims made during the policy period as long as the Inspection was performed subsequent to your Retroactive Date and you had no prior knowledge of the claim. For instance, an e-mail demand to rectify a situation. When you should contact your insurance provider will be discussed later. Lastly, you want to make sure you do not have a lapse in policies or let your policy get cancelled for non-payment of premium. If you do, you will lose coverage for all the inspections performed and most likely you will not be able to cover them again. Occurrence Policies It is fairly rare to find an Insurance Company issuing Occurrence policies any more. They are usually very expensive! A claim arising out of an inspection performed while you had an Occurrence Policy would be covered by that policy. Usually an Occurrence Policy is forever but some have a “Sunset Clause” which ends coverage - often after 4 years. When do I need to contact my insurance representative about a situation? Let’s say for example, you had a callback that might be more serious than the failure of a water heater, which you would probably just handle yourself or get a demand letter from a lawyer. Call your insurance representative for guidance. As we discussed about reporting potential claims during the renewal process,

Nat’l Product Approval Database

Home Inspectors and public adjustors in some markets have long needed to research and recommend sources for code compliant building products to their clients for insurance purposes. Until now, this has been done by visiting various websites or instructing homeowners to do so such as Miami Dade, ICC, Florida, Texas, AAMA, and many others. NAHI is pleased to have formed an alliance with ApprovalZoom.com to provide all that information at the NAHI website and in sync with many certification agencies. This NAHI member benefit offers a wealth of resources for inspectors to easily find and provide a resource on their inspections for homeowners to assist in home sales, insurance discounts, and code compliance needs. Access the database under members, education and then by clicking Nat’l Product Approval Database. Requires a member login.

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Photo credit: depositphotos.com/38898365

What do you mean, you don’t have insurance?

Scared Home Inspections

this is just as important. You paid for assistance and now is the time to get it. Depending on the authority your insurance representative has, they may guide you with some ideas of how to handle and treat it as an incident until it is resolved or a formal claim needs to be filed. They may not have any authority and will need to discuss with the Insurance Company. This will probably be deemed to “an incident” by the Company unless they need to become involved. In any event, you have made contact, which is required by your policy and will be covered. Will contacting your insurance representative cause your rates to go up? Not necessarily. It depends on your Insurance Company and if they really understand that every business, no matter what type, has many complaints which can, in many cases, be made to go away with a little guidance. Too often, an Inspector tries to handle an issue and it blows up and escalates when a lawyer gets involved. An Insurance Company could argue that they were not advised of the matter when, in their opinion, it could have been settled for a nuisance value and they deny coverage. Thoughts on protecting yourself. Get your agreement signed prior to the inspection. This is vital to deflect the concept that the agreement is a Contract of Adhesion and the buyer had no chance to negotiate the contract. Never, never, never give an inspection fee back or pay a nuisance claim without a signed release. Sure, you gave them back their money and now they sue. You are just out of luck and you’ll now have to pay your deductible. Sample releases are available by contacting the author. Contact Bob Pearson at 800-474-4472 x201,

Differentiate from your Competition! Improve the Quality of your Service! Increase your Sales & Profitability! Monroe Infrared Technology, Inc. (800) 221-0163 monroeinfrared.com 29 years dedicated to Infrared NAHI partner for Thermography Training and Infrared Camera Selection

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Buyer Sanctioned for Frivolous Lawsuit A California appellate court has affirmed the award of $60,000 in sanctions against a homebuyer for pursuing a meritless disclosure lawsuit against the seller and seller’s real estate representative. In 2009, Joanne Peake (“Buyer”) purchased a home from Marviel and Deanna Underwood (“Sellers”). Two years later, Buyer sued Sellers and Sellers’ broker, Paul Ferrell (“Listing Broker”) for allegedly failing to disclose defective subflooring in the home caused by water drainage problems. Buyer stated in her suit that she only became aware of the defective flooring after her son’s foot broke through a bathroom floor. She alleged that Sellers and Listing Broker had been aware of the damage at the time of her purchase, but had failed to alert her to it. While Buyer eventually dropped her suit against Sellers based on her understanding that they were insolvent, she persisted in her suit against Listing Broker. Buyer claimed that Listing Broker owed her “a duty to fully and completely disclose all material defects, failures and deficiencies” about the home. Her counts against Listing Broker included breach of statutory duties, breach of fiduciary duties, and constructive fraud. After Buyer filed suit, Listing Broker’s attorney sent Buyer’s attorney numerous emails explaining that prior to the sale Listing Broker had provided Buyer with all of the information in his possession, including a number of documents that indicated possible problems with the subflooring. Listing Broker’s attorney recommended that Buyer’s attorney consult with a real estate standard-of-care expert, as Buyer’s lawsuit failed to recognize that a listing broker’s statutory duties to a Buyer are limited to disclosing defects that are detectable upon a visual inspection of the property. Listing Broker’s attorney warned Buyer’s attorney that if he did not drop the suit, Listing Broker would seek sanctions for frivolous claims. Buyer’s attorney ignored the emails, and, as promised, Listing Broker’s attorney filed a motion for sanctions. The motion for sanctions set forth the facts that Listing Broker had provided Buyer with no less than three separate documents suggesting the possibility of flooring defects, and containing recommendations made by Listing Broker that Buyer also “see ‘reports and disclo-

