Denying access to the "bad" home inspector

Do sellers have a say in what inspector a buyer may use? More to the point, can sellers deny an inspector’s access to the property because the listing agent believes that inspector is a known problem-finder?

How an inspection report is worded can be pivotal to the success or failure of a transaction. There are home inspectors who bear the reputation as being unreasonable problem-finders. The common complaint is that these inspectors err by reporting conditions as "defects" to prevent claims that defects were missed. For example, the roof is found to be defective when it is merely an older, though functioning, roof; settlement cracks are never trivial but always "evidence" of compromised structural integrity despite the lack of analysis beyond visual identification, etc.

One recent hotline caller asked whether he, as a listing agent, could prevent a buyer from using one such inspector. What the caller meant to ask was, "Can my seller stop a buyer from using one such inspector?" Before giving you the answer, a word of caution. The answer is more complex than a simple "yes" or "no." Read on.

Generally, buyers and sellers can negotiate agreements that define, even limit, pre-settlement access to the property, even by inspectors. This is not to say that limiting access is a good idea given that it will likely turn off potential buyers who can choose to purchase properties where their choice of inspectors will be honored.

The issue is similar to one that arises when a buyer’s mortgage contingency clause identifies a lender with whom the listing agent and/or seller have had bad experiences. The seller can counter the buyer’s offer by removing from the contingency the named mortgage lender and asking the buyer to identify another. This unusual counteroffer usually leads to a call from the buyer agent asking why the named mortgage lender was not acceptable. I am familiar with one case where the listing agent, in response, explained how lousy the mortgage lender was and the bad things it had done in the past and on and on. The result was that the information was transmitted to the mortgage lender who brought a defamation suit against the agent.

If a seller is committed to limiting a buyer’s use of a specific home inspector, then the seller can do something about it, but proceed with caution. When an offer to purchase is submitted, the listing agent and seller will have no idea who will be performing the inspection. If the seller accepts the buyer’s offer, and if a home inspection is elected, then the buyer will be able to use the qualified inspector of his/her choosing.

One way for the seller to deal with this problem is to send the buyer’s offer back, unsigned, and ask the buyer to identify the home inspector or home inspection service that the buyer will use (e.g., "buyer will have the home/property inspection performed by the following inspector: ________________."). Another way to respond is that the buyer and seller cannot continue this process until both agree on a home inspector. If the home inspector identified is one that the seller will not permit, then the seller can counter the buyer’s offer and ask that a different inspector/service be selected much like a seller would do with a buyer who has selected a mortgage lender that seller will not accept.

You can safely presume that regardless of which approach you choose, any efforts to limit who the buyer selects to perform the inspections will result in a telephone call from the buyer’s agent. When the buyer agent asks why you seek the inspector’s name, you may give as little or much information as you would like. Hint: Less is more. It’s sufficient to say that the seller seeks to approve of the inspector who will be permitted into seller’s home.

If your seller rejects the offer because a specific inspector has been identified, there is no need to "trash-talk" the inspector. Doing so will bring you the defamation suit for which you probably have no insurance coverage. The best answer is to say something to the effect that seller has elected not to accept the offer if the inspection is to be made by the identified service. There is no requirement that you give a reason and giving a reason is to invite problems.

I’m not anticipating (rather, I am hoping) that this practice does not become commonplace. Sellers are best protected when a buyer’s due diligence inspection is conducted by an inspector of buyer’s choosing. Further, problem inspectors are weeded from the industry or it is soon learned that the reputation is undeserved. If the hotline is any indication, however, this seems to be a growing issue for some of our members.

A final word: this is not the licensee’s opportunity to get even with an inspector! It is done solely for the purpose of protecting the seller where there a real need exists.

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2016

All Rights Reserved

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached atwww.realcompliance.com