Blog Readers: Please be aware that my answer to this question relates to court cases in Washington state. Case law may be different in your state.
Q: I have a question about liability for home inspectors. In February, I purchased a second home with my daughter. We hired an inspector and paid about $350 for an inspection. It was a three hour inspection. After buying the home, we have come to find out that there is massive rot, which was not disclosed to us. Some of the rot is even visible (after it was pointed out to me). I was told that any competent home inspector should have seen the rot right away. Also after crawling under the house it was discovered that there had been a fire in the kitchen. There were still ashes under the house and this was not disclosed to us by either the home inspector or the seller. I have been told that that has to be disclosed. Do we have any recourse against the home inspector or the seller?
A: Washington State law requires sellers to disclose any known property defects that could affect the value of the property. “Massive amounts of rot” would certainly fall into the category of a defect that could affect the value of your home.
So the short answer to your question is, “Yes.” If the sellers knew about the rot in the house — and based on your description, it is hard to understand how they could not have known about the problem — I think you have a very strong case against the sellers. The key is going to be proving that they actually knew about the rot and deliberately hid this information from you. As I said, if a reasonable person could easily see the rot in the house, that may be all the proof that you need. As for the kitchen fire, that may be another story. It depends on how long the previous owners lived in the house. It is possible that the kitchen fire occurred before they bought the house, and if they never crawled under the house, they would have no way of knowing about the ashes. So it would be very useful to find out when the fire occurred.
As for the home inspector’s liability in this, that depends on the wording of the home inspection contract that you signed when you hired him or her. Most home inspectors have a clause in their contract that says any claims for damages resulting from a faulty inspection shall be limited to the amount of the home inspection fee. So in your case, your damage claim would be limited to $350 if your inspector had such a clause in his or her inspection contract. However, there is no settled case law on whether courts will enforce such a damage limit. Bellevue real estate attorney Alan Tonnon says damages are literally decided on a case-by-case basis. Some judges will honor the home inspection contract language and limit damage claims to the inspector’s fee, while other judges refuse to enforce the contract damage limit and will award actual monetary damages to the prevailing homeowner. Until somebody takes a case to the appellate court to get a ruling and establish a precedent, there is no way to know what to expect until you get to court.
The other problem with suing the home inspector is that many inspection companies are corporations with no real assets, so there is not much you can go after to recover your damages. That’s why you should both the seller and the home inspector in a situation like this. I hate to say it, but it may come down to who has the deepest pockets assuming that both the seller and home inspector are at fault. For further advice, please contact an attorney who specializes in real estate cases.
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