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sures’ of previous owners.” The documents provided by Listing Broker to Buyer prior to sale also listed numerous past repairs made to the home to upgrade its water drainage system. They also contained photographs that showed rotting to the subfloors. In addition, Listing Broker disclosed in his Visual Inspection Checklist that he had observed a soft spot in the subfloor of a bedroom. In her deposition, Buyer admitted that both Sellers and Listing Broker had provided her with documents revealing that the home had extensive repairs made to the drainage system. In addition, she conceded that she and her own real estate representative had discussed Listing Broker’s disclosures about the drainage repairs. She also admitted that she herself had noticed some “sponginess” in a bedroom floor during a walk-through of the home. Nonetheless, Buyer claimed that because her own inspector had given the home the all-clear, Buyer had “assumed” that the disclosed drainage systems repairs had taken care of any problems with the home. Buyer opposed the motion for sanctions in part by offering an “expert declaration” from a real estate agent and property manager. Buyer’s expert stated that it was his opinion that Listing Broker failed to meet his standard of care to Buyer because he had failed to “red flag the drainage issue” by disclosing in writing that the repairs had not been properly performed, thus allowing further damage to the subflooring. Both the trial and appellate court roundly disagreed with the expert’s assessment. In its opinion, the appellate court stated that the expert’s conclusions were “directly at odds” with well-settled case law and the applicable statutory standard of care.

competent and diligent visual inspection of the property….and to disclose to the prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal. The inspection… does not include or involve an inspection of areas that are reasonably and normally inaccessible.” Because, stated the court, subflooring is “reasonably and normally inaccessible,” as a matter of law Listing Broker did not breach his duties to Buyer. Furthermore, Listing Broker had provided Buyer with numerous documents indicating the possibility of problems with the subflooring, and Buyer had had constructive knowledge of the damage prior to purchasing the home. Finally, the court held that Buyer and her attorney “engaged in conduct supporting the conclusion that they did not reasonably or honestly believe the claims had any merit.” While the appellate court made clear in its opinion that “sanctions should not be routinely awarded,” it held that, given the acts of Buyer and her attorney, in this case they were justified. Peake v. Underwood, 173 Cal. Rptr. 3d (Cal. Ct. App. 2014). Editor’s Note: NAR Legal Affairs would like to thank Mark D. Stavros of Stavros & Associates for alerting NAR to this decision. Mr. Stavros represented the listing broker, Paul Ferrell, at all phases of the Peake v. Underwood case.

The trial court determined that Buyer’s claims against Listing Broker were “utterly lacking in merit” and that Buyer’s refusal to drop the suit warranted sanctions in the amount of $60,000, representing Listing Broker’s attorney’s fees for defending the action. In affirming the trial court’s award, the appellate court reiterated that a seller’s real estate representative has a duty under California law to “conduct a reasonably

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NAHI Affiliates: Helping Home Inspectors to make more money!

A dve r tiser s fall 2 0 1 4

Sponsor Partners

3-D Inspection Systems, Inc. | 21

Gold

American Home Inspectors Training

Allen Insurance Group Pillar to Post Home Inspections Inspector Pro Insurance Radalink EMSL Analytical, Inc.

(AHIT)

Silver

3-D Inspection Systems, Inc. America’s Call Center AmeriSpec® Inspection Services Monroe Infrared Technology Mutual of Omaha RTCA (Radon Testing Corp of America) Target Insurance Services How To Operate Your Home

Bronze

HomeGauge

Mutual of Omaha | 18 OREP / Working RE Magazine | 25

chapter contacts ■ Alabama James E. Mason, CRI Pillar To Post, Inc. jamese.mason@pillartopost.com (205) 919-1913 ■ Arizona Daniel E. Haydon, CRI, Ph.D. DEC Inspection Services nahidan@msn.com (602) 308-8722 ■ California John St. George, CRI California Const. Consultants jstgeorge@roadrunner.com (818) 266-8300 ■ California - FRESNO Joseph Araiza, MPM, CIPM JS Enterprises Civil Eng Const. Consultants josepha@jscivilengineering.com (559) 840-6007 ■ Colorado Charlie Van Fleet B Safe & Healthy Home Inspections Cvanfleet56@aol.com (720) 890-9663

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■ Georgia Rob Golden, CRI Safeguard Home Inspection info@safeguardinspect.net (770) 992-5575

Committee chairs

■ Illinois Dave Yost Quality Building Inspections dave@qbinspect.com (630) 347-6400 ■ Michigan Steven Burnett, CRI Journey Property Inspections, LLC journeyinspection@yahoo.com (517) 447-3071

Chapter RelationsOpen Education JT McConnell Dragon Ridge Home Inspections jt@DragonRidgeHomeInspections. com (703) 472-8400

■ New York – Western Paul J. Nagalski, CRI Accurate Home Inspection Services accupaul@rochester.rr.com (716) 681-9739

Legislative Allan Monat, CRI Metro Real Estate Inspections ainspector@prodigy.net (847) 272-2766

■ Ohio Forrest A. Lines, CRI By-Lions Home Inspections, Inc. bylionshi@gmail.com (614) 855-9310

Standards of Practice – Compliance Bill Laughlin, CRI Prairie Home Inspection, LLC wglaughlin1@juno.com

■ Pennsylvania-SE William Squitieri A-Stat Inspection Services bills@astatinspection.com (215) 421-0560

(612) 250-9251

Advertise in The NAHI Forum For information contact NAHI 4426 5th Street West Bradenton, FL 34207 (800) 448-3942 Mark your calendar for the Winter 2014 issue advertising deadline: December 12, 2014.

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4426 5th Street West Bradenton, Florida 34207 www.nahi.org