HOME INSPECTIONS
by Tania Snyder, ATG Senior Law Clerk

Home inspections are becoming an increasingly common aspect of residential real estate transactions. While growth is more significant in some places than others, home inspections now occur all over the country. Yet, few states have legislated to regulate home inspectors and the liability for their inspections.

A home inspection is a visual examination of the actual condition of the house with a written report. It informs the buyer of problems and repairs that might be necessary for negotiations with the seller. A home inspection usually costs between $200-$350 and takes anywhere from one to three hours to complete. The American Society of Home Inspectors (ASHI) lists ten areas to inspect: structural components, exterior, roofing, plumbing, electrical, heating, central air conditioning, interiors, insulation, and ventilation. Additionally, most home inspectors will include pools and hot tubs or spas.

A home inspector will not alter anything in the house to examine a system. For example, an inspector will not comment on the quality of electrical or plumbing behind walls or under floors. Furthermore, a home inspection is not an appraisal, engineering analysis, code inspection, pest infestation determination, or termite inspection. Buyers must contract separately for those services. Home inspectors will not inspect for environmental problems. However, if specifically contracted, some will conduct a transactional screening for a lender as a way to determine if a Phase I Site Assessment will be necessary.

In Illinois, some case law exists that begins to define the role of home inspections in real estate transactions and the extent to which a home inspector is liable for representations or mistakes in a report. The causes of action asserted against home inspectors in these cases include negligence, negligent misrepresentation, and breach of contract. To proceed past summary judgment for all these causes of action, the courts have required that the buyer has reasonably and actually relied upon a home inspector?s statements and had no knowledge of the defect. The following case summaries illustrate this.

Connor v. Merrill Lynch Realty, Inc., 220 Ill. App. 3d 522, 581 N.E.2d 196, 163 Ill. Dec. 245 (1st Dist. 1991). In this summary judgment case, the buyers brought actions for negligent misrepresentation and breach of contract against the home inspector (among other parties) because the house's basement flooded. During the home inspection, the inspector and buyers had a conversation about a water stain on the baseboard in the basement. The parties alleged that different things were said about where the water came from. However, where the buyers knew there had been flooding and had relied on the seller?s explanation, the court affirmed summary judgment on the claim of negligent misrepresentation against the home inspector. The court also affirmed summary judgment of the claim for breach of contract because the buyers relied upon the seller's explanation, and the home inspector had fulfilled the obligation to point out the defect.

Mitchell v. Skubiak, 248 Ill. App. 3d 1000, 618 N.E.2d 1013, 188 Ill. Dec. 443 (1st Dist. 1993). This case addressed the issue of whether the buyer's use of a home inspection insulated the sellers from liability for defects that the inspectors did not find. The buyers brought an action for negligence against the inspection company and actions for fraud, concealment, and nondisclosure against the sellers. Basing its decision upon the Connor case, the court held that the negligence action against the home inspector did not preclude an action against the sellers for defects the sellers actively concealed from both the inspector and the buyer. On the other hand, no action existed against the sellers or the inspector for defects of which the buyer was actually aware.

Howard v. Druckemiller, 238 Ill. App. 3d 937, 611 N.E.2d 1, 183 Ill. Dec. 148 (2nd Dist. 1992). Here, an attorney failed to obtain an adequate home inspection, and the client sued for malpractice. The attorney represented to the clients (buyers) that an inspection by the Veterans' Administration (VA) would be sufficient. After closing, the buyers found many problems that lowered the value of the home. The VA stated its appraisal did not ensure that the house had no defects, recommended that the buyer either inspect the property or have a home inspection, and advised that the inspection served only for loan purposes. In reversing summary judgment, the appellate court held that the attorney's recommendation to rely upon the VA inspection was given within the attorney-client relationship as advice about the real estate transaction and was the exact nature of what the client hired the attorney to provide.

With home inspections on the rise, this area of the law will most likely expand. These decisions in Illinois indicate an attempt by the courts to limit home inspections to a fairly common sense and casual role in residential real estate transactions. However, by considering the actions of sellers, buyers, and brokers in determining the extent of a home inspector's liability, home inspectors may become more responsible for their representations in the future.

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