San Antonio-Area Home Inspectors Reject Builder's Liability-Dodging Tactic.

Knight Ridder/Tribune Business News | January 09, 2004 | Copyright

By Adolfo Pesquera, San Antonio Express-News Knight Ridder/Tribune Business News

Jan. 9--Home inspectors are shying away from inspecting houses built by Medallion Homes because of a contract Medallion requires that releases it from any liability while the inspector is on site.

Some inspectors say the contract is a ploy to dissuade homebuyers from using them, or at the very least to steer the buyer to inspectors Medallion prefers. But Medallion officials deny that. "The whole idea behind this is strictly to limit our responsibility if an inspector gets injured," said Medallion spokeswoman Sue Kopplin.

The contract says that Medallion will not be liable for injury or death to any person or damage to any property arising out of "any act or omission of (the inspector) while on the property," and this release of liability extends to "consequences of Medallion's own negligence." Amador Rodriguez, an inspector with AIM for Real Estate Inspections, said he was solicited by a homebuyer, but had to turn down the job. "Before I could get out there, Medallion sent a fax to my office stating I needed to sign this agreement," Rodriguez said. "I informed the client, and also the Realtor that represents that client, that I would not sign the agreement. Their hold-harmless agreement says I'm responsible for their defects and their negligence; that's my interpretation."

Jeff Adams, president of the San Antonio Real Estate Inspectors Association, said he also had refused a client because of the agreement and that other inspectors were losing jobs because of it. "There are several other builders doing this, but Medallion is the most insistent," Adams said. "I only know of one inspector that is signing it. I plugged in an electric stovetop (at another builder's property) that wasn't wired right and got severely shocked," Adams said. "I wasn't seriously injured, but what happens if I am? It would be ridiculous for me to sign their 'hold harmless.'"

Matt Gessner, president of the local AmeriSpec franchise, said there have been problems with the vagueness of Medallion's hold harmless agreement. An earlier version of it was so vague that it appeared to say all liability shifted to the inspector even after he left the premises. "I do have a problem with them if they're trying to say we're responsible for everything that goes on," Gessner said. "I've never heard them say, 'You now own this house.' But when you read that, it seems that's what it says."

Gary Javore, Medallion's attorney, said the document was created because homebuyers have increased their use of real estate inspectors. A few years ago, only about 1 percent of Medallion's houses were getting third-party inspections, but "that percentage has gone up significantly." Consequently, he said, because of the nature of an inspector's job -- climbing all over an incomplete structure -- Medallion instituted the agreement to reduce its exposure. Medallion has no objection to inspectors doing their job, Javore said, and the company revised the agreement once at AmeriSpec's request to clarify that it was only in effect while the inspector was on site.

But Adams accused Javore of "blowing smoke," and noted that if the agreement was intended to protect Medallion, then it would require the agreement of real estate agents, appraisers, subcontractors, city employees and the home buyer.  In addition, he added, Medallion asks inspectors to show general liability coverage of $1 million. Javore said Medallion would prefer that real estate inspection companies carry liability insurance, but most do not. He added, however, that even if they did have insurance, Medallion would insist the inspectors sign the agreement because the policy could have a clause shifting responsibility back to the builder.

"The feedback I've gotten," Adams said, "is that if Medallion would take out the inspector's liability to 'any person' and lower the insurance to a reasonable level -- most of these houses are worth under $250,000 -- most people wouldn't have a problem with it."

